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Chapter 1

Chapter 1. Chapter 14. General Ledger And Business Reporting (GL/BR). Introduction to Accounting Information Systems. Learning Objectives. See how business processes feed data required for GL updates Understand how GL/BR supports external & internal reporting functions

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Chapter 1

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  1. Chapter 1 Chapter 14 General Ledger And Business Reporting (GL/BR) Introduction to Accounting Information Systems

  2. 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

  3. 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

  4. Horizontalperspective VPFinance Controller Treasurer Businessreporting department Budgetingdepartment Financial reportingofficer Managerial reportingofficer

  5. 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

  6. 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.

  7. Responsibility Accounting Performance Reporting

  8. GL/FR - level 0 DFD

  9. GL 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

  10. 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

  11. Technology-enabled Issues in BR • FR modules in ERP systems • Balanced Scorecard • Business Intelligence • Business Reporting via the Internet • Public Databases • Object-oriented databases

  12. 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

  13. 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

  14. 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

  15. 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.

  16. 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

  17. 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

  18. 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

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