1. General Ledger and Reporting System
Chapter 16
General Ledger and Reporting System

2. General Ledger and Reporting

3. General Ledger and Reporting
Primary function is to collect and organize
The accounting cycle activities
Each accounting subsystem provides information about regular transaction.
Financing activities
Investing activities
The treasurer provides information about financing and investing activities, such as the issuance or retirement of debt and equity instruments and the purchase or sale of investment securities.
Budget activities
Provided by budget department
Adjustments
The controller provides adjusting entries

4. General Ledger and Reporting Activities
Basic activities performed in the general ledger and reporting cycle
Update general ledger
Post adjusting entries
Prepare financial statements
Produce management reports

5. General Ledger and Reporting General Threats
Inaccurate or invalid general ledger data
Unauthorized disclosure of financial statement

6. General Ledger and Reporting General Controls
Inaccurate or invalid general ledger data
Data processing integrity controls
Restriction of access to general ledger
Review of all changes to general ledger data

7. General Ledger and Reporting General Controls
Unauthorized disclosure of financial statement
Access controls
Encryption

8. General Ledger and Reporting General Controls
Loss or destruction of data
Backup and disaster recovery procedures

9. Update General Ledger
Posting journal entries that originate from two sources:
Accounting subsystems.
By means of summary journal entries
Treasurer
Update general ledger for non routine transactions
Journal voucher file – contains the information that would be found in the general journal in a manual accounting system.
Date of the entry, debit, credit, and amount.

10. Update General Ledger
The following types of input edit and processing controls are needed to ensure that the entries are accurate and complete
A validity check – to ensure that general ledger accounts exist for each account number referenced in a journal entry.
Field (format) checks - to ensure that the amount field in the journal entry contains only numeric data.
A zero-balance check - to verify the total debits equal total credits in a journal entry.
A completeness test - to ensure that all pertinent data are entered, especially the source of the journal entry.
Closed-loop verification - matching account numbers with account descriptions, to ensure that the correct general ledger account is being accessed.

11. Update General Ledger
The following types of input edit and processing controls are needed to ensure that the entries are accurate and complete
A sign check – of the general ledger account balance, once updating is completed, to verify that the balance is of the appropriate nature (debit or credit)
Calculating run-to-run totals – to verify the accuracy of journal voucher batch processing

12. Update General Ledger Reconciliations and control reports
Trial balance
Control account balances & subsidiary balances total
Close all temporary accounts (including suspense or clearing accounts)
The audit trail
Trace any transaction from its original source document (whether paper or electronic) to the journal entry that updated the general ledger and to any report or other document using the data. This provides a means to verify that all authorized transactions were recorded.
Trace any item appearing in a report back through the general ledger to its original source document (whether paper or electronic). This provides a means to verity that all recorded transactions were indeed authorized and that they were recorded correctly.

13. Update General Ledger Threats
Inaccurate updating of general ledger
Unauthorized journal entries

14. Update General Ledger controls
Inaccurate updating of general ledger
Data entry processing integrity controls
Reconciliations and control reports
Audit trail creation and review

15. Update General Ledger controls
Unauthorized journal entries
Access controls
Reconciliations and control reports
Audit trail creation and review

16. Post Adjusting Entries Threats
Inaccurate adjusting entries
Unauthorized adjusting entries

17. Post Adjusting Entries controls
Inaccurate adjusting entries
Data entry processing integrity controls
Spreadsheet error protection controls
Standard adjusting entries
Reconciliations and control reports
Audit trail creation and review

18. Post Adjusting Entries controls
Unauthorized adjusting entries
Access controls
Reconciliations and control reports
Audit trail creation and review

19. Prepare Financial Statement Threats
Inaccurate financial statements
Fraudulent financial reporting

20. Prepare Financial Statement controls
Inaccurate financial statements
Processing integrity controls
Use of packaged software
Training and experience in applying IFRS and XBRL

21. Prepare Financial Statement controls
Fraudulent financial reporting
Audits

22. eXtensible Business Reporting Language (XBRL)
Without
With

23. XBRL Instance Document Taxonomy Linkbases
Contains data from financial statements
Marked up or tagged with data describing the data
Each piece of data in XBRL is an element
Taxonomy
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

24. Produce Management Reports Threats
Poorly designed reports and graphs

25. Produce Management Report Controls
Responsibility accounting
Balanced scorecard
Training on proper graph design

26. Balanced Scorecard
A report that provides a multidimensional perspective of organizational performance (example: page 499)
Reflecting four perspectives of the organization
Financial
Customer
Internal operations
Innovation and learning
Showing goals and measures
Targets
Actual