Chapter 7: The Impact of Technology on Financial Control Flashcards
What is the core function of the financial control department? (FCD)
Manage the financial resources of the business
What is the difference between management accounting and statutory reporting?
Management accounting (product control) produces P&L and balance sheets for individual business units, controls financial risk
Statutory reporting collates these into a firm wide report
What 2 technology applications does the FCD use?
Corporate general ledger, all assets, liabilities, income and expenditure of the firm
Regulatory accounting system - used to calculate the information needed to send to regulator
How do trade systems impact financial control?
Trading system can be used to calculate the commissions to be paid by clients
Trade processing errors, technical and human
Interest calculation
What are some functions of the main settlement system?
instruct trades
send trade confirmations to clients
reporting trade details to regulators
COACs
position management
receiving reports from clearing houses
How does the reconciliation system work?
Takes in feeds about transactions from the main settlement system, and compares it to data from settlement agents and CSDs
What is the definition of the General Ledger?
Nominal ledger
Main accounting record of a business which uses the double-entry bookkeeping convention.
How does double-entry bookkeeping work?
Idea that each transaction is recorded in at least 2 ledger accounts
Debit and a Credit
What is the benefit of double-entry bookkeeping?
Means that the accuracy of accounts can be checked quickly
sum of debits = sum of credits
What is a “configuration origin code” in the general ledger?
Advises which of the systems produced the transaction
How are security accounts split out in general ledgers?
By exchange LSE, NYSE
then by sub currency that it settled with on exchange GBP, USD, EUR
POS-LSE/GBP/SONY
How do systems decide on which account to post ledger movements to?
Explosion table breaking up the trade
If you input the variables you can assign an account to update
What is the sub-sub-account used for in account selection?
Security account or client account from where the securities were bought/sold
What does stock record allow firms to do?
Use double-entry bookkeeping to record stock quantities and balances
What is the issue with using credit and debit terminology with stock record?
‘A purchase of stock is a debit of money and a credit of stock’.
or
‘A purchase of stock is a debit of money and also a debit of stock’.
