19/04/2019
Designing Reports &
Reporting
Session 9
Dr Ravi Seethamraju
ACCT6014 Designing Accounting System
Discipline of Accounting
The University of Sydney Business School
Learning outcomes
On completing this session, you will be able to:
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Explain the reporting process including the activities, information
needs, sources, threats and controls
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Identify different report types and explain their key features
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Explain the concepts of responsibility accounting and flexible budgets
in the context of management reporting
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Design a balanced scorecard based reporting for a medium sized firm
Readings:
Ch. 16 in Romney & Steinbart (2018)
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Korkmaz, A. (2008) “Financial Statements and Statutory Reporting” In
Financial Reporting with SAP, pp. 25-75
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Lecture slides
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Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
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Business reporting
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To provide stakeholders with information
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Sources:
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Managers (costs, revenue & performance of
divisions/product/customers)
Internal auditors (maintenance of appropriate controls to safeguard
human, physical and financial resources)
Tax accountant (expenses data)
External bodies – P&L, B/S, CSR report etc.
All sub systems (expenditure, revenue, production, HR)
Info about financing & investing activities
Budget numbers
Adjusting entries
Balanced scorecard
Public databases
Analytics
Types – financial statement, statutory reports (country-specific), Tax
reports (direct tax and indirect tax)
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Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
G/L system & other subsystems
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Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
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Financial Reporting process
Capture and
Record
transactions
Review,
validate &
reconcile
Financial
reporting
Closing
Source
documents
Financial
statements
Trial
balance
Journal
s
Ledger
(t-accounts)
* Trial balance – a final check up before Fin. Statements are prepared;
* In automated accounting systems – data entry is just once – into the
journals, the posting into ledgers is automatic; trial balance not necessary
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Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
Adjusting Entries
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Accruals - Made at end of accounting period to reflect
events that have occurred but are not in the financial
statements (e.g., wages payable)
Deferrals - Made at end of accounting period to reflect
exchange of cash prior to performance of related event
(e.g., rent)
Estimates - Portion of expenses expected to occur over a
number of accounting periods (e.g., depreciation)
Revaluations - Entries made to reflect differences between
actual and recorded value of an asset or change in
accounting principle
Corrections - Entries made to counteract effects of errors
found in the general ledger
Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
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Designing Fin reporting process in an
Automated Integrated System
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Master data governance:
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Harmonizing and unifying the chart of accounts:
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Owned & maintained by a centralized organization;
Standardized maintenance process with clear definition for
validation, acceptance, creation, rejection with clear
responsibility
Ensure data consistency, data quality & correct
customization of data & check lists for creation
Three types of CoA – operational, group & country
Standardizing financial reporting structure
Complying with international accounting standards
through leading ledger and additional ledgers
Automating the reconciliation of intercompany
transactions – with cross-system intercompany reconciliation tool
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Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
Business Reports – types & examples
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Periodic - Non financial:
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Ad hoc (that is, for a specific purpose):
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Which customers have paid by the due date
Do customer discounts help profitability?
What is the profitability of individual products/product
groups/divisions/customers/segments
Exception:
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Payables, Receivables - level
Product innovation, leadership and quality
Market share and growth
Employee skill, morale and productivity
Customer service, loyalty and delivery times
Which customers have exceeded their credit limit?
Combined fin & non-fin - daily, weekly & monthly reports
Other reports – balanced score card and analytics
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Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
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Issues in Designing reports
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Issues in designing reports:
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Availability and timeliness (Periodic or ad hoc)
Inputs (sources of entries) & Audit trail
Data classification & coding (through CoA) & incompatible CoA
Appropriate internal controls (authorities/approvals) or lack of it
Drill-down capability (access, comparability of figures)
Separate reporting structures & separate functional system
Developments & regulatory requirements:
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International Financial Reporting Standards (IFRS) & Generally
Accepted Accounting Principles (GAAP)
eXtensible Business Reporting Language (XBRL) - Specifically used for
communicating financial data (required by the Securities and Exchange
Commission (SEC) if public company)
SBR – Standard Business Reporting in Australia – built-into accounting
software allowing businesses to fill-in forms and submit reports; no
need to re-enter info for multiple reporting obligations
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Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
Managerial Reports & Evaluating Performance
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Responsibility
accounting -
Reporting results
based upon
managerial
responsibilities in an
organization
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Flexible budget Budget formula
based upon level
of activity (e.g.,
production levels)
Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
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Balanced Scorecard & Visualization
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Balanced scorecard:
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Financial, Customer, Internal Operations & Innovation and Learning
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Goals and measures – performance and risk-based
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Cause and effect relationships between these dimensions - leading
and lagging indicators
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Facilitates testing and refining of strategy
Data visualization and Analytics (next week)
Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
Threats & Controls in Reporting system
Threats
Controls
Inaccurate/invalid G/L data
and inaccurate updating
Data entry & processing integrity controls,
restriction of access to G/L, reconciliations, audit
trail creation, review of all changes to G/L data
Unauthorized disclosure of
financial statement
Access controls, Encryption
Loss of destruction of data
Backup and disaster recovery procedures
Inaccurate & unauthorised
adjusting entries
Data entry processing integrity controls, standard
adjusting entries, reconciliations, audit trial
controls; access controls
Inaccurate financial
statements & fraudulent
financial reporting
Processing integrity controls, use of packaged
software, Training/experience in using XBRL,
IFRS; audits
Poorly designed reports
Responsibility reporting, balanced scorecard &
training on data visualization tools & dashboards
Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
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XBRL – financial reporting
What is XBRL
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eXtensible Business Reporting Language (XBRL)
A way to tag data (numerical & non‐numerical) from an accounting info system;
read by different hardware & software combinations regardless of tools used to
create them
Mandated by stock exchanges/regulatory bodies in several countries – China, US,
Europe, Japan, South Korea, Singapore
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Benefits:
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Allows info to flow freely & efficiently – within and outside
Used by bankers, stock exchanges, governments, regulators, firms, analysts &
accountants
Easier preparation, exchange, processing & sharing of info
Real‐time financial reporting
Accountants should know – how to incorporate XBRL tagging in reporting & using
tagging software (e.g.: Dragon Tag, EDGAR Online I‐Metrix, Corefilling, Sage software,
XBRL publisher by SAP, XBRL manager in Oracle, or TagEzee
In Australia it is SBR that is promoted by Governments; XBRL in Europe, Asia and
Americas
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Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
Conclusions & Summary
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Designing reports:
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Reporting is very firm specific; depends on needs of decision
makers and stakeholders; changes as organization and decision
makers change; different types of reports and sources are subsystems, budgets, investing & public databases
Design reports - accurate, timely, organized and easy to follow
meaningful relationships & relate to managerial tasks
Controls in the reporting process – managed by access controls,
audit trail, data entry & processing controls in packaged software
Balanced score card, responsibility accounting & dashboards to
manage performance
Next week:
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Adoption and configuration of an integrated accounting system
Readings:
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Patel (2008) “General Ledger” chapter 2 in Discover SAP Financials
Arif & Tauseef (2008) “SAP Enterprise Structure”
Seethamraju (2019)
Dr Ravi Seethamraju
ACCT6014 Designing Accounting Systems
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