Chapter 16: General Ledger and Reporting System
Learning Objectives Describe the information processing operations required to update the general ledger and to produce reports for internal and external users. Identify the major threats in general ledger and reporting activities and evaluate the adequacy of various control procedures for dealing with them. Understand the implications of new IT developments, such as XBRL, and changes in external reporting requirements, such as IFRS, for the design and operation of the general ledger and reporting system. Discuss how tools such as responsibility accounting, balanced scorecards, and graphs can be used to provide information managers need to effectively monitor performance.
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Chapter 16General Ledger and Reporting SystemCopyright © 2012 Pearson Education16-1Learning ObjectivesDescribe the information processing operations required to update the general ledger and to produce reports for internal and external users.Identify the major threats in general ledger and reporting activities and evaluate the adequacy of various control procedures for dealing with them.Understand the implications of new IT developments, such as XBRL, and changes in external reporting requirements, such as IFRS, for the design and operation of the general ledger and reporting system.Discuss how tools such as responsibility accounting, balanced scorecards, and graphs can be used to provide information managers need to effectively monitor performance.Copyright © 2012 Pearson Education16-2General Ledger and ReportingCopyright © 2012 Pearson Education16-3General Ledger and ReportingPrimary function is to collect and organizeThe accounting cycle activitiesFinancing activitiesInvesting activitiesBudget activitiesAdjustmentsCopyright © 2012 Pearson Education16-4General Ledger and Reporting ActivitiesUpdate general ledgerPost adjusting entriesPrepare financial statementsProduce management reportsCopyright © 2012 Pearson Education16-5General Ledger and Reporting General ThreatsInaccurate or invalid general ledger dataUnauthorized disclosure of financial statementLoss or destruction of dataCopyright © 2012 Pearson Education16-6General Ledger and Reporting General ControlsData processing integrity controlsRestriction of access to general ledgerReview of all changes to general ledger dataAccess controlsEncryptionBackup and disaster recovery proceduresCopyright © 2012 Pearson Education16-7Update General Ledger ThreatsInaccurate updating of general ledgerUnauthorized journal entriesCopyright © 2012 Pearson Education16-8Update General Ledger ControlsData entry processing integrity controlsReconciliations and control reportsAudit trail creation and reviewAccess controlsReconciliations and control reportsAudit trail creation and reviewCopyright © 2012 Pearson Education16-9Post Adjusting Entries ThreatsInaccurate adjusting entriesUnauthorized adjusting entriesCopyright © 2012 Pearson Education16-10Post Adjusting Entries ControlsData entry processing integrity controlsSpreadsheet error protection controlsStandard adjusting entriesReconciliations and control reportsAudit trail creation and reviewAccess controlsReconciliations and control reportsAudit trail creation and reviewCopyright © 2012 Pearson Education16-11Prepare Financial Statement ThreatsInaccurate financial statementsFraudulent financial reportingCopyright © 2012 Pearson Education16-12Prepare Financial Statement ControlsProcessing integrity controlsUse of packaged softwareTraining and experience in applying IFRS and XBRLAuditsCopyright © 2012 Pearson Education16-13eXtensible Business Reporting Language (XBRL)WithoutWithCopyright © 2012 Pearson Education16-14XBRLInstance DocumentContains data from financial statementsMarked up or tagged with data describing the dataEach piece of data in XBRL is an elementTaxonomy Set of files defining the various elements and the relationships between themA schemaContains the definitions of every element that could appear in an instance documentLinkbasesDescribes relationships between elementsReferenceIdentifies relevant authoritative pronouncementsCalculationSpecifies how to combine elementsPresentationHow to group elementsLabelAssociates human-readable labels with elementsCopyright © 2012 Pearson Education16-15Produce Management Reports ThreatsPoorly designed reports and graphsCopyright © 2012 Pearson Education16-16Produce Management Report ControlsResponsibility accountingBalanced scorecardTraining on proper graph designCopyright © 2012 Pearson Education16-17Balanced ScorecardA report that provides a multidimensional perspective of organizational performanceReflecting four perspectives of the organizationFinancialCustomerInternal operationsInnovation and learningShowing goals and measuresTargetsActualCopyright © 2012 Pearson Education16-18
