Chapter
1
Chapter 14
General
Introduction
to Ledger
Accounting InformationAnd
Systems
Business Reporting
(GL/BR)
1
Learning Objectives
• See how business processes feed data required
for GL updates
• Understand how GL/BR supports external &
internal reporting functions
• Recognize limitations of traditional GL
approach in contemporary systems
• Appreciate how PC hardware/software
platforms can be used to implement GL/BR
• Examine control issues and potential problems
Functions of GL/BR
• GL
– accumulating data, classifying data by GL
accounts, recording data in those accounts
– fueling FR, BR and other reporting subsystems
• BR
– preparing general-purpose, external financial
statements
– ensuring that F/S conform to GAAP
– generating web-based forms
– generating ad hoc & predetermined business
reports
3
Horizontal perspective
VP
Finance
Treasurer
Business
reporting
department
Controller
Budgeting Financial reporting Managerial reporting
department
officer
officer
4
Horizontal information flows
• Business process feeders send updates to
business reporting department
• Treasurer notifies BR of investing transactions
• Treasurer notifies BR of financing transactions
• Controller notifies BR of adjusting entries
• Budgeting dept. send final budget figures to BR
• BR accounting dept. sends Adjusted T/B to
financial reporting officer
5
Horizontal information flows (2)
• BR sends actual & budget figures to budgeting
department
• BR sends actual & budget figures to managerial
reporting officer
• Financial reporting officer sends GAAP-based
financial statements to Treasurer, Controller,
and outside parties (owners, banks, SEC)
• Managerial reporting officer sends performance
reports to various managers.
6
7
Responsibility Accounting
Performance Reporting
8
9
GL invoices
update
B/AR/CR
process
GL estimated
bad debts
update
GL
write-off
update
GL sales
retrun update
GL/FR Context Diagram
OE/S
process
GL inventory
sale update
Standard
costs
update
IPS
process
Cost of
finished
goods
GL cash
receipts update
Cost
variances
update
Treasurer
GAAP-based
financial
statements
GL payable
update
P/AP/CD
process
Controller
General Ledger/
Business Reporting
GL cash
disbursements
update
External
parties
GL inventory
received update
Treasurer
Controller
Investing
transactions
update
Financing
transactions
update
Adjusting entry
journal vouchers
Budget &
actual trial
balance
Finalized
budget
Budgeting
department
Budgeting
department
Managerial
reporting
officer
10
GL/FR - level 0 DFD
11
GL Coding
• 1113 Cash in Bank
–
–
–
–
1xxx
x1xx
xx1x
xxx3
=
=
=
=
assets
current assets
cash accounts
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
12
Charts of Accounts
• Must be flexible to meet the firm’s financial
and managerial reporting needs
• For a multi-entity firm, there is need to code
for departments, geographical regions,
product lines, divisions, and special reporting
entities
• Should accommodate “rolling up” or
consolidating accounts into statements using
different forms
13
Technology-enabled Issues in BR
•
•
•
•
•
•
FR modules in ERP systems
Balanced Scorecard
Business Intelligence
Business Reporting via the Internet
Public Databases
Object-oriented databases
14
FR modules in ERP systems
• Many options available for processing
business events that affect multiple
processes
• Options controlled to permit only users with
pertinent interest to record events
• User access to ERP database also restricted
to “need to know” basis
15
Balanced Scorecard
• Methodology for assessing organization’s
business performance via
–
–
–
–
Financial
Internal business processes
Customers
Innovation and improvement activities
• Functionality included in applications by all
major ERP vendors
16
Business Intelligence
• Integration of statistical and analytical tools
with decision support technologies
• Facilitates complex analyses of data
warehouses by managers and decision
makers
• Typical module in ERP systems
17
Extensible Business Reporting
Language (XBRL)
• XML-based language consisting of a set of
tags used to unify presentation of business
reporting information into a single format
• Easily read by many software packages
• Can be easily searched by web browsers
• Enables easy uploading and downloading of
information to other software packages for
update, analysis, etc.
18
Public Databases
• Aid to financial reporting officers in
determining BR treatments
• National Automated Accounting Research
System (NAARS)
• The Internet may be viewed as one huge
public database
19
Object-oriented Databases
• Widely used in ERP systems
• Permit rapid and flexible summarization of
database information into various reports
• Can easily specify predetermined report
forms and see automatic reports in
predetermined format
20
Learning Objectives
• See how business processes feed data required
for GL updates
• Understand how GL/BR supports external &
internal reporting functions
• Recognize limitations of traditional GL
approach in contemporary systems
• Appreciate how PC hardware/software
platforms can be used to implement GL/BR
• Examine control issues and potential problems