Pelajari tentang Accounting Information Systems

(1)

Accounting Information Systems

Fourteenth Edition, Global Edition

Chapter 12

The Revenue Cycle: Sales to

Cash Collections

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Learning Objectives

^{(1 of 2)}

• Describe the basic business activities in the revenue cycle and discuss the general threats to that process and the controls that can be used to mitigate those threats.

• Explain the sales order entry process, the key decisions that need to be made, and threats to that process, and

describe the controls that can be used to mitigate those threats.

• Explain the shipping process, key decisions that need to be made, and threats to that process, and describe the

controls that can be used to mitigate those threats.

(3)

Learning Objectives

^{(2 of 2)}

• Explain the billing process, key decisions that need to be made, and threats to that process, and describe the

controls that can be used to mitigate those threats.

• Explain the cash collections process, the key decisions

that need to be made, and threats to that process, and

describe the controls that can be used to mitigate those

threats.

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Basic Revenue Cycle Activities

• Sales order entry

• Shipping

• Billing

• Cash Collections

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General Threats and Controls to Revenue Cycle

Threats Controls

1. Inaccurate or invalid master data

2. Unauthorized disclosure of sensitive information

3. Loss or destruction of data 4. Poor performance

1 a. Data processing integrity controls

b. Restrict access to master data c. Review of all changes to

master data 2 a. Access controls

b. Encryption

c. Tokenization of customer personal information

3 a. Backup and disaster recovery procedures

4 a. Managerial reports

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Sales Order Entry Processing Steps

• Take the customer order

– Source document: sales order

• Approve customer credit

• Check inventory availability

• Respond to customer inquiries

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Sales Order Entry Processing

Threats Controls

1. Incomplete/inaccurate orders 2. Invalid orders

3. Uncollectible accounts

4. Stockouts and excess inventory 5. Loss of customers

1 a. Data entry edit controls

b. Restrict access to master data to maintain accuracy

2 a. Signature to authorize sale

3 a. Credit limits checked and if sale exceeds limit, specific

authorization needed

b. Aging of accounts receivable 4 a. Perpetual inventory system

b. RFID or bar code technology c. Physical inventory counts d. Sales forecast and activity

reports

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Shipping Process

^{(1 of 2)}

• Pick and pack the order

– Source documents: picking ticket

• Ship the order

– Source documents: Packing slip, Bill of lading

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Shipping Process

^{(2 of 2)}

Threats Controls

1. Picking wrong item or quantity to ship

2. Theft

3. Shipping errors (fail to ship the goods, wrong quantities, wrong items, ship to wrong address, duplication)

1 a. Bar code technology

b. Reconcile picking list to sales order

2 a. Restrict physical access to inventory

b. Document inventory transfers c. Physical counts of inventory

and reconcile to quantities recorded

3 a. Reconcile shipping documents to sales orders, picking lists, and packing slips

b. Data entry edit controls

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Billing Process

^{(1 of 2)}

• Invoicing the customer

– Source document: sales invoice

• Updating accounts receivable

– Source document: credit memo and monthly statements

(11)

Billing Process

^{(2 of 2)}

Threats Controls

1. Failure to bill customer 2. Billing errors

3. Posting errors in accounts receivable 4. Inaccurate or invalid credit memos

1 a. Reconcile invoices with sales orders and shipping documents

b. Separate shipping and billing functions 2 a. Data entry edit controls

b. Configure system for automatically enter price data

c. Data entry edit controls

d. reconciliation of shipping documents to sales orders

3 a. Reconcile subsidiary accounts

receivable balance to the amount for accounts receivable in the general ledger

b. Mail monthly statements to customers 4 a. Segregation of authorization and

recording function for credit memos

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Cash Collection Process

^{(1 of 2)}

• Process customer payment and update their account balance

– Remittance

• Deposit payments to the bank

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Cash Collection Process

^{(2 of 2)}

Threats Control

1. Theft of cash

2. Cashflow problems

1 a. Proper segregation of cash

handling and posting to customer accounts, authorize credit

memos, or reconcile bank account

b. Use lockbox

c. Immediately open mail, prompt endorsement and deposit all cash receipts daily

d. Use cash registers 2 a. Lockbox

b. Discounts for early payment c. Cash flow budgeting

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Key Terms

• Revenue cycle

• Sales order

• Electronic data interchange (EDI)

