# Locking the period

> Sign-off by someone other than the preparer, a lock on posting, and the three ways an error found later is corrected without reopening the books.

Source: https://lopifi.com/learn/closing-the-month/locking-the-period
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**What does locking a period mean, and how is an error in a closed period corrected?** Sign-off by someone other than the preparer, a lock on posting, and the three ways an error found later is corrected without reopening the books.

Every section ends with a [Sign-off](https://lopifi.com/md/glossary/sign-off) by someone other than the person who prepared it. That's [segregation of duties](https://lopifi.com/md/glossary/segregation-of-duties). Whoever can post to cash shouldn't be the one who reconciles it. The sign-off, the preparer, the reviewer and the time all go into the [audit trail](https://lopifi.com/md/glossary/audit-trail).

When every section is signed off, the [Period](https://lopifi.com/md/glossary/period) is closed and [Posting](https://lopifi.com/md/glossary/posting) to it stops. That keeps reported numbers stable: someone reading September's statements in March sees the same figures the signer saw. An error found later is never fixed by reopening the locked books. How it's corrected depends on how much it matters, judged under ASC 250 and, for SEC registrants, SAB 108 (which also asks whether fixing it in the current period would misstate the current period). An immaterial error becomes an [out-of-period adjustment](https://lopifi.com/md/glossary/out-of-period-adjustment) in the open month. An error material to statements already issued is corrected by a [Restatement](https://lopifi.com/md/glossary/restatement): the prior period is reissued, openly, with the error disclosed. The in-between case, immaterial to the old period but too big to absorb in the new one, is a [Revision](https://lopifi.com/md/glossary/revision) of the comparatives.

— [ASC 250](https://asc.fasb.org/250/tableOfContent), Accounting Changes and Error Corrections

> “The staff believes that this can be accomplished by quantifying an error under both the rollover and iron curtain approaches as described above…”

— [SEC Staff Accounting Bulletin No. 108 (2006)](https://www.sec.gov/interps/account/sab108.htm), A prior-year error is measured against the current year too

*[Figure: period lock]*

Illustrative: a year of periods as a drum of month tiles, locked one by one as each is signed off. A late entry is refused by the lock and lands in the open month.

**Soft close**
- Pro: Fast: directional numbers within days
- Pro: Routine posting stops while adjustments continue
- Con: Estimates where a reconciliation should be
- Con: Numbers that can still move — never for a lender or an auditor
- Best for: Internal monthly reporting, and a team still building its close

**Hard close**
- Pro: Every balance proved and locked
- Pro: Statements others can rely on
- Con: Slower: every reconciliation and sign-off done
- Con: Needs the evidence on file before the lock
- Best for: Quarter and year ends, a board pack, a lender's covenant certificate, an audit

Two ways to end a month, and when each is the right one.

## Where this page's rules come from

- [ASC 250](https://asc.fasb.org/250/tableOfContent) — Accounting Changes and Error Corrections (codification)
- [SEC Staff Accounting Bulletin No. 108 (2006)](https://www.sec.gov/interps/account/sab108.htm) — A prior-year error is measured against the current year too (sec)
- [SEC Release 33-8238 (June 2003) — Sarbanes-Oxley §404](https://www.sec.gov/rule-release/33-8238) — Management's report on internal control over financial reporting (sec)

## Read further

- https://lopifi.com/md/differences/soft-close-vs-hard-close
- https://lopifi.com/md/accounting/period-locks
- https://lopifi.com/md/accounting/close

- **Track:** [Accounting](https://lopifi.com/md/learn/accounting)
- **Part of:** [Closing the month](https://lopifi.com/md/learn/closing-the-month) — 6 min
- **Terms taught:** [Sign-off](https://lopifi.com/md/glossary/sign-off), [Segregation of duties](https://lopifi.com/md/glossary/segregation-of-duties), [Audit trail](https://lopifi.com/md/glossary/audit-trail), [Period](https://lopifi.com/md/glossary/period), [Restatement](https://lopifi.com/md/glossary/restatement), [Revision](https://lopifi.com/md/glossary/revision), [Out-of-period adjustment](https://lopifi.com/md/glossary/out-of-period-adjustment), [Soft close](https://lopifi.com/md/glossary/soft-close), [Hard close](https://lopifi.com/md/glossary/hard-close)
- **Previous:** [Materiality and flux analysis](https://lopifi.com/md/learn/closing-the-month/materiality-and-flux-analysis)
- **Next:** [Revenue recognition and deferred revenue, Accounting · Lesson 14](https://lopifi.com/md/learn/revenue-recognition-and-deferred-revenue)
- **The course:** https://lopifi.com/md/learn