Chapter 16

General Ledger and Reporting System

16-1
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 Learning Objectives
 Describe the information processing operations required to
update the general ledger and to produce reports for
internal and external users.

 Identify the major threats in general ledger and reporting

activities and evaluate the adequacy of various control
procedures for dealing with them.

 Understand the implications of new IT developments, such

as XBRL, and changes in external reporting requirements,
such as IFRS, for the design and operation of the general
ledger and reporting system.

 Discuss how tools such as responsibility accounting,

balanced scorecards, and graphs can be used to provide
information managers need to effectively monitor
performance.

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 General Ledger and Reporting

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 General Ledger and Reporting

 Primary function is to collect and organize

 The accounting cycle activities
 Financing activities
 Investing activities
 Budget activities
 Adjustments

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 General Ledger and Reporting Activities

1. Update general
ledger

2. Post adjusting
entries

3. Prepare financial
statements

4. Produce
management
reports

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 General Ledger and Reporting General
Threats

 Inaccurate or invalid general ledger data

 Unauthorized disclosure of financial statement

 Loss or destruction of data

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 General Ledger and Reporting
General Controls
 Data processing integrity controls

 Restriction of access to general ledger

 Review of all changes to general ledger data

 Access controls

 Encryption

 Backup and disaster recovery procedures

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 Update General Ledger Threats

 Inaccurate updating of general ledger

 Unauthorized journal entries

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 Update General Ledger Controls

 Data entry processing integrity controls

 Reconciliations and control reports

 Audit trail creation and review

 Access controls

 Reconciliations and control reports

 Audit trail creation and review

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 Post Adjusting Entries Threats

 Inaccurate adjusting entries

 Unauthorized adjusting entries

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 Post Adjusting Entries Controls

 Data entry processing integrity controls

 Spreadsheet error protection controls

 Standard adjusting entries

 Reconciliations and control reports

 Audit trail creation and review

 Access controls

 Reconciliations and control reports

 Audit trail creation and review

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 Prepare Financial Statement Threats

 Inaccurate financial statements

 Fraudulent financial reporting

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 Prepare Financial Statement Controls

 Processing integrity controls

 Use of packaged software

 Training and experience in applying IFRS and XBRL

 Audits

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 eXtensible Business Reporting
Language (XBRL)
Without With

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 XBRL
 Instance Document
 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

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 Produce Management Reports
Threats
 Poorly designed reports and graphs

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 Produce Management Report
Controls
 Responsibility accounting

 Balanced scorecard

 Training on proper graph design

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 Balanced Scorecard

 A report that provides a multidimensional perspective of

organizational performance
 Reflecting four perspectives of the organization
 Financial
 Customer
 Internal operations
 Innovation and learning
 Showing goals and measures
 Targets
 Actual

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