• Credit limit

• Accounts receivable aging report

• Back order

• Picking ticket

• Customer relationship management systems (CRM)

• Packing slip

• Bill of lading

• Sales invoice

• Open-invoice method

• Remittance advice

• Balance-forward method

• Monthly statement

• Cycle billing

• Credit memo

• Remittance list

• Lockbox

• Electronic lockbox

• Electronic funds transfer (EFT)

• Financial electronic data interchange (FEDI)

• Universal payment identification code (UPIC)

• Cash flow budget

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Accounting Information Systems

Chapter 13

The Expenditure Cycle:

Purchasing to Cash

Disbursements

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Learning Objectives

^{(1 of 2)}

• Discuss the basic business activities and related

information processing operations in the expenditure cycle, explain the general threats to those activities, and describe the controls that can mitigate those threats.

• Explain the process and key decisions involved in ordering goods and services, identify the threats to those activities, and describe the controls that can mitigate those threats.

• Explain the process and key decisions involved in

receiving goods and services, identify the threats to those

activities, and describe the controls that can mitigate those

threats.

(17)

Learning Objectives

^{(2 of 2)}

• Explain the process and key decisions involved in

approving supplier invoices, identify the threats to those activities, and describe the controls that can mitigate those threats.

• Explain the process and key decisions involved in cash disbursements to suppliers, identify the threats to those

activities, and describe the controls that can mitigate those

threats.

(18)

Basic Expenditure Cycle Activities

• Order materials, supplies, and services

• Receive materials, supplies, and services

• Approve supplier (vendor) invoice

• Cash disbursement

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Key decisions

• What is the optimal level of inventory?

• Which suppliers provide the best quality at the best price?

• How can IT be used to improve efficiency and accuracy of logistics?

• How can we take advantage of vendor discounts?

• How can we maximize cash flow?

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General Threats and Controls

Threats Control

1. Inaccurate or invalid master data 2. Unauthorized disclosure of

sensitive information

3. Loss or destruction of data 4. Poor performance

1 b. Restriction of access to master data

1 c. Review of all changes to master data

2 a. Access controls b. Encryption

4 a. Managerial reports

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Order Goods (Materials/Supplies) or Services Processing Steps

• Identify what, when, and how much to purchase

– Source document: purchase requisition

• Choose a supplier

– Source document: purchase order

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Ordering Goods/Services

^{(1 of 2)}

Threats Controls

1. Stockouts and excess inventory 2. Purchasing items not needed 3. Purchasing items at inflated

prices

4. Purchasing goods of poor quality

1 a. Perpetual inventory system b. Bar-coding, RFID

c. Periodic physical counts 2 a. Perpetual inventory systems

b. Review and approval of purchase requisitions

c. Centralized purchasing 3 a. Price lists

b. Competitive bids

c. Review purchase orders 4 a. Use approved suppliers

b. review and approve purchases from new suppliers

c. Monitor product quality by supplier

d. hold purchasing managers responsible for rework and scrap cost

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Ordering Goods/Services

^{(2 of 2)}

Threats Controls

5. Unreliable suppliers

6. Purchasing from unauthorized suppliers

7. Kickbacks

5 a. Monitor supplier performance b. Require quality certification

6 a. Purchase from approved suppliers b. Review approval from purchases

of new suppliers c. EDI specific controls 7 a. Supplier audits

b. Prohibit gifts

c. Job rotation & mandatory vacations

d. Required disclosure of financial and personal interests in suppliers

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Receiving Process

• Goods arrive

– Verify goods ordered against the purchase order (what, how much, quality)

– Source document: receiving report

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Receiving Goods or Services

Threats Controls

1. Accepting unordered items 2. Mistakes in counting

3. Verifying receipt of services 4. Inventory theft

1 a. Authorized purchase orders needed before receiving goods 2 a. Bar codes or RFID

b. Receiving employees sign receiving report

c. Do not inform receiving of quantity ordered

3 a. Budget controls and audits 4 a. Restrict physical access to

inventory

b. Document all inventory transfers c. Segregate custody vs. receiving

of inventory

(26)

Approve Supplier Invoice and Cash Disbursements

• Match the supplier invoice to:

