1. Accounting systems design & evaluation
9434SB
19 April 2002
Class 9

2. Exercises There are various system tools used in documenting systems.
Describe these tools and describe the circumstances under which they are most useful
Distinguish between system flow charts and program flow charts
Compare the use of DFDs to the use of flowcharts
Explain the difference between a context diagram, a logical DFD and a physical DFD

3. This lecture
Functions/activities, input forms/ source documents and output reports for each subsystem
Payroll and human resource information system
Customer billing and payment
Purchase order and payment to suppliers
Fixed assets

4. DFD for the human resources cycle
Time sheet
Approval
Personnel
Action Forms
Payroll
Department
Human
Resources
Payroll
Dept
Cheque
Register
Time sheet
Deduction
Rpt & Payroll
Summaries
Prepare
paycheque
Employee
TB pg 224
Paycheque
And earning
Summary
Payroll
Master File
Prepare
reports
A.T.O.
Tax reports

5. Payroll system
Objectives: records and processes data used to pay employees for their services. A payroll application calculates the pay due employees, prints paycheques and maintains cumulative earnings records
A separate system to allow for:
Withholding of deductions eg income tax and union fees
Application controls to detect fraud
Typically processed in batch mode

6. Activities in payroll systems
Record/ input payroll transactions for the period
Update payroll master file
Update tax rate and deductions (eg PAYG, HECS, Super)
Validate time and attendance data
Prepare the payroll
Disperse the payroll
Calculate employer-paid benefit and taxes (eg payroll tax, FBT)
Disperse payroll taxes and miscellaneous deductions
System flowchart: refer Illu Boockholdt pg 679

7. Payroll system (cont’d)
Inputs
Personnel records and action forms from HR
Approved time sheets or timecard (Boockholdt Illu )
Deduction authorisation signed by employees
Outputs
Paycheques (Boockholdt Illu )
Pay advice slip (Boockholdt Illu )
Employee listing
Payroll register (Boockholdt Illu )
Payroll master file (Boockholdt Illu and 19-24)
Cheque registers
Tax reports
Deduction reports
Personnel records: are records which affects the status of an employee’s pay eg employee hiring, a change of status or a resignation.
Time sheets: A recording of time spent by workers. They are generally required for hourly workers. If a company uses a job cost system, time sheets for employees need to be cross-referenced with time recorded on individual jobs.
Pay advice slip: provided to employee showing all necessary details including gross salaries, deductions and net pay. Some pay slips may include employee year to date earning records.
Payroll register: a report printed prior to payment of wages, listing all employees who are due to be paid, their gross wages, deductions made and the net amount due.
Payroll master file:This file contains one record for each current or past employee and contains data necessary for determining payroll deductions and submitting earnings information required in government reports.

8. Sample GL entries generated by a payroll system
Dr marketing salaries
Dr Warehouse salaries
Dr Manufacturing overhead
Cr Payroll control
to record the gross payroll costs of employee services
Dr Payroll control
Cr PAYG payable
Cr Union fees payable
to record the payroll deductions for the period

9. Other activities in the Human Resources Management System
Recruitment and hiring
Training
Assignment of job responsibilities
Evaluation of performance
Discharge of employees

10. Files maintained in a human resource information system
Employee payroll master file
Personnel reference and history file
Time record transaction file
Compensation reference file
Personnel planning file
Employee payroll master file: contains earnings records of the employees and employees details.
Personnel reference and history file: contains non-financial and financial data concerning each employee.
Time record transaction file: copies of time records used in payroll processing for a particular pay period.
Compensation reference file: Table of pay rates and salary levels for various job description
Personnel planning file: provides the basis for planning for future personnel needs.

11. DFD for the billing and receipts cycle
Sales Analysis
Reports
Administration
Sales
AR Master File
Cash Receipts
Forecast
Sales
Order
Invoice
Aging Reports
Bad Debt Reports
Customers
Receive
payment
Debit/ Credit Memo
Manage
Customer A/C
TB: pg 222
System flowcharts: refer Boockholdt Illustrations and 17-26
Deposit Slips
& Cheques
Cheque &
Remittance
Advice
Sales Return Notification
Stock
Control
Receiving
Dept
Customers
F.I.

12. Sample subsystems supporting the billing and receipts cycle
Order entry system
Shipping system
Billing system
Cash receipt system

13. Objectives of the billing & cash receipt systems
The purposes of the billing application are to prepare sales invoices for merchandise that has been shipped and to record the sale in the appropriate accounts
The purpose of the cash receipt system is to record payments made by customers for credit sales. It also deletes paid invoice records from the invoice detail file.

14. Inputs and activities of the billing and cash receipt systems
Customer purchase orders
Sales order (Boockholdt Illu. 17-3)
Remittance advices (Boockholdt Illu. 17-5)
Credit memo authorisation
Activities
Generate sales
Receive payments
Manage customer accounts
Remittance advice A document returned by customers with their payments.
Credit memo. A document that records a sales return or sales allowance.

