1

Chapter 1

Introduction to Accounting Information

Systems

Chapter 14

General Ledger

And

Business Reporting

(GL/BR)

Learning Objectives• See how business processes feed data required

for GL updates

• Understand how GL/BR supports external & internal reporting functions

• Recognize limitations of traditional GL approach in contemporary systems

• Appreciate how PC hardware/software platforms can be used to implement GL/BR

• Examine control issues and potential problems

3

Functions of GL/BR• GL

– accumulating data, classifying data by GL accounts, recording data in those accounts

– fueling FR, BR and other reporting subsystems

• BR– preparing general-purpose, external financial

statements– ensuring that F/S conform to GAAP– generating web-based forms– generating ad hoc & predetermined business

reports

4

Horizontal perspectiveVP

Finance

Treasurer Controller

Businessreporting

department

Budgetingdepartment

Financial reportingofficer

Managerial reportingofficer

5

Horizontal information flows• Business process feeders send updates to

business reporting department

• Treasurer notifies BR of investing transactions

• Treasurer notifies BR of financing transactions

• Controller notifies BR of adjusting entries

• Budgeting dept. send final budget figures to BR

• BR accounting dept. sends Adjusted T/B to financial reporting officer

6

Horizontal information flows (2)

• BR sends actual & budget figures to budgeting department

• BR sends actual & budget figures to managerial reporting officer

• Financial reporting officer sends GAAP-based financial statements to Treasurer, Controller, and outside parties (owners, banks, SEC)

• Managerial reporting officer sends performance reports to various managers.

7

8

Responsibility Accounting Performance Reporting

9

10

B/AR/CRprocess

P/AP/CDprocess

Treasurer

Controller

OE/Sprocess

Treasurer

IPSprocess

Controller

Externalparties

Budgetingdepartment

Managerialreporting

officer

Budgetingdepartment

General Ledger/Business Reporting

GL invoicesupdate

GL estimatedbad debts

update

GLwrite-off

update

GL salesretrun update

GL cashreceipts update

GL payableupdate

GL cashdisbursements

update

GL inventoryreceived update

Investingtransactions

updateFinancing

transactionsupdate

Adjusting entryjournal vouchers

Finalizedbudget

Budget &actual trial

balance

GAAP-basedfinancial

statements

Standardcosts

update

Cost offinished

goods

Costvariances

update

GL inventorysale update

GL/FR Context Diagram

11

GL/FR - level 0 DFD

12

GL Coding• 1113 Cash in Bank

– 1xxx = assets– x1xx = current assets– xx1x = cash accounts– xxx3 = cash in bank

• --------------------------------------------------– 1111 might mean petty cash

1112 might mean change fund1121 might mean trade accounts receivable1122 might mean receivables from officers

13

Charts of Accounts

• Must be flexible to meet the firm’s financial and managerial reporting needs

• For a multi-entity firm, there is need to code for departments, geographical regions, product lines, divisions, and special reporting entities

• Should accommodate “rolling up” or consolidating accounts into statements using different forms

14

Technology-enabled Issues in BR

• FR modules in ERP systems

• Balanced Scorecard

• Business Intelligence

• Business Reporting via the Internet

• Public Databases

• Object-oriented databases

15

FR modules in ERP systems

• Many options available for processing business events that affect multiple processes

• Options controlled to permit only users with pertinent interest to record events

• User access to ERP database also restricted to “need to know” basis

16

Balanced Scorecard

• Methodology for assessing organization’s business performance via– Financial– Internal business processes– Customers– Innovation and improvement activities

• Functionality included in applications by all major ERP vendors

17

Business Intelligence

• Integration of statistical and analytical tools with decision support technologies

• Facilitates complex analyses of data warehouses by managers and decision makers

• Typical module in ERP systems

18

Extensible Business Reporting Language (XBRL)

• XML-based language consisting of a set of tags used to unify presentation of business reporting information into a single format

• Easily read by many software packages• Can be easily searched by web browsers• Enables easy uploading and downloading of

information to other software packages for update, analysis, etc.

19

Public Databases

• Aid to financial reporting officers in determining BR treatments

• National Automated Accounting Research System (NAARS)

• The Internet may be viewed as one huge public database

20

Object-oriented Databases

• Widely used in ERP systems

• Permit rapid and flexible summarization of database information into various reports

• Can easily specify predetermined report forms and see automatic reports in predetermined format

Learning Objectives• See how business processes feed data required

for GL updates

• Understand how GL/BR supports external & internal reporting functions

• Recognize limitations of traditional GL approach in contemporary systems

• Appreciate how PC hardware/software platforms can be used to implement GL/BR

• Examine control issues and potential problems