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Chapter 16

General Ledger and Reporting System


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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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General Ledger and Reporting

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General Ledger and Reporting


Primary function is to collect and organize
The accounting cycle activities
Financing activities
Investing activities
Budget activities
Adjustments

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General Ledger and Reporting Activities


1. Update general
ledger
2. Post adjusting
entries
3. Prepare financial
statements
4. Produce
management
reports

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General Ledger and Reporting General


Threats
Inaccurate or invalid general ledger data
Unauthorized disclosure of financial statement
Loss or destruction of data

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General Ledger and Reporting


General Controls
Data processing integrity controls
Restriction of access to general ledger
Review of all changes to general ledger data
Access controls
Encryption
Backup and disaster recovery procedures

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Update General Ledger Threats


Inaccurate updating of general ledger
Unauthorized journal entries

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Update General Ledger Controls


Data entry processing integrity controls
Reconciliations and control reports
Audit trail creation and review
Access controls
Reconciliations and control reports
Audit trail creation and review

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Post Adjusting Entries Threats


Inaccurate adjusting entries
Unauthorized adjusting entries

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Post Adjusting Entries Controls


Data entry processing integrity controls
Spreadsheet error protection controls
Standard adjusting entries
Reconciliations and control reports
Audit trail creation and review
Access controls
Reconciliations and control reports
Audit trail creation and review
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Prepare Financial Statement Threats


Inaccurate financial statements
Fraudulent financial reporting

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Prepare Financial Statement Controls


Processing integrity controls
Use of packaged software
Training and experience in applying IFRS and XBRL
Audits

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eXtensible Business Reporting


Language (XBRL)
Without

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With

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XBRL

Instance Document

Taxonomy

Contains data from financial statements

Marked up or tagged with data describing the data


Each piece of data in XBRL is an element

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

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Produce Management Reports


Threats
Poorly designed reports and graphs

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Produce Management Report


Controls
Responsibility accounting
Balanced scorecard
Training on proper graph design

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Balanced Scorecard
A report that provides a multidimensional perspective of
organizational performance
Reflecting four perspectives of the organization
Financial
Customer
Internal operations
Innovation and learning
Showing goals and measures
Targets
Actual

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