What does it mean to review by exception?

Review by exception is an accounting workflow where routine work moves forward automatically while accountants focus their attention on items that require review, investigation, or professional judgment.

Instead of manually reviewing every transaction, accountants focus on work the system cannot confidently resolve on its own. Exceptions might include unusual activity, missing information, reconciliation differences, low-confidence decisions, or situations that require accounting judgment.

Review by exception shifts the accountant's attention from reviewing every item to focusing on the areas where human expertise is needed most. This can reduce time spent on routine review while keeping accountants involved when their judgment or oversight is needed.

Example: An AI-native accounting system moves familiar recurring transactions forward while flagging an unusual transaction with insufficient context. The accountant investigates the exception and determines the appropriate accounting treatment.

Related terms: Confidence Score, Checklist, Human in the Loop, Embedded Verification, Trust Layer, Continuous Close