Financial reporting and Management reporting systems – Flashcards

The source of input to the GL with the manager offering a degree of control against unauthorized GL entries

The principal file in the GLS database and is based on the chart of accounts FRS draws upon the GL master to produce financial statements

provides a record of all GL transactions and replaces the traditional general journal

contains journal vouchers of past periods for the audit trail

contains financial data by responsibility centres for MRS reporting

contains budget data by responsibility centre

The primary data source for the FRS

Financial reporting is mandatory

- provides management with information needed for planning and controlling business activities - draws upon financial and non financial data from operations as well as traditional GL data

General ledger analysis - listing of trans - allocation of expenses Financial statements - balance sheet - income statement - statement of cash flows Managerial reports - analysis of sales - analysis of cash - analysis of receivables Chart of accounts

- improperly prepared journal entries - unposted journal entries - debits not equal to credits - subsidiary not equal to GL controla ccounts - poor audit trail - lost or damaged data

Transaction Authorization - journal vouchers must be authorized by a manager at the source dept Segregation of duties - GL clerks should not: - have record keeping responsibility for subsidiary ledgers - prepare journal vouchers - have custody of asserts Access controls: unauthorized access to GL can result in errors, fraud, and misrepresentations in fin statements. Accounting records - trace source documents from inception to financial statements

Transaction processing applications summarize and capture transactions in journal vouchers where they are held.

each transaction posted directly to the general ledger and a journal voucher is created concurrently Journal voucher does not authorize a Gl entry, it provides a posting reference and audit trail.

1. defective audit trail 2. unauthorized access to the general ledger 3. GL accounts that are out of balance with the subsidiary 4. incorrect GL account balances because of unauthorized/incorrect journal vouchers.

Transaction authorization - journal vouchers must be authorized by a manager Segregation of duties - Gl clerks should not have recordkeeping resposisbility over subsidiary ledgers. Access controls - unauthorized GL access can cause errors, fraud and misrepresentation Accoutning records - audit trail ensures transactions can be accurately traced. Independent verification - gl department provides this step within the accounting information system

produce financial and nonfinancial information needed by management to "plan, evaluate, control" Provides formal means for monitoring the internal controls

Reports must have value or information content. They should reduce the level of uncertainty associated with a problem facing the decision maker,