– Purchase order – Receiving report

supplier invoice + purchase order + receiving report = voucher

• Approve supplier invoice for payment

– Source document: disbursement voucher

• Pay vendor

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Approve Supplier Invoice

Threats Control

1. Errors in supplier invoice

2. Mistakes in posting to accounts payable

1 a. Verify invoice accuracy

b. Require detailed receipts for p- cards

c. Restrict access to supplier master data

2 a. Data entry edit controls

b. Reconcile detailed accounts payable records to the general ledger accounts payable

account

(28)

Cash Disbursements

Threats Controls

1. Failure to take discounts 2. Pay for items not received 3. Duplicate payments

4. Theft of cash 5. Check alteration 6. Cash flow problems

1 a. File invoices by due date to take advantage of discounts

2 a. Match supplier invoice to supporting documents (purchase order, receiving report)

3 a. Pay only original invoices

b. Cancel supporting document when payment is made

4 a. Physical security of checks b. Separation of duties

c. Reconcile bank accounts 5 a. Check Protection machines

b. special inks / papers 6 a. Cash flow budget

(29)

Key Terms

• Expenditure cycle

• Economic order quantity (EOQ)

• Reorder point

• Materials requirement planning (MRP)

• Just-in-time (JIT) inventory system

• Purchase requisition

• Purchase order

• Blanket purchase order/blanket order

• Vendor-managed inventory (VMI)

• Kickbacks

• Receiving report

• Debit memo

• Voucher package

• Nonvoucher system

• Voucher system

• Disbursement voucher

• Evaluated receipt settlement (ERS)

• Procurement card

• Imprest fund

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Accounting Information Systems

Chapter 15

The Human Resources

Management and Payroll

Cycle

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Learning Objectives

• Describe the major business activities, key decisions, and information needs in the HRM/payroll cycle, the general threats to those activities, and the controls that can

mitigate those threats.

• Explain the payroll cycle activities, key decisions, and

information needs, the threats to those activities, and the controls that can mitigate those threats.

• Discuss and evaluate the options for outsourcing

HRM/payroll cycle activities.

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Human Resource Management Process

• Recruit and hire new employees

• Training

• Job assignment

• Compensation (payroll)

• Performance evaluation

• Discharge of employees (voluntary or involuntary)

(33)

General Issues HRM/Payroll

Threats Controls

1. Inaccurate or invalid data 2. Unauthorized disclosure of

3. Loss or destruction of data

4. Hiring unqualified or larcenous employees

5. Violations of employment laws

b. Restrict access to master data c. Review changes to master

data

3 a. Backup and Disaster recovery 4 a. Sound hiring procedures

5 a. Documentation of hiring b. Continuing education on

changes to employment laws

(34)

Payroll Cycle Activities

• Update payroll master data

• Validate time and attendance data

– Source document: time sheets

• Prepare payroll

– Payroll register and deduction register

• Disburse payroll

• Disburse taxes and miscellaneous deductions

(35)

1. Update Master Payroll Data

2. Validate Time and Attendance Data 3. Prepare Payroll

Threats Controls

1. Unauthorized changes to payroll master data

2. Inaccurate updating of master data

3. Inaccurate time and attendance data

4. Errors in processing payroll

1 a. Access controls and segregation of duties

3 a. Supervisory review

b. Source data automation for data capture

b. Supervisory review

(36)

4. Disburse Payroll

5. Disburse Payroll Taxes

Threats Controls

1. Theft or fraudulent distribution of paychecks

2. Failure to make required payments

3. Untimely payments 4. Inaccurate payments

1 a. Restrict access to blank payroll checks and check signing machine

b. Use separate account (imprest fund)

2 a. Configure system to make automatic payments on time 3 a. Configure system to make

automatic payments on time 4 a. Process integrity controls

b. Supervisory review

(37)

Reasons to Outsource Payroll

• Reduce costs

– Cost of processing and minimize errors

• Broader range of benefits

– Administration of benefits

• Free up computer resources

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Key Terms

• Human resource management (HRM)/payroll cycle

• Knowledge management systems

• Time card

• Time sheet

• Payroll register

• Deduction register

• Earnings statement

• Payroll clearing account

• Flexible benefits plan

• Payroll service bureau

• Professional employer organization (PEO)

