1. General Ledger and Reporting System
Chapter 4: Relational Databases
4/13/2017
General Ledger and Reporting System
UAA – ACCT Accounting Information Systems Dr. Fred Barbee 15
Chapter
Dr. Fred Barbee

2. General Ledger and Reporting Activities
Chapter 4: Relational Databases
4/13/2017
General Ledger and Reporting Activities
Dr. Fred Barbee

3. Chapter 4: Relational Databases
4/13/2017
Objectives
To record all accounting transactions promptly and accurately.
To post these transactions to the proper accounts.
To maintain an equality of debit/credit balances among the accounts.
Dr. Fred Barbee

4. Chapter 4: Relational Databases
4/13/2017
Objectives
To accommodate needed adjusting entries.
To generate reliable and timely financial reports pertaining to each accounting period.
Dr. Fred Barbee

5. Basic Activities (Processes)
Chapter 4: Relational Databases
4/13/2017
Basic Activities (Processes)
Update the general ledger
Post adjusting entries
Prepare financial statements
Produce managerial reports
Dr. Fred Barbee

6. Chapter 4: Relational Databases
4/13/2017
The Accounting Cycle
1. Analyze Transactions
10. Reverse (Optional)
9. Prepare Post-Closing Trial balance
2. Journalize
8. Close
3. Post
7. Prepare Statements
4. Prepare Unadjusted Trial Balance
5. Adjust
6. Prepare Adjusted Trial Balance
Dr. Fred Barbee

7. Update The General Ledger
Chapter 4: Relational Databases
4/13/2017
Update The General Ledger
Updating consists of posting journal entries that originated from two sources:
Accounting subsystems
The treasurer
Dr. Fred Barbee

8. Update The General Ledger
Chapter 4: Relational Databases
4/13/2017
Update The General Ledger
Update the GL
Accounting
subsystems
Journal entry
Journal entry
Treasurer
Journal voucher
General ledger
Dr. Fred Barbee

9. Post Adjusting Entries
Chapter 4: Relational Databases
4/13/2017
Post Adjusting Entries
The second activity in the general ledger system involves posting various adjusting entries.
Adjusting entries originate from the controller’s office, after the initial trial balance has been prepared.
Dr. Fred Barbee

10. Post Adjusting Entries
Chapter 4: Relational Databases
4/13/2017
Post Adjusting Entries
Accruals (wages payable)
Deferrals (rent, interest, insurance)
Estimates (depreciation)
Revaluation (change in inventory method)
Corrections
Dr. Fred Barbee

11. Post Adjusting Entries
Journal voucher
Adjusting entries
Adjusted trial balance
Prepare
financial
statements
Controller
Financial statements

12. Prepare Financial Statements
Chapter 4: Relational Databases
4/13/2017
Prepare Financial Statements
The third activity in the general ledger and reporting system involves the preparation of financial statements.
The income statement is prepared first.
The balance sheet is prepared next.
The cash flows statement is prepared last.
Dr. Fred Barbee

13. Produce Managerial Reports
Chapter 4: Relational Databases
4/13/2017
Produce Managerial Reports
The final activity in the general ledger and reporting system involves the production of various managerial reports.
What are the two main categories of managerial reports?
General ledger control reports
Budgets
Dr. Fred Barbee

14. Produce Managerial Reports
Chapter 4: Relational Databases
4/13/2017
Produce Managerial Reports
Control Report Examples
lists of journal vouchers by numerical sequence, account number, or date
listing of general ledger account balances
Budget Examples
operating budget
capital expenditures budget
Dr. Fred Barbee

15. Produce Managerial Reports
Chapter 4: Relational Databases
4/13/2017
Produce Managerial Reports
Budgets and performance reports should be developed on the basis of responsibility accounting.
Responsibility Accounting involves reporting financial results on the basis of managerial responsibilities within an organization.
Dr. Fred Barbee

16. Responsibility Accounting
Chapter 4: Relational Databases
4/13/2017
A concept that implies that every economic event that affects the organization is the responsibility of and can be traced to an individual.
Responsibility Accounting
Dr. Fred Barbee

17. Responsibility Accounting
Chapter 4: Relational Databases
4/13/2017
Responsibility Accounting
Dr. Fred Barbee

18. Installing Responsibility Accounting
Chapter 4: Relational Databases
4/13/2017
Installing Responsibility Accounting
Create a set of financial performance goals (budgets)
Measure and report actual performance.
Evaluate based on comparison of actual with budget.
Dr. Fred Barbee

19. Responsibility Accounting
Chapter 4: Relational Databases
4/13/2017
Responsibility Accounting
Measures the results of each responsibility center and
Dr. Fred Barbee

20. Responsibility Accounting
Chapter 4: Relational Databases
4/13/2017
Responsibility Accounting
compares those results with some standard or benchmark.
Heh man, that isn‘t funny! Please don’t erase that line, I’m benchmarking!
Dr. Fred Barbee

21. Responsibility Centers
Chapter 4: Relational Databases
4/13/2017
Responsibility Centers
Dr. Fred Barbee

22. Responsibility Center
Chapter 4: Relational Databases
4/13/2017
Responsibility Center
A segment of an organization with authority . . .
To incur and control costs
To earn revenues, and
To invest funds in assets.
Dr. Fred Barbee

23. Responsibility Center . . .
Chapter 4: Relational Databases
4/13/2017
Responsibility Center . . .
A responsibility center can be:
A cost center
A revenue center
A profit center
An investment center
Dr. Fred Barbee

