General Ledger And Business Reporting (GL/BR) Process 1
Learning Objectives • • • • •
Illustrate how the business processes feed data required for GL updates Explain how GL/BR reporting capabilities support an organization’s external & internal reporting functions
Analyze the limitations of the traditional GL approach in contemporary systems Describe how client/server architecture implements GL/BR Analyze control issues and Control plans associated with client/server hardware and software used to implement the GL and related business reporting extensions Evaluate potential problems in operating the GL and possible solutions to those problems
GL/BR is a Spoke on AIS Wheel • The GL/BR process – Assembles financial information for both internal and external users – Depends on process controls for accuracy and completeness – Relies on pervasive controls for system security – Documentation of effective controls is required by SarbanesOxley
Functions of GL/BR • GL – accumulating data,
classifying data by GL accounts, recording data in those accounts – fueling FR, BR and other reporting subsystems
Functions of GL/BR, Cont’d. • BR – preparing generalpurpose, external financial statements – ensuring that F/S conform to GAAP – generating webbased forms – generating ad hoc & predetermined business reports
GL/BR Horizontal perspective 1. Business process feeders send updates to the business reporting department.
GL/BR Horizontal perspective 2. Treasurer notifies the business reporting department of investing transaction activities.
GL/BR Horizontal perspective 3. Treasurer notifies the business reporting department of financing transaction activities.
GL/BR Horizontal perspective 4. Controller notifies the business reporting department of various adjusting entries.
GL/BR Horizontal perspective 5. Finalized budget figures are sent to the business reporting department from the budgeting department.
GL/BR Horizontal perspective 6. Adjusted trial balance figures are sent from the business reporting department to the financial reporting officer.
GL/BR Horizontal perspective 7. Actual and budget figures are sent from the BR department to the budgeting department; the actual results will be one of the inputs used in formulating next period’s budgets. 12
GL/BR Horizontal perspective 8. Actual and budget figures are sent by the business reporting department to the managerial reporting officer.
GL/BR Horizontal perspective 10. Managerial reporting officer sends performance reports to various managers.
E-Business Angle Operational stores are financial information stored in databases used to create the chart of accounts, GL and financial reports •
Manual Reports – The old method of manually preparing financial reports – Financial reports are comprised of text and data from the operational data stores formatted as financial statements – Often data had to be rekeyed for each different report created
• XBRL Enabled Reports – Operational store data contains descriptive (semantic) tags – XBRL enabled report reads descriptive tag and merges data into report – Data from one data store can be used to generate many different reports including Web reports without re-keying
Integrated Systems Perspective Including ERP • Events summarized automatically by the system eliminating the need for a separate GL process – The GL is simply a report summarizing transactions by account and by date in ascending order
• Treasurer still enters investment and financing transactions into treasury module • Controller still enters adjusting entries • Financial reports are generated by the system using ad hoc queries or pre-established reports
Internal and External Business Reporting Flows
Responsibility Accounting/Reporting System • Duties of managerial reporting officer – Reports to assist internal management decision making – Performance reports comparing actual performance with budgeted performance – Reports are most detailed at lowest levels of management, least detailed at highest levels of management – It ties into the concept of responsibility accounting 19
Responsibility Accounting Performance Reporting
Summary of Horizontal and Vertical Information Flows
Summary of Horizontal and Vertical Information Flows • Horizontal flows – Events are processed in various operational systems – Culminates in GL and external business reports
• Vertical Flows – GL and other event information flow upward through responsibility accounting system – Culminates in internal performance reports
GL/BR Process: Context Diagram • Various feeder processes provide event information • Source of internal and external financial reports
GL/BR Process: Level 0 DFD • Detail of common GL/BR processes
GL Hierarchical Coding • 1113 Cash in Bank – 1xxx
cash in bank
• -------------------------------------------------– 1111 might mean petty cash 1112 might mean change fund 1121 might mean trade accounts receivable 1122 might mean receivables from officers