15. Outputs of the billing and cash receipt systems
Financial statement information
Customer Billing Statement (Boockholdt Illu. 17-8) or Invoices (Boockholdt Illu. 17-4)
Aging Report (Boockholdt Illu. 17-9)
Bad Debts Report
Cash Receipts Forecast
Customer Listing
Sales Analysis Reports (Boockholdt Illu )
Credit Memos
Customer billing statement. A list of all transactions in a customer’s account during a specified time period, usually a month. It is mailed to the customer.
Aging report A document which shows outstanding balance categorised according to how long it has existed. Usually an aging report shows amounts less than 31 days, and those 31 to 60 days and 61 to 90 days.
Sales Analysis Report: summarises sales revenue,costs and profit margin by customer, product sales person, or sales district.

16. DFD of the purchases cycle
Stock
Control
Receive
goods or
services
Delivery Notice
Order
Form
Receiving Rpt
Receiving Report
Production
Departments
Purchase
goods or
services
Purchase Order
Merchant
Source: TB page 223
System flowcharts: refer Boockholdt Illustrations and 18-24
Notice of Receipt
Payment
Maintain
creditors
Cash Requirement
Forecast
Purchase Analysis
Admin
Creditors
Master File

17. Sample subsystems in the purchases cycle
Purchasing system
Receiving system
Voucher system
Cash disbursement system
Inventory and Material Requisition systems
Receiving applications are to ensure that all receipts of material, supplies, and equipment are authorised and to record their receipt in the accounting records.
Voucher system to record the obligation to pay a supplier. Inputs to this system are vendor invoices and records from the receipts, open purchase order, and purchase order detail files. This is an accounts payable system that assigns a unique identifying number to each vendor invoice

18. Objectives of the purchasing and cash disbursement systems
The purposes of the purchasing application are to identify materials, supplies, and equipment for acquisition; to select a supplier for these items; and to ensure that the items are requested and received.
The purpose of the cash disbursement system is to ensure that payments are made to vendors in the proper amount and at the proper time.

19. Inputs and activities of the purchases cycle
Procurement ie. Purchase goods and services
Track and receive goods and services
Maintain creditors and make payments
Inputs
Order Form or Purchase Requisition (Boockholdt Illu. 18-3)
Notice of Receipt or Receiving Report (Boockholdt Illu. 18-5)
Delivery Notice
Debit memo
Debit memo A document sent by a purchaser to a vendor that documents a purchase return.
Purchase requisition A document prepared by someone in an organisation requesting that the purchasing department acquire goods and services.
Receiving report A document prepared in the receiving department to record the receipt of goods from a vendor

20. Outputs of the purchasing and cash disbursement systems
Financial statement information
Purchase orders (Boockholdt Illu. 18-4)
Vendor cheques (Boockholdt Illu. 18-7)
Cheque Register Boockholdt Illu. 18-9)
A Vendor Control Report (Boockholdt Illu. 18-8)
Discrepancy Reports
Cash Requirement Forecast (Boockholdt Illu )
Purchase Analysis Reports
Open Invoices Report (Boockholdt Illu )
Voucher Aging report (Boockholdt Illu )
Purchase Order A document prepared in the purchasing department and mailed to a vendor requesting that the vendor sell goods or services on credit.
Vendor Control Report summarises the changes made to the payment file sorted by vendor
Cash Requirement Report lists vouchers by the date they are due to be paid. IT aids the accounts payable department in planning cash flows and in identifying which invoices should be paid promptly to receive discounts and maintain good relations with vendors.
Open Invoices Report lists unpaid vendor invoices as of the date of the report.
Voucher Ageing Report summarises vouchers by how long they have existed.

21. DFD for the non-current assets cycle
Shipping Report
Invoice
Supplier
User departments
& Management
Record disposal of
assets
Request
For
Disposal
Buyer
Non-current Asset Change Form
Purchase Requisition
Update
Reports
Record repair, maintenance &
changes in
locations
Invoice
Record cost of new
assets
Depreciate
Non-current
assets
Non-Current Assets File

22. Objectives and outputs of the non-current asset system
To ensure effective and accurate processing of the purchase, maintenance, valuation and disposal of an organisation’s fixed assets.
Outputs include:
Financial Statement information
Fixed Asset Register
Depreciation Register
Repair and Maintenance Report
Retired Assets Report

23. Inputs and activities of the non-current assets system
Purchase requisition
Request for disposal
Non-Current Asset Change Form
Invoice
Activities
Record cost of new assets
Depreciate non-current assets
Record repair, maintenance and change in asset location
Record disposal of assets

24. In summary
Functions/activities, input forms/ source documents and output reports for each subsystem
Payroll and human resource information system (Notes: 9-4 to 9-10;TB: 5.1 to 5.4, Boockholdt pg )
Customer billing and payment (Notes: 9-11 to 9-15; TB: 6.1; Boockholdt pg )
Purchase order and payment to suppliers (Notes: 9-16 to 9-20; TB 6.1; Boockholdt pg )
Non-current assets (Notes: 9-21 to 9-23; TB: 6.1)

25. Exercises TB Chapter 5 – Questions 1 to 4
ACCA Paper 5 Exam (Jun 2000): Question 9
Model Exam Question 5
Compile a system flowchart for the granting of credit in a large wholesaling organisation