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SISTEM AKUNTANSI AKTIVA TETAP

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TOPIK PEMBAHASAN

Definisi dan

Karakteristik Proses Bisnis Klasifikasi Aktiva

Tetap

Transaksi yang Mengubah Aktiva Tetap

Manajemen Aktiva Tetap

Struktur, Dokumen,

Fungsi Pengendalian Intern

(41)

DEFINISI

Aset perusahaan yang memiliki wujud,

mempunyai manfaat ekonomis lebih dari satu

tahun, diperoleh perusahaan untuk

melaksanakan kegiatan perusahaan, bukan

untuk dijual kembali

(42)

KARAKTERISTIK

• Frekuensi terjadinya transaksi kecil, nilainya transaksinya besar

• Pengendalian sejak perencanaan

• Pengeluaran terkait dengan aktiva tetap berupa

pengeluaran pendapatan dan pengelauran modall

(43)

PROSES BISNIS

Perolehan / Acquisition

Pengelolaan /

Maintenaince Penghentian /Disposal

Recognition | Measuring | Recording

(44)

PROSES BISNIS

SISTEM AKTIVA

TETAP

UNIT PENGGUNA &

SIKLUS-SIKLUS SIKLUS

PENGELUARAN

SISTEM GLRS

Permintaan Servis & Upgrade

MANAGEMENT

VENDOR

Diagram Konteks | Sistem Akuntansi Aktiva Tetap

Laporan

(45)

PEROLEHAN PENGELOLA AN

PENGHENTI AN

UNIT PENGGUNA &

SIKLUS-SIKLUS PROSES BISNIS

MANAGEMENT VENDOR

SIKLUS PENGELUARAN

AKTIVA TETAP

SISTEM GLRS

Jurnal transaksi perolehan

Jurnal transaksi pengelolaan (depresiasi, capital & revenue expenditure)

Jurnal transaksi penghentian

Servis dan Upgrade Kebutuhan Pembelian

Penyerahan aktiva Tetap

Permintaan otorisasi Pemberian Otorisasi

Penyerahan aktiva Tetap

Kebutuhan Aktiva Tetap DFD Level 0 | Sistem Akuntansi Aktiva Tetap

Laporan

Permintaan otorisasi

Pemberian Otorisasi

(46)

PENGGUNAAN AKTIVA TETAP

AKTIVA TETAP

Revenue Cycle

Expenditure Cycle

Production Cycle

Payroll Cycle

GL &

Reporting System

Selling and Administration

Other

(47)

KLASIFIKASI AKTIVA TETAP

Tanah and Perbaikan Tanah (Land Improvement) Gedung dan Perbaikan Gedung

Mesin dan Peralatan Pabrik Mebel

Kendaraan

Lainnya

(48)

TRANSAKSI YG MENGUBAH AKTIVA TETAP

Transaksi Terkait Aktiva Tetap

Mengubah Akun Aktiva Tetap

Mengubah Akun Akumulasi Penyusutan

Mengubah Akun Beban

Reparasi dan Pemeliharaan

(49)

TRANSAKSI YG MENGUBAH AKTIVA TETAP

Reparasi dan Pemeliharaan Pertukaran

Revaluasi

Pengeluaran Modal Perolehan

Pertukaran Penjuallan

Penghentian Pemakaian

(50)

MANAJEMEN AKTIVA TETAP

Menempatkan aktiva tetap di tangan fungsi pemakai aktiva tetap

Memberikan otorisasi pemindahan aktiva tetap dari satu fungsi ke fungsi lainnya Memberikan otorisasi penghentian aktiva tetap

Memberikan otorisasi pengiriman aktiva tetap ke pihak luar untuk reparasi

Fungsi dalam organisasi dengan tanggungjawab mengatur penggunaan, pemindahan, pemberian otorisasi penghentian pemakaian aktiva tetap idealnya dibawah BAGIAN AKTIVA TETAP

WEWENANG BAGIAN AKTIVA TETAP

(51)

STRUKTUR KODE AKTIVA TETAP

Kodifikasi atas Aktiva Tetap perlu dilakukan, jika perusahaan mempunyai berbagai jenis aktiva tetap yang tersebar di berbagai lokasi, sehingg dapat memberikan informasi yang lengkap

