IAAUDCIS CHAPTER 6: Transaction processing and financial reporting systems overview Flashcards
Economic event that affects the assets and equities of the firm
Financial Transactions
Time lag between the due to credit relations with suppliers
Expenditure Cycle
Time lag between the due to credit relations with customers
Revenue Cycle
Used to capture and formalize transaction data needed for transaction processing
Source Documents (Manual Systems Accounting Record)
The result of transaction processing
Product Documents (Manual Systems Accounting Record)
A product document of one system that becomes a source document for another system
Turnaround Documents (Manual Systems Accounting Record)
A record of chronological entry
Journals (Manual Systems Accounting Record)
Specific classes of transactions that occur in high frequency
Special Journals (Manual Systems Accounting Record)
Nonrecurring, infrequent and dissimilar
General Journal (Manual Systems Accounting Record)
A book of financial accounts
Ledger (Manual Systems Accounting Record)
Shows activity for each account listed on the chart of accounts
General Ledger (Manual Systems Accounting Record)
Shows activity by details for each account type
Subsidiary Ledger (Manual Systems Accounting Record)
Audit Trail
Source Document - Journal - General Ledger - Financial Statements
Financial Statements - General Ledger - Journal - Source Document
Generally contains account data (General Ledger and Subsidiary File)
Master File (Computer Files)
A temporary file containing transactions since the last update
Transaction File (Computer Files)
Contains relatively constant information used in processing (tax tables, customer addresses)
Reference File (Computer Files)
Contains past transactions for reference purposes
Archive Files (Computer Files)
is a documentation technique to represent the relationship between entities in a system
Entity Relationship Diagram (ERD)
Represents the numerical mapping between entities (one to one, one to many, many to many)
Cardinalities
Uses symbols to represent the processes, data sources, data flows and entities in a system.
Data Flow Diagrams (DFD)
Illustrates the relationship among processes and the documents that flow between them
Documents Flowcharts
Used to represent the relationship between the key elements – input sources, programs and output products of computer systems
System Flowcharts
illustrates the logic used in programs
Program Flowcharts
- client based server
- process transactions real time
- relational database tables
- high degree of process integration & data sharing
- mainframe based
- uses batch processing
Modern Systems
- mainframe- based applications
- batch oriented
- uses flat files for data storage
- uses hierarchical and network databases
- single user environment data storage (discourages information integration)
Legacy Systems
Transaction - Update Program - Master - Backup Program - Backup Master - Recovery Program - Master
Database Backup Procedures
- a group of similar transactions that are accumulated over time and then processed together.
- independent from one another
- time lag exists between the event and the processing
Batch Processing
Keystroke - Edit Run - Sort Run - Update Run - Backup Procedure
Steps in Batch Processing/Sequential File
source documents are transcribed by clerk for processing later
Keystroke
identifies clerical errors and places them into an error file
Edit Run
places transaction file in the same order as the master file using a primary key
Sort Run
changes the value of appropriate fields in the master file to reflect the transaction
Update Run
original master continues to exist and a new master file is created
Backup Procedure
Advantages of Batch Processing
- can increase efficiency
- provides control over the transaction processing
- process transactions individually at the moment the economic event occurs
- have no time lag between the economic event and the processing
- require greater resources than batch processing since it requires dedicated processing capacity however, cost differentials are decreasing
- often have longer systems development
Real-Time systems
Sequential Codes
Block Codes
Group Codes
Alphabetic Codes
Mnemonic Codes
Data Coding Schemes
hub connected to other systems
sources of input for other systems
flows as feedback
provides data to MRS & FRS
General Ledger System
principal FRS file based on chart of accounts
General Ledger Master File
used for comparative history file
General Ledger History File
all journal vouchers of the current period
Journal Voucher File
journal vouchers of past period audit trails
Journal Voucher History File
financial data by responsibility center for MRS
Responsibility Center File
Budget data by responsibility centers for MRS
Budget Master File
Listing of transactions
Allocation of expenses to cost enters
Comparison of account balances from prior periods
General Ledger Analysis
Analysis of sale
Analysis of cash
Analysis of receivables
Managerial reports
Transaction Authorization
Segregation of duties
Access Controls
Accounting Records
Independent Verification
GL/FRS Control Issues
Details of each journal voucher posted to the G/L
Journal Voucher Listing
The effects of journal voucher postings on G/L accounts
General Ledger Change Report
Format used to produce Web Pages
HTML: Hyper Text Markup Language
meta-language for describing markup languages
XML: eXtensible Markup Language
XML-based language for standardizing methods for preparing, publishing and exchanging financial information (Financial Statements)
XBRL: eXtensible Business Reporting Language
incorrect taxonomy results in invalid mapping that may cause material misrepresentation of financial data
Taxonomy Creation
ensure that appropriate taxonomy and tags have been applied
Validation of instance documents
impact on auditor responsibility as a consequence of real-time distribution of financial statements
Audit Scope and timeframe
