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Understanding General Ledger and Business Reporting: An Introduction to Accounting Information Systems

This chapter introduces the pivotal roles of General Ledger (GL) and Business Reporting (BR) in accounting information systems. It outlines how business processes contribute to GL updates, supports internal and external reporting, and highlights the limitations of traditional GL systems in modern contexts. Readers will learn how PC hardware and software can facilitate GL/BR implementation while examining control issues within these systems. Key functions of GL, including data accumulation and classification, as well as the purpose of accurate financial reporting, are discussed to enhance understanding.

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Understanding General Ledger and Business Reporting: An Introduction to Accounting Information Systems

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Presentation Transcript

  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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