General Ledger And Business Reporting (GL/BR) Process. 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
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 problemsLearning Objectives
1. Business process feeders send updates to the business reporting department.
2. Treasurer notifies the business reporting department of investing transaction activities.
3. Treasurer notifies the business reporting department of financing transaction activities.
4. Controller notifies the business reporting department of various adjusting entries.
5. Finalized budget figures are sent to the business reporting department from the budgeting department.
6. Adjusted trial balance figures are sent from the business reporting department to the financial reporting officer.
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.
8. Actual and budget figures are sent by the business reporting department to the managerial reporting officer.
9. Financial reporting officer sends GAAP-based financial statements to Treasurer, Controller, and outside parties (owners, banks, SEC)
10. Managerial reporting officer sends performance reports to various managers.
Manual Reports GL updates
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 re-keyed 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-keyingE-Business Angle
Operational stores are financial information stored in databases used to create the chart of accounts, GL and financial reports
Horizontal flows GL updates
Events are processed in various operational systems
Culminates in GL and external business reports
GL and other event information flow upward through responsibility accounting system
Culminates in internal performance reportsSummary of Horizontal and Vertical Information Flows
GL/BR Process: Level 0 DFD GL updates
Typical Controls GL updates
Passwords and access controls
Access logs kept and reviewed
Call back procedures for remote log on
Controls on database/file access
Controls on level of access/privileges, e.g., read-only file access
Data encryption and digital signatures
Backup facilities for extended network failures
File locking/contention controlsIT Control Processes forWorkstation-to-Workstation Networks
Typical Controls GL updates
Server logs kept and reviewed
Standardized file transfer formats
Read-only access to database
Front-end workstations process data relieving server
Data entry to event data store and subsequent batch update to databaseWorkstations Connected to Servers
Section 302 GL updates
Requires CEO and CFO to certify that financial statements contain neither material untrue facts nor omit material facts.
Penalty for violation of section 302 up to 20 years prison and $5 million in fines
Requires financial statements that clearly reflect the economic reality of business events
Defines report on internal control that must be provided with annual report
Requires management assertion and auditor attestation on internal control effectiveness
Requires rapid and current disclosure of information regarding material changes in financial conditionsSarbanes-Oxley Act of 2002