General Ledger and External Reporting Flashcards
What does the General Ledger and Financial reporting cycle do?
Summarises, adjusts, and reports on data from all the previous operational cycles
OBJECTIVE - to synthesise and report data
How does Online Banking support the General Ledger process?
Helpful for when preparing bank reconciliations (double checking the book keeping) because it links the organisation’s books and the bank statements.
Also automatically includes things non-specialists normally wouldn’t know about eg bank fees, interest charged
What is eXtensible Business Reporting Language (XBRL) and why is it beneficial?
A data standard used when generating financial reports
Allows data to be seamlessly transferred in multiple formats to multiple agencies and ensures the integrity of the underlying data
What data does the GL and Financial Reporting cycle extract?
Accounts Receivable
- asset
Accounts Payable
- liability
Payroll Data
- liability
Production Cycle Data
Overall these determine income and expenses
What are the four key activities in the GL and Financial Reporting cycle?
- Prepare budgets
- Update the general ledger
- Record GL adjustments
- Produce reports
What are the key decisions that need to be made?
Budgetary considerations
- are there adjustments required to meet targets?
Accounting policies and procedures
What are the two steps in preparing budgets (activity 1)?
Determine revenue and expenditure items
What are the two steps in updating the general ledger (activity 2)?
Extract and validate data
Post transactions
What are the two types of accounting recording?
Accrual basis - transaction happens
Cash flow basis - cash must change happens
What are budgeting and planning tools?
These tools enable organisation’s to build budgets efficiently and effectively by:
- allowing past performance to be analysed (spikes or trends)
- allowing forecasting and predicting future outcomes
- update data automatically
- allowing all departments to update a single centralised spreadsheet to enter budget information
What are the two steps in recording the GL adjustments (activity 3)?
Prepare adjustment journals
Post adjustment journals
What are the risks in preparing adjustment journals?
Errors in journal entries
- need documentation to prove and justify adjustments
What are the risks in producing reports?
Business sensitive information is revealed to unauthorised parties
If email
- can be intercepted or sent to the wrong person
What are the controls for producing reports?
Access Controls - Only people who have authorisation to manage the report can view and edit it
What are the KPIs for determining and recording budget estimates?
Budget variance
Budget preparation time
Complaints received regarding budget errors
What are the KPIs to validate and correctly transfer all relevant transactional data?
Number of data errors detected
What are the KPIs for ensuring all adjusting journal entries are accurately prepared and independently authorised?
What are the KPIs to ensure all reports are well designed and contain accurate and relevant data?
What is eXtensible Business Reporting Language (XBRL)?
Used for digital financial reporting around the globe
XBRL adds electronic tags to each financial amount with a description of the data (ie metadata) that can be searched by web browsers (ie easily accessed)
Create, share, distribute
- Code and bring meaning and context to financial information
- Allows transparent and comparable data
- Seamless sharing of information between accountants as all software can access and interpret/define information the same way (because of the electronic tags)
- Analysts enables near real time financial analysis (compare companies across jurisdictions and local markets)
What are the benefits of XBRL?
- reduce costs
- improve access
- increase productivity
- improve data quality and validity
- reduce errors
- more secure information transfer
- automated software updates
Who uses XBRL?
Stock exchanges
Companies
Governmental and regulatory agencies
Banks and banking regulators
Financial and investment analysts
Accountants
What is the process of using XBRL?
- Store data
- Make a report
- Add tags
- Use reports
What are the disadvantages of XBRL?
Evolving standards require conformity to changing standards
No requirement for auditors to provide assurance (they don’t have to audit XBRL - gives way to hackers)
Expensive transition
What is integrated reporting?
A report that contains financial and non-financial information about a company’s performance (to tell a holistic store about the company)