Portability Lokasi Fungsi

Tahun Perolehan Jenis Aktiva Tetap Golongan Aktiva Tetap

(52)

DOKUMEN TERKAIT AKTIVA TETAP

Surat permintaan otorisasi investasi

Surat permintaan reparasi

Surat permintaan transfer

Surat perintah penghentian

pemakaian

Surat perintah kerja Surat order pembelian

LPB Bukti Kas keluar DLL

(53)

FUNGSI TERKAIT

Fungsi Pemakai Fungsi Penelitian dan Pengembangan Direktur Terkait Direktur Utama

Fungsi Pembelian Fungsi Penerimaan Fungsi Akutansi

(54)

JARINGAN SUBSISTEM

SISTEM AKUNTANSI

AKTIVA TETAP

SISTEM PEMBELIAN

SISTEM PEROLEHAN

MELALUI PEMBANGUN

AN

SISTEM PENGELURAN

MODAL

SISTEM PENGHENTIAN

PEMAKAIAN SISTEM

TRANSFER SISTEM

REVALUASI SISTEM AKUNTANSI PENYUSUTAN

(55)

UNSUR PENGENDALIAN

ORGANISASI

Fungsi pemakai terpisah dari fungsi akuntansi aktiva tetap

Transaksi perolehan, penjualan, penghentian pemakaian atas aktiva

tetap dilaksanakan oleh lebih dari

satu unit independen

(56)

UNSUR PENGENDALIAN

SISTEM OTORISASI

• Anggaran investasi diotorisasi RUPS

• Surat permintaan otorisasi atas investasi, reparasi, surat permintaan otorisasi penghentian pemakaian aktiva tetap dan surat permintaan transfer aktiva tetap diotorisai oleh Direktur yang bersangkutan dan Direktur Utama

• Surat perintah kerja diotorisasi kepala departmen yang bersangkutan

• Surat order pembelian ditorisasi oleh pejabat yang berwenang

• LPB diotorisasi fungsi penerimaan

• Bukti kas keluar diotorisasi oleh fungsi akuntansi

• Bukti memorial diotorisasi oleh kepala fungsi akuntansi

(57)

UNSUR PENGENDALIAN

PROSEDUR

PENCATATAN Perubahan kartu aktiva tetap harus didasarkan pada BUKTI KAS KELUAR, atau BUKTI MEMORIAL atau SURAT PERMINTAAN TRANSFER dilampiri dokumen pendukung yg lengkap, dan diotorisasi oleh pejabat yang berwenang

PRAKTIK YANG SEHAT

Secara periodok dilakukan pencocokan fisk aktiva tetap dengan kartu aktiva tetap Penggunaan anggaran investasi sbg alat pengendalian investasi dalam aktiva tetap Mengasuransikan aktiva tetap dari kerugian

Kebijakan akuntansi tentang pemisahan pengeluaran modal dan pengeluaran pendapatan

(58)

GENERAL ISSUES

THREAT CONTROL

1.Inaccurate or invalid master data

a) Data processing integrity control

b) Restriction of access to master data c) Review of all changes to master data

2.Unauthorized disclosure of sensitive information

a) Access controls b) Encryption

THREATS AND CONTROLS

3. Loss or destruction of master data a. Backup and disaster recovery

procedures

(59)

GENERAL ISSUES

THREAT CONTROL

4. Poor Performancce a)Managerial reports

(60)

ACQUISITION

THREAT CONTROL

1.Suboptimal investment in fixed assets

a) Proper approval of fixed asset acquisitions, including use of requests for proposals to solicit multiple competitive bids

2. Purchasing items not needed

3.Purchasing at inflated prices

a) Review and approval of purchase requisition b) Centralized purchasing function

a) Price lists

b) Competitive bidding

c) Review of purchase orders

(61)

ACQUISITION

THREAT CONTROL

4.Purchasing goods of inferior quality

a) Purchasing only from approved supplier

b) Review and approval of purchases from new suppliers

c) Tracking and monitoring product quality by supplier

5. Unreliable supplier

a)Requiring suppliers to prossess quality certification [e.g., ISO 9000]

b)Collecting and monitoring supplier delivery

performance data

(62)

