The General Ledger System
transaction authorization
Journal vouchers must be authorized by a manager at the source department
role of the JV in real time GL systems
each transaction is posted directly and the JV is made concurrently. provides a reference for the audit trail, linking GL summary account to transactions
FRS - the primary recipients of financial statement information are
external users, such as stockholders, creditors, and government agencies
GL/FRS Internal Controls
transaction authorization, segregation of duties, access controls, accounting records, independent verification
The role of the JV in batch GL systems
transaction processing apps summarize and capture transaction in JVs where they are held, reviewed, and later posted to the GL. JVs are the authority and source of GL postings
GL history file
used for comparative financial support
GLS Reports
GL analysis, financial statements, managerial reports, chart of accounts
segregation of duties
GL clerks should not have recordkeeping responsibility for special journals or subsidary ledgers, prep or authorize JVs, or have custody of physical assets
independent verifivation
GL dept reconciles JVs and summaries; MGMT reviews JV listing, GL change report, and the trial balance; external auditors test the audit trail leading up to the F/S
files in the GLS data base
GL master file, GL history file, JV file, JV history file, Responsibility center file, budget master file
Financial reporting procedures
1. capture the transaction 2. record in special journal 3. post to subsidary ledger 4. post to GL 5. prep unadjusted trial balance 6. making adjustng entries 7. journalize and post adjusting entries 8. prep the adjusted final balance 9. prep financial statements 10. journalize and post the closing entries 11. prep the post closing trial balance
access controls
SOX requires controls that limit database access to only authorized individuals
GL/FRS risks
a defective audit trail (missing docs), unauthorized access to the GL, GL accounts are out of balance with subsidary accounts, incorrect GL account balance because of unauthorized or incorrect JV
The GLS is
a hub connected to the other systems of the firm through information flows
JV listing
a listing that provides relevant details about each JV posted to the GL/FRS
GLS Reports - Managerial reports
analysis of sales, cash, and receivables
GLS Reports - financial statements
balance sheet, income statement, statement of cash flows
budget master file
budget data by responsibility centers for MRS
FR procedures simplifies
capture the transaction and record in appropriate journal, post to subsidiary ledger and GL, prep unadjusted trial balance and make journalize/post the adjusting entries, prep the financial statements, journalize and post the closing entries and prep the post closing trial balance
GLS Reports - chart of accounts
coded listing of accounts
functions of the GLS/Financial reporting system
collect transaction data promptly and accurately, classify/code data and accounts, validate collected transactions/maintain accounting controls, process transaction data, store transaction data, generate timely financial reports
journal voucher file
compilation of all journal vouchers current posted to the general ledger
financial reporting is the...
final step in the overall accounting process that begins in the transaction cycles
responsibility center file
financial data by responsibility centers for MRS
summaries of the transaction cycles
flow into the GLS and become sources of input for the MRS and FRS
transaction cycles process
individual events that are recorded in special journals and subsidiary accounts
journal voucher history file
journal vouchers of past periods for audit trail
GLS Reports - GL analysis
listing of transaction, allocation of expenses to cost centers, comparison of account balances from prior periods, trial balances
GL change report
presents the effects of JV transactions on each of the GL accounts
GL master file
principal FRS file based on chart of accounts
accounting records
the audit trail should be able to trace source documents from inception to financial statements
The journal voucher
the source of input to the GL; identifies the financial amounts and affected GL accounts