24. Responsibility Centers
A Systems Perspective

25. A firm can be examined in the context of Input  Process  Output
Processing Steps
Within
Information Systems
Data
(Inputs)
Information
(Outputs)
Resources used . . .
Capital . . .
Output . . . DM DL
MOH
Working
Capital
Equipment
Etc.
Goods, Services, Ideas

26. A firm can be examined in the context of Input  Process  Output
Resources are converted through the use of working capital, equipment, etc.
Processing Steps
Within
Information Systems
Data
(Inputs)
Information
(Outputs)
Resources used . . .
Capital . . .
Output . . . DM DL
MOH
Working
Capital
Equipment
Etc.
Goods, Services, Ideas

27. Responsibility Centers:
A Systems Perspective
Input
Output
Process
Control only this
Cost Center

28. Responsibility Centers:
A Systems Perspective
Input
Output
Process
Control only this
Revenue Center

29. Responsibility Centers:
A Systems Perspective
Input
Output
Process
Control these
Profit Center

30. Responsibility Centers:
A Systems Perspective
Input
Output
Process
Control these
Investment Center

31. Control Objectives, Threats & Procedures

32. Chapter 4: Relational Databases
4/13/2017
Control Objectives
Updates to the general ledger are properly authorized.
Recorded general ledger transactions are valid.
Valid, authorized general ledger transactions are recorded.
Dr. Fred Barbee

33. Chapter 4: Relational Databases
4/13/2017
Control Objectives
General ledger transactions are accurately recorded.
General ledger data are safeguarded from loss or theft.
General ledger system activities are performed efficiently and effectively.
Dr. Fred Barbee

34. Threats and Controls in the General Ledger and Reporting System
Process/Activity
Threat
Applicable Control Procedures
Updating the general ledger
Errors
Input and processing controls; reconciliations and control reports; audit trail
Access to general ledger
Loss of confidential data and/or concealment of theft
Access controls; audit trail
Loss or destruction of the general ledger
Loss of data and assets
Backup and disaster recovery procedures
Threats and Controls in the General Ledger and Reporting System

35. Threat 1: Errors in Updating the GL

36. Errors in Updating GL
Can lead to poor decision making based on erroneous information in financial performance reports.
Control procedures fall into three categories:
Input edit and processing controls
Reconciliations and control reports
Maintenance of an adequate audit trail

37. Input Edit and Processing Controls
There are two sources of journal entries for updating the general ledger:
Summary journal entries from other AIS cycles
Direct entries made by the treasurer or controller

38. Input Edit and Processing Controls
Journal entries made by the treasurer and controller are original data entry.
Several types of input edit and processing controls are needed to ensure that they are accurate and complete.

39. Input Edit and Processing Controls
Validity Check
Field checks
Zero-balance checks
Completeness Test
Closed-loop verification
Sign Check

40. Input Edit and Processing Controls
Calculation run-to-run totals to verify accuracy of journal voucher batch processing
Standard adjusting entry file for recurring adjusting entries made each period

41. Reconciliation and Control Report
Reconciliations and control reports can detect if any errors were made during the process of updating the general ledger.
Trial Balance
Comparing the general ledger control account balances to the total balance in the corresponding ledger

42. Reconciliation and Control Report
The audit trail is the path of a transaction through the accounting system.
The audit trail should allow you to do three things . . .

43. Reconciliation and Control Report
Trace any transaction from its original source document to the general ledger and to any report or other document using that data.

44. Reconciliation and Control Report
Trace any item appearing in a report back through the general ledger to its original source document
Trace all changes in general ledger accounts from their beginning balance to their ending balance

45. Threat 2: Unauthorized Access to the GL

46. Unauthorized Access to the GL
Unauthorized access to the general ledger can result in confidential data leaks to competitors or corruption of the general ledger.
It can also provide a means for concealing the theft of assets.

47. Unauthorized Access to the GL
User IDs and passwords
Read-only access to the general ledger
System checks of authorization codes for each journal voucher record before posting

48. Threat 3: Loss or Destruction of the GL

49. Loss or Destruction of the GL
Adequate backup and disaster recover y procedures must be in place to protect the general ledger.
Use of internal and external file labels
Performance of regular backup of the general ledger

50. Integrated Data Model

51. Chapter 4: Relational Databases
4/13/2017
Integrated Data Model
An integrated enterprise-wide data model represents a merging of separate data models.
This merging primarily involves linking each resource with the events that increase and decrease that resource.
Dr. Fred Barbee

52. Integrated Data Model Integrated Data Model
Chapter 4: Relational Databases
4/13/2017
Integrated Data Model
Integrated Data Model
Cash
receipts
Cash
disbursements
(1, 1)
(1, 1)
(1, N)
Cash
(1, N)
Dr. Fred Barbee

53. Integrated Data Model Integrated Data Model
Cash
(0, N)
(1, 1)
Issue
debt
(1, N)
(0, N)
(0, N)
(0, N)
(0, N)
(1, 1)
(1, 1)
(1, 1)
(1, 1)
(1, N)
Pay
employees
Issue
stock
Dividend
payment
Debt
payment

54. Benefits of an Integrated Data Model
Chapter 4: Relational Databases
4/13/2017
Benefits of an Integrated Data Model
What are some benefits of an Integrated data model?
Improved support for decision making
Integration of financial and nonfinancial information
Improved internal reporting
Dr. Fred Barbee

55. Benefits of an Integrated Data Model
Chapter 4: Relational Databases
4/13/2017
Benefits of an Integrated Data Model
Development of a virtual value chain occurs in three stages.
What are these stages?
Visibility
Mirroring
Building new customer relationships
Dr. Fred Barbee