ACQUISITION

THREAT CONTROL

6. Purchasing from unauthorized suppliers

a) Maintaining a list of approved suppliers and configuring the system to permit purchase orders only to approved suppliers

b) Review and approve of purchases from new suppliers

THREATS AND CONTROLS

7. Kickbacks

a) Requiring purchasing agents to disclose financial and personal interests in suppliers

b) Training employees in how to respond to offers of gifts from suppliers

c) Job rotation and mandatory vacations

(63)

MAINTENANCE

THREAT CONTROL

1.Theft of fixed assets

a) Physical inventory of all fixed assets

b) Restriction of physical access to fixed assets c) Maintaining detailed records of fixed assets,

including disposal

THREATS AND CONTROLS

2. Loss of fixed assets due to fire or other disasters

a) Physical safeguards (e.g., fire sprinklers)

b) Insurance

(64)

ACCOUNTING

THREAT CONTROL

1. Inaccurate data a) Source data automation

b) Data processing integrity controls

2. Inappropriate allocation of depreciation

a) Source data automation

b) Data processing integrity controls

c) Training

(65)

(66)

(67)

SELESAI

(68)

Accounting Information Systems

Chapter 14

The Production Cycle

(69)

Learning Objectives

^{(1 of 2)}

• Describe the major business activities and key decisions that must be made in the production cycle, the threats to accomplishing production cycle objectives, and the

controls that can mitigate those threats.

• Explain the key decisions and information needs in product design, the threats to those activities, and the controls that can mitigate those threats.

• Explain the key decisions and information needs in

planning and scheduling production, the threats to those

activities, and the controls that can mitigate those threats.

(70)

Learning Objectives

^{(2 of 2)}

• Explain the key decisions and information needs in

production operations, the threats to those activities, and the controls that can mitigate those threats.

• Explain the key decisions and information needs for

accurate cost accounting, threats to those activities, and

the controls that can mitigate those threats.

(71)

Production Cycle Process

^{(1 of 2)}

• Product Design

– Source documents: bill of materials and operations list

• Planning and Scheduling

– Source documents: Master production schedule, production order, and materials requisition

• Production Operations

• Cost Accounting

(72)

Production Cycle Process

^{(2 of 2)}

(73)

General Issues

Threats Controls

1. Inaccurate/Invalid master data 2. Unauthorized disclosure of

b. Restrict access to master data c. Review changes to master

data

(74)

Product Design

• Create a product that meets customer requirements

• Generates two output documents:

– Bill of materials – Operations list

(75)

Planning and Scheduling

• Two types of production planning

– Manufacturing resource planning (MRP-II) – Lean manufacturing

• Documents from Planning and Scheduling

– Production order – Materials requisition – Move tickets

(76)

1. Product Design

2. Planning and Scheduling

Threats Controls

1. Poor product design resulting in excess costs

2. Over and under production

1 a. Analysis of costs arising from product design choices

b. Analysis of warranty and repair costs

2 a. Production planning systems b. Review and approve

production orders and schedules

c. Restrict access to orders and schedules

(77)

3. Production Operations

Threats Controls

1. Inventory theft 2. Fixed asset theft 3. Poor performance

4. Suboptimal investments in fixed assets

5. Loss of inventory or fixed assets due to fire or disasters

6. Disruption of operations

1 a. Restrict physical access

b. Document movement of inventory c. Segregation of custody duties

from authorization and recording 2 a. Restrict access to fixed assets

b. Keep detailed records of fixed assets including disposals

3 a. Performance reporting 4 a. Solicit competitive bids

5 a. Insurance and physical safeguards 6 a. Backup and disaster recovery

plans

(78)

Cost Accounting Systems

• Provide information for planning, controlling, and evaluating the performance of production operations

• Provide accurate cost data about products for use in pricing and product mix decisions

• Collect and process the information used to calculate the

inventory and cost of goods sold values that appear in

organization’s financials

(79)

4. Cost Accounting

Threats Controls

1. Inaccurate cost data

2. Inappropriate allocation of overhead costs

3. Misleading reports

1 a. Source data automation b.Data processing integrity

controls

2 a. Time-driven activity-based costing

3 a. Performance metrics

(80)

Key Terms

• Production cycle

• Bill of materials

• Operations list

• Manufacturing resource planning (MRP-II)

• Lean manufacturing

• Master production schedule (MPS)

• Production order

• Materials requisition

• Move ticket

• Computer-integrated manufacturing (CIM)

• Request for proposal (RFP)

• Job-order costing

• Process costing

• Job-time ticket

• Manufacturing overhead

• Activity-based costing

• Cost driver

• Throughput

(81)

Accounting Information Systems

Chapter 16

General Ledger and

Reporting System

(82)

Learning Objectives

• Describe the activities, information needs, and key decisions made in the general ledger and reporting system, explain the general threats in the cycle, and describe the controls that can be used to mitigate those threats.

