Module 5 - Accounting Information Systems And Controls: Part Two Flashcards
What are accounting processes?
Business processes that relate to an area of the financial statements
Examples of accounting processes
Sales cycle
Purchases cycle
Payroll cycle
Stock cycle
Fixed assets
Month-end processes
What are the phases of the stock cycle?
Phase 1: Receive Goods
Phase 2: Stock Movements
Phase 3: Stock Holding
Phase 4: Stock Valuation
Phase 5: Order Fulfilled and Despatched
In the stock cycle, which department deals with the Receive Goods phase?
Warehouse
In the stock cycle which department deals with the Stock Movements phase?
Warehouse
In the stock cycle which department deals with the Stock Holding phase?
Warehouse
In the stock cycle which department deals with the Stock Valuation phase?
Finance
In the stock cycle which department deals with the Order Fulfilled and Despatched phase?
Warehouse
What are the phases of the fixed asset cycle?
Phase 1: Identify the need for asset
Phase 2: Seek management or board approval
Phase 3: Order asset
Phase 4: Receive asset / transfer ownership
Phase 5: Receive invoice
Phase 6: Make payment
What are the phases of the Payroll Cycle?
Phase 1: Work done and time recorded
Phase 2: Calculation of payroll liability
Phase 3: Payment of payroll liability
What are the phases of Monthly Financial Reporting?
Phase 1: Month-end journals
Phase 2: Month-end reconciliations
Phase 3: Stock counts
Phase 4: Production of management accounts
Phase 5: Production of financial statements
What can be used to indicate where stock is?
Goods Received Notes (‘GRNs’) and Goods Despatch Notes (‘GDN’)
For stock count to be performed effectively, what procedures should management ensure?
Clear instructions
Stock movements ceased until completed
Stock count sheets provided
Counted by two members of staff
Signed by both counters
Marked once counted
Any differences investigated
What is the Human Resources Cycle?
Involved the engagement and termination of personnel and the creation and maintenance of master data (personnel files)
Is it important to segregate responsibilities of payroll and HR?
If so why?
Yes
To ensure no one individual has access rights to all data and procedures
What documents are involved with the work done and time recorded phase in Payroll Phases?
Timesheets
What Documentation is involved in the Calculation of payroll liability in Payroll Phases?
HR master file for hourly rate or salary
What documentation is involved in the Payment of payroll liability phase in Payroll Phases?
Payroll listing / summaries
Payslips
Organisations payroll transactions may include:
Salaries and hourly wages
Commissions
Bonuses
PAYE deductions
NI deductions
Pension contributions
Employee benefits (eg health insurance)
What are the main elements of monthly financial reporting?
Month-end journals
Month-end reconciliations
Stock counts
Production of management accounts
Production of financial statements
What are month end journals?
Some examples as well?
Transactions processed through the nominal ledger
Depreciation expense and acc dep’n
Cost of sales and stock
Accrued and prepaid expenses
Allowance for doubtful debts
Correction of errors
Relevant objectives for month-end journals
Necessary journals are processed
Journals are accurate and agree to supporting documentation
Journal entries processed are genuine
What should reconciliations be performed for
All control accounts
Examples of key reconciliations
Trade debtors / receivables in nominal ledger to the aged debtors ledger
Trade creditors / payables in nominal ledger to the aged creditors ledger
Bank reconciliation
Payroll reconciliation
Main reconciling issues arise due to what?
Timing differences
Manual entries
Relevant objectives for reconciliations
All necessary are completed
All reconciling items are investigated and corroborated
Reconciliations are completed accurately and consistently
Production of management accounts can be done automatically via reporting software, through the export of ledger data or by manual input to a spreadsheet?
Yes
How regularly are financial statements produced?
Once a year (sometimes twice if half-yearly financial statements)
Production of statutory accounts tend to be a more “what” process?
Manual
