General Ledger Accounting and Financial Reporting System - APWU
Chapter 16 General Ledger and Reporting System 16-1.
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Transcript of Chapter 16 General Ledger and Reporting System 16-1.
Chapter 16General Ledger and Reporting System
16-1
General Ledger and Reporting
16-2
General Ledger and Reporting
Primary function is to collect and organize The accounting cycle activities
Each accounting subsystem provides information about regular transaction.
Financing activities Investing activities
The treasurer provides information about financing and investing activities, such as the issuance or retirement of debt and equity instruments and the purchase or sale of investment securities.
Budget activities Provided by budget department
Adjustments The controller provides adjusting entries
16-3
General Ledger and Reporting Activities
1. Update general ledger
2. Post adjusting entries
3. Prepare financial statements
4. Produce management reports
16-4
Basic activities performed in the general ledger and reporting cycle
General Ledger and Reporting General Threats
Inaccurate or invalid general ledger data
Unauthorized disclosure of financial statement
Unauthorized disclosure of financial statement
16-5
General Ledger and Reporting General Controls
Inaccurate or invalid general ledger data Data processing integrity controls Restriction of access to general ledger Review of all changes to general ledger data
16-6
General Ledger and Reporting General Controls
Unauthorized disclosure of financial statement Access controls Encryption
16-7
General Ledger and Reporting General Controls
Loss or destruction of data
Backup and disaster recovery procedures
16-8
Update General Ledger
Posting journal entries that originate from two sources: Accounting subsystems.
By means of summary journal entries Treasurer
Update general ledger for non routine transactions
Journal voucher file – contains the information that would be found in the general journal in a manual accounting system. Date of the entry, debit, credit, and amount.
16-9
Update General Ledger
The following types of input edit and processing controls are needed to ensure that the entries are accurate and complete1. A validity check – to ensure that general ledger accounts
exist for each account number referenced in a journal entry.
2. Field (format) checks - to ensure that the amount field in the journal entry contains only numeric data.
3. A zero-balance check - to verify the total debits equal total credits in a journal entry.
4. A completeness test - to ensure that all pertinent data are entered, especially the source of the journal entry.
5. Closed-loop verification - matching account numbers with account descriptions, to ensure that the correct general ledger account is being accessed.
16-10
Update General Ledger
The following types of input edit and processing controls are needed to ensure that the entries are accurate and complete6. A sign check – of the general ledger account balance,
once updating is completed, to verify that the balance is of the appropriate nature (debit or credit)
7. Calculating run-to-run totals – to verify the accuracy of journal voucher batch processing
16-11
Update General Ledger
Reconciliations and control reports Trial balance Control account balances & subsidiary balances total Close all temporary accounts (including suspense or
clearing accounts)
The audit trail Trace any transaction from its original source document
(whether paper or electronic) to the journal entry that updated the general ledger and to any report or other document using the data. This provides a means to verify that all authorized transactions were recorded.
Trace any item appearing in a report back through the general ledger to its original source document (whether paper or electronic). This provides a means to verity that all recorded transactions were indeed authorized and that they were recorded correctly. 16-12
Update General Ledger Threats
Inaccurate updating of general ledger
Unauthorized journal entries
16-13
Update General Ledger controls
Inaccurate updating of general ledger Data entry processing integrity controls Reconciliations and control reports Audit trail creation and review
16-14
Update General Ledger controls
Unauthorized journal entries Access controls Reconciliations and control reports Audit trail creation and review
16-15
Post Adjusting Entries Threats
Inaccurate adjusting entries
Unauthorized adjusting entries
16-16
Post Adjusting Entries controls
Inaccurate adjusting entries Data entry processing integrity controls Spreadsheet error protection controls Standard adjusting entries Reconciliations and control reports Audit trail creation and review
16-17
Post Adjusting Entries controls
Unauthorized adjusting entries Access controls Reconciliations and control reports Audit trail creation and review
16-18
Prepare Financial Statement Threats
Inaccurate financial statements
Fraudulent financial reporting
16-19
Prepare Financial Statement controls
Inaccurate financial statements Processing integrity controls Use of packaged software Training and experience in applying IFRS and XBRL
16-20
Prepare Financial Statement controls
Fraudulent financial reporting Audits
16-21
eXtensible Business Reporting Language (XBRL)
Without With
16-22
XBRL
Instance Document Contains data from financial statements
Marked up or tagged with data describing the data Each piece of data in XBRL is an element
Taxonomy Set of files defining the various elements and the relationships between them
A schema Contains the definitions of every element that could appear in an instance document
Linkbases Describes relationships between elements
Reference Identifies relevant authoritative pronouncements
Calculation Specifies how to combine elements
Presentation How to group elements
Label Associates human-readable labels with elements
16-23
Produce Management Reports Threats
Poorly designed reports and graphs
16-24
Produce Management Report Controls
Responsibility accounting
Balanced scorecard
Training on proper graph design
16-25
Balanced Scorecard
A report that provides a multidimensional perspective of organizational performance (example: page 499) Reflecting four perspectives of the organization
Financial Customer Internal operations Innovation and learning
Showing goals and measures Targets Actual
16-26