• Explain the process for updating the general ledger, the threats to that process, and the controls that can be used to mitigate those threats.

• Explain the purpose and nature of posting adjusting entries, the threats to that process, and the controls that can be used to mitigate those threats.

• Explain the process of preparing financial statements, the threats to that process, the controls that can be used to mitigate those threats, and how IT developments such as XBRL can improve the efficiency and effectiveness of preparing financial statements.

• Describe the process for producing various managerial reports, the threats to that process, and how tools like responsibility accounting, the balanced

scorecard, and well-designed graphs can help mitigate those threats.

(83)

General Ledger and Reporting System Process

• Update general ledger

• Post adjusting entries

• Prepare financial statements

• Produce managerial reports

(84)

General Threats Throughout the General Ledger and Reporting Cycle

Threats Controls

1. Inaccurate or invalid general ledger data

2. Unauthorized disclosure of financial statement

b. Restriction of access to G/L c. Review of all changes to G/L

data

(85)

Update General Ledger

Threats Controls

1. Inaccurate updating of general ledger

2. Unauthorized journal entries

1 a. Data entry processing integrity controls

b. Reconciliations and control reports

c. Audit trail creation and review 2 a. Access controls

c. Audit trail creation and review

(86)

Adjusting Entries

• Accruals

– Made at end of accounting period to reflect events that have occurred but are not in the financial statements (e.g., wages payable)

• Deferrals

– Made at end of accounting period to reflect exchange of cash prior to performance of related event (e.g., rent)

• Estimates

– Portion of expenses expected to occur over a number of accounting periods (e.g., depreciation)

• Revaluations

– Entries made to reflect differences between actual and recorded value of an asset or change in accounting principle

• Corrections

– Entries made to counteract effects of errors found in the general ledger

(87)

Post Adjusting Entries

Threats Controls

1. Inaccurate adjusting entries 2. Unauthorized adjusting entries

1 a. Data entry processing integrity controls

b. Spreadsheet error protection controls

c. Standard adjusting entries d. Reconciliations and control

reports

e. Audit trail creation and review 2 a. Access controls

c. Audit trail creation and review

(88)

Prepare Financial Statements Produce Managerial Reports

Threats Controls

1. Inaccurate financial statements

2. Fraudulent financial reporting 3. Poorly designed reports and

graphs

1 a. Processing integrity controls b. Use of packaged software c. Training and experience in

applying IFRS and XBRL d. Audits

2 a. Audits

3 a. Responsibility accounting b. Balanced scorecard

c. Training on proper graph design

(89)

Regulatory & Technological Developments That Affect Financial Reporting

• International Financial Reporting Standards (IFRS)

– Understand the systems implications due to the fact that the IFRS is different in financial reporting than Generally Accepted

Accounting Principles (GAAP)

• eXtensible Business Reporting Language (XBRL)

– Specifically used for communicating financial data (required by the Securities and Exchange Commission (SEC) if public company)

(90)

Managerial Reports & Evaluating Performance

• Responsibility accounting

– Reporting results based upon managerial responsibilities in an organization

• Flexible budget

– Budget formula based upon level of activity (e.g., production levels)

• Balanced scorecard

– Measures financial and nonfinancial performance using four dimensional goals:

 Financial

 Customer

 Internal Operations

 Innovation and Learning

• Graphs

– Data visualization and proper graph design

(91)

Key Terms

• Journal voucher file

• Trial balance

• Audit trail

• XBRL

• Instance document

• Element

• Taxonomy

• Schema

• Linkbases

• Style sheet

• Extension taxonomy

• Responsibility accounting

• Flexible budget

• Balanced scorecard