CHAPTER V Physical and Monetary Measures -
Reporting Process, Coding Methods,
and Audit Trails
REPORTING PROCESS
Principles of Reporting:
1. Necesity for concise reports
2. Emphasis on both physical and
monetary measures
3. Frequency of reporting
4. Responsibility reporting
5. Reporting by function
6. Comparative Reporting
7. Exception Reporting
Concise Reports - contain data that
are essential to the performance of of
the recipient’s duties. These reports
are important for two reasons:
 Most operations have relatively
few critical success factors, and a
manager’s attention should be
focused on these factors.
 People’s ability to simultaneously
process multiple data elements
are limited. Thus, reports to
managers should only contain
those that are vital to the
performance of their
responsibilities.
All operating managers find physical
data to be an essential element in
reporting. Managers can both observe
and influence these tangible measures,
while related monetary measures will
often be influenced by other factors
which the same managers have little
or no control.
Frequency of Reporting - the factors
affecting frequency of reporting:
 Significance of the data
Only when data are important (1)
to the detection of an
out-of-control situation (2) to
make a specific decision
 Nature of the activity being
reported on
Nature of the activity affects
behavior of related data.
 Type of data reported (Physical
vs. Monetary)
Responsibility Reporting - is the
process of reporting data to a
manager that measures activities over
which a manger has some authority
and for which he is held responsible.
Functional Reporting - functional
duties of managers.
Comparative Reporting - the
arrangement together of actual data
for a current period with either
budget data for the current period or
actual data for a prior period, thereby
facilitating comparison of the data.
May include data at fixed points in
time (i.e balance sheets).
Exception Reporting - is that only
data reflecting significant deviation
from expected, budgeted, normal
should be reported to managers. Only
those aspects that require their
attention.
 Selection and Sequencing of
records.
XBRL (eXtensible Business
Reporting Language) - internet
standard specifically for business,
reporting, and information exchange.
Its objective is to facilitate the
publication, exchange and processing
of financial and business information.
This is a derivative of XML. Enhances
the usefulness of a data.
XML (eXtensible Markup Language)
- a metalanguage for describing
markup languages; can be used to
model the data structure of an
organization’s internal database.
CODING
Event Coding - uniquely identify
events recorded in AIS.
Codes - are used for identification and
classification.
Numerical Sequence Code -
numbers; simplest coding system.
Block Coding - assigns meaning to
various positions in a code (i.e SSS,
Bank number, chart of accounts).
Group Code - used to represent
complex items or events involving two
or more pieces of related data. The
code consists of zones or fields that
possess specific meaning (i.e zip code).
Express the significance of amounts of
information.
Mnemonic Codes - expresses some
logical association between characters
forming the code and the item being
identified; Abbreviation (i.e ADZU,
Atty.). However, lacks flexibility.
AUDIT TRAIL
Audit Trail - is a set of processing
references that enables the tracing of
an event from its source to its
destination. Consists of codes attached
to data as they flow through the
accounting system. Applicable to
working back.
Reference Identifier - leads an
accountant from a data item’s specific
location in the AIS to its preceding or
successor location. These identifiers
have an ordinal value permitting you
to easily locate a particular identifier
when they are in order.