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General Ledger And Business Reporting (GL/BR) Process

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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

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General Ledger


Business Reporting

(GL/BR) Process

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

Learning Objectives


gl br is a spoke on ais wheel
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 Sarbanes-Oxley
functions of gl br
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
Functions of GL/BR, Cont’d.
  • BR
    • preparing general-purpose, external financial statements
    • ensuring that F/S conform to GAAP
    • generating web-based forms
    • generating ad hoc & predetermined business reports
gl br horizontal perspective
GL/BR Horizontalperspective

1. Business process feeders send updates to the business reporting department.

gl br horizontal perspective1
GL/BR Horizontalperspective

2. Treasurer notifies the business reporting department of investing transaction activities.

gl br horizontal perspective2
GL/BR Horizontalperspective

3. Treasurer notifies the business reporting department of financing transaction activities.

gl br horizontal perspective3
GL/BR Horizontalperspective

4. Controller notifies the business reporting department of various adjusting entries.

gl br horizontal perspective4
GL/BR Horizontalperspective

5. Finalized budget figures are sent to the business reporting department from the budgeting department.

gl br horizontal perspective5
GL/BR Horizontalperspective

6. Adjusted trial balance figures are sent from the business reporting department to the financial reporting officer.

gl br horizontal perspective6
GL/BR Horizontalperspective

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.

gl br horizontal perspective7
GL/BR Horizontalperspective

8. Actual and budget figures are sent by the business reporting department to the managerial reporting officer.

gl br horizontal perspective8
GL/BR Horizontalperspective

9. Financial reporting officer sends GAAP-based financial statements to Treasurer, Controller, and outside parties (owners, banks, SEC)

gl br horizontal perspective9
GL/BR Horizontalperspective

10. Managerial reporting officer sends performance reports to various managers.

e business angle
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 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-keying

E-Business Angle

Operational stores are financial information stored in databases used to create the chart of accounts, GL and financial reports

integrated systems perspective including erp
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
responsibility accounting reporting system
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
summary of horizontal and vertical information flows1
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

Summary of Horizontal and Vertical Information Flows
gl br process context diagram
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
GL Hierarchical Coding
  • 1113 Cash in Bank
    • 1xxx = assets
    • x1xx = current assets
    • xx1x = cash accounts
    • xxx3 = cash in bank
  • --------------------------------------------------
    • 1111 might mean petty cash1112 might mean change fund1121 might mean trade accounts receivable1122 might mean receivables from officers
chart of accounts
Chart 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
technology enabled issues in br
Technology-enabled Issues in BR
  • FR modules in ERP systems
  • Balanced Scorecard
  • Business Intelligence
  • Business Reporting via the Internet
  • Public Databases
  • Object-oriented databases
erp financial module
ERP Financial Module
  • Many options available for processing business events that affect multiple processes
  • Not all users do not need all these options
  • For security reasons and for ease of use, we limit the access to menu items to only those needed a user to perform his or her responsibilities
  • We limit the menu options that appear
  • We allow a user to have different privilege levels for different information—that is, view access, write access, entry access, and/or change access
  • Carefully set up the system limitations for that specific user
  • Each user has their own ID and password
balanced scorecard
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
business intelligence
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
extensible business reporting language xbrl
Extensible Business Reporting Language (XBRL)
  • XBRL is a form of 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
public databases
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
it control processes for workstation to workstation networks
Typical Controls

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

Diskless workstations

Data encryption and digital signatures

Removable drives

Backup facilities for extended network failures

File locking/contention controls

IT Control Processes forWorkstation-to-Workstation Networks
workstations connected to servers
Typical Controls

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 database

Workstations Connected to Servers
sarbanes oxley act of 2002
Section 302

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

Section 401

Requires financial statements that clearly reflect the economic reality of business events

Section 404

Defines report on internal control that must be provided with annual report

Requires management assertion and auditor attestation on internal control effectiveness

Section 409

Requires rapid and current disclosure of information regarding material changes in financial conditions

Sarbanes-Oxley Act of 2002
current environment of financial reporting
Current Environment of Financial Reporting
  • Today’s environment demands rapid access to information
    • Investors want information sooner
    • Sarbanes-Oxley demands “rapid and current” disclosures
    • SEC has shortened the time companies have for reporting certain events
    • Real-time reporting of events summarized in the GL is just over horizon