Professional Documents
Culture Documents
Chapter 16
General Ledger and
Reporting System
Copyright © 2018 Pearson Education, Ltd. Chapter 16: General Ledger and Reporting System Slide 1 - 2
General Ledger and Reporting System
Process
• Update general ledger
• Post adjusting entries
• Prepare financial statements
• Produce managerial reports
Copyright © 2018 Pearson Education, Ltd. Chapter 16: General Ledger and Reporting System Slide 1 - 3
General Threats Throughout the General Ledger
and Reporting Cycle
Threats Controls
1. Inaccurate or invalid general 1 a. Data processing integrity
ledger data controls
2. Unauthorized disclosure of b. Restriction of access to G/L
financial statement c. Review of all changes to G/L
data
3. Loss or destruction of data
2 a. Access controls
b. Encryption
3 a. Backup and disaster recovery
procedures
Copyright © 2018 Pearson Education, Ltd. Chapter 16: General Ledger and Reporting System Slide 1 - 4
Update General Ledger
Threats Controls
1. Inaccurate updating of general 1 a. Data entry processing
ledger integrity controls
2. Unauthorized journal entries b. Reconciliations and control
reports
c. Audit trail creation and review
2 a. Access controls
b. Reconciliations and control
reports
c. Audit trail creation and review
Copyright © 2018 Pearson Education, Ltd. Chapter 16: General Ledger and Reporting System Slide 1 - 5
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
Copyright © 2018 Pearson Education, Ltd. Chapter 16: General Ledger and Reporting System Slide 1 - 6
Post Adjusting Entries
Threats Controls
1. Inaccurate adjusting entries 1 a. Data entry processing
2. Unauthorized adjusting entries 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
b. Reconciliations and control
reports
c. Audit trail creation and review
Copyright © 2018 Pearson Education, Ltd. Chapter 16: General Ledger and Reporting System Slide 1 - 7
Prepare Financial Statements
Produce Managerial Reports
Threats Controls
1. Inaccurate financial 1 a. Processing integrity controls
statements b. Use of packaged software
2. Fraudulent financial reporting c. Training and experience in
applying IFRS and XBRL
3. Poorly designed reports and
d. Audits
graphs
2 a. Audits
3 a. Responsibility accounting
b. Balanced scorecard
c. Training on proper graph
design
Copyright © 2018 Pearson Education, Ltd. Chapter 16: General Ledger and Reporting System Slide 1 - 8
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)
Copyright © 2018 Pearson Education, Ltd. Chapter 16: General Ledger and Reporting System Slide 1 - 9
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
Copyright © 2018 Pearson Education, Ltd. Chapter 16: General Ledger and Reporting System Slide 1 - 10
Key Terms
• Journal voucher file • Schema
• Trial balance • Linkbases
• Audit trail • Style sheet
• XBRL • Extension taxonomy
• Instance document • Responsibility accounting
• Element • Flexible budget
• Taxonomy • Balanced scorecard
Copyright © 2018 Pearson Education, Ltd. Chapter 16: General Ledger and Reporting System Slide 1 - 11