Presentation on theme: "Accounting systems design & evaluation"— Presentation transcript:
1 Accounting systems design & evaluation 9434SB19 April 2002Class 9
2 Exercises There are various system tools used in documenting systems. Describe these tools and describe the circumstances under which they are most usefulDistinguish between system flow charts and program flow chartsCompare the use of DFDs to the use of flowchartsExplain the difference between a context diagram, a logical DFD and a physical DFD
3 This lectureFunctions/activities, input forms/ source documents and output reports for each subsystemPayroll and human resource information systemCustomer billing and paymentPurchase order and payment to suppliersFixed assets
4 DFD for the human resources cycle Time sheetApprovalPersonnelAction FormsPayrollDepartmentHumanResourcesPayrollDeptChequeRegisterTime sheetDeductionRpt & PayrollSummariesPreparepaychequeEmployeeTB pg 224PaychequeAnd earningSummaryPayrollMaster FilePreparereportsA.T.O.Tax reports
5 Payroll systemObjectives: 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 recordsA separate system to allow for:Withholding of deductions eg income tax and union feesApplication controls to detect fraudTypically processed in batch mode
6 Activities in payroll systems Record/ input payroll transactions for the periodUpdate payroll master fileUpdate tax rate and deductions (eg PAYG, HECS, Super)Validate time and attendance dataPrepare the payrollDisperse the payrollCalculate employer-paid benefit and taxes (eg payroll tax, FBT)Disperse payroll taxes and miscellaneous deductionsSystem flowchart: refer Illu Boockholdt pg 679
7 Payroll system (cont’d) InputsPersonnel records and action forms from HRApproved time sheets or timecard (Boockholdt Illu )Deduction authorisation signed by employeesOutputsPaycheques (Boockholdt Illu )Pay advice slip (Boockholdt Illu )Employee listingPayroll register (Boockholdt Illu )Payroll master file (Boockholdt Illu and 19-24)Cheque registersTax reportsDeduction reportsPersonnel 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 salariesDr Warehouse salariesDr Manufacturing overheadCr Payroll controlto record the gross payroll costs of employee servicesDr Payroll controlCr PAYG payableCr Union fees payableto record the payroll deductions for the period
9 Other activities in the Human Resources Management System Recruitment and hiringTrainingAssignment of job responsibilitiesEvaluation of performanceDischarge of employees
10 Files maintained in a human resource information system Employee payroll master filePersonnel reference and history fileTime record transaction fileCompensation reference filePersonnel planning fileEmployee 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 descriptionPersonnel planning file: provides the basis for planning for future personnel needs.
11 DFD for the billing and receipts cycle Sales AnalysisReportsAdministrationSalesAR Master FileCash ReceiptsForecastSalesOrderInvoiceAging ReportsBad Debt ReportsCustomersReceivepaymentDebit/ Credit MemoManageCustomer A/CTB: pg 222System flowcharts: refer Boockholdt Illustrations and 17-26Deposit Slips& ChequesCheque &RemittanceAdviceSales Return NotificationStockControlReceivingDeptCustomersF.I.
12 Sample subsystems supporting the billing and receipts cycle Order entry systemShipping systemBilling systemCash 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 accountsThe 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 ordersSales order (Boockholdt Illu. 17-3)Remittance advices (Boockholdt Illu. 17-5)Credit memo authorisationActivitiesGenerate salesReceive paymentsManage customer accountsRemittance 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 informationCustomer Billing Statement (Boockholdt Illu. 17-8) or Invoices (Boockholdt Illu. 17-4)Aging Report (Boockholdt Illu. 17-9)Bad Debts ReportCash Receipts ForecastCustomer ListingSales Analysis Reports (Boockholdt Illu )Credit MemosCustomer 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 StockControlReceivegoods orservicesDelivery NoticeOrderFormReceiving RptReceiving ReportProductionDepartmentsPurchasegoods orservicesPurchase OrderMerchantSource: TB page 223System flowcharts: refer Boockholdt Illustrations and 18-24Notice of ReceiptPaymentMaintaincreditorsCash RequirementForecastPurchase AnalysisAdminCreditorsMaster File
17 Sample subsystems in the purchases cycle Purchasing systemReceiving systemVoucher systemCash disbursement systemInventory and Material Requisition systemsReceiving 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 servicesTrack and receive goods and servicesMaintain creditors and make paymentsInputsOrder Form or Purchase Requisition (Boockholdt Illu. 18-3)Notice of Receipt or Receiving Report (Boockholdt Illu. 18-5)Delivery NoticeDebit memoDebit 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 informationPurchase 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 ReportsCash Requirement Forecast (Boockholdt Illu )Purchase Analysis ReportsOpen 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 vendorCash 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 ReportInvoiceSupplierUser departments& ManagementRecord disposal ofassetsRequestForDisposalBuyerNon-current Asset Change FormPurchase RequisitionUpdateReportsRecord repair, maintenance &changes inlocationsInvoiceRecord cost of newassetsDepreciateNon-currentassetsNon-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 informationFixed Asset RegisterDepreciation RegisterRepair and Maintenance ReportRetired Assets Report
23 Inputs and activities of the non-current assets system Purchase requisitionRequest for disposalNon-Current Asset Change FormInvoiceActivitiesRecord cost of new assetsDepreciate non-current assetsRecord repair, maintenance and change in asset locationRecord disposal of assets
24 In summaryFunctions/activities, input forms/ source documents and output reports for each subsystemPayroll 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 9Model Exam Question 5Compile a system flowchart for the granting of credit in a large wholesaling organisation