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