REVENUE CYCLE: SALES TO CASH COLLECTIONS

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DEFINITION OF REVENUE CYCLE

The recurring set of business activities and data processing operations associated with: * Provides goods and services to customers * Collects cash in payment for those sales

Primary Objective: * Provide the right product * In the right place * At the right time for the right price

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BASIC REVENUE CYCLE ACTIVITIES & GENERAL THREATS

BASIC REVENUE CYCLE ACTIVITIES

1. Sales order entry 2. Shipping 3. Billing 4. Cash collections

GENERAL REVENUE CYCLE THREATS

1. Inaccurate or invalid master data 2. Unauthorized disclosure of sensitive information 3. Loss or destruction of master data 4. Poor performance

GENERAL REVENUE CYCLE CONTROLS

1. Data processing integrity controls 2. Restriction of access to master data 3. Review of all changes to master data 4. Access controls 5. Encryption 6. Backup and disaster recovery procedures 7. Managerial reports

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SALES ORDER ENTRY ACTIVITIES AND THREATS | CONTROL | 1. Take order 1. Incomplete/inaccurate orders 2. Invalid orders | 3. Data entry edit controls 4. Restriction of access to master data 5. Digital signatures or written signatures | 2. Check and approve credit * Uncollectible accounts | * Credit limits * Specific authorization to approve sales to new customers or sales that exceed a customer’s credit limit * Aging of accounts receivable | 3. Check inventory availability * Stock outs or excess inventory * Loss of customers | * Perpetual inventory control system * Use of bar-codes or RFID * Training * Periodic physical counts of inventory * Sales forecasts and activity reports * CRM systems, self-help Web sites, and proper evaluation of customer service ratings |

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SHIPPING

ACTIVITIES AND THREATS | CONTROL | 1. Picking and packing the order * Picking the wrong items or the wrong quantity * Theft of inventory | * Bar-code and RFID technology * Reconciliation of picking lists to sales order details * Restriction of physical access to inventory * Documentation of all inventory transfers | 2. Shipping the order 6. Shipping errors (delay or failure to ship, wrong quantities, wrong items, wrong addresses, duplication | * Reconciliation of shipping documents with sales orders, picking lists, and packing slips * Use RFID systems to identify delays * Data entry edit controls (if shipping data entered on terminals) |

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BILLING
ACTIVITIES AND THREATS | CONTROL | 1. Invoicing * Failure to bill customer * Billing errors ( pricing mistake, bill items not shipped, or unbilled item shipped) | * Separation of billing and shipping functions (segregation of duties) * Periodic reconciliation of invoices with sales orders, picking tickets, and shipping documents * Configuration of system to automatically enter pricing data * Restriction of access to pricing master data * Data entry edit controls | 2. Updating accounts receivable * Posting errors in accounts receivable * Inaccurate or invalid credit memos | * Data entry controls (validity check, field check, batch total, closed-loop verification) * Mailing of monthly statements to customers * Segregation of duties of credit memo authorization from both sales order entry and customer account maintenance |

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CASH COLLECTIONS

ACTIVITIES AND THREATS | CONTROL | 1. Theft of cash 2. Cash flow problems | * Separation of cash handling function from accounts receivable and credit functions * Regular reconciliation of bank account with recorded amounts by someone independent of cash collections procedures * Use of EFT, FEDI, and lockboxes to minimize handling of customer payments by employees * Prompt, restrictive endorsement of all customer checks * Having two people open all mail likely to contain customer payments * Use of cash registers * Daily deposit of all cash receipts * Lockbox arrangements, EFT, or credit cards * Discounts for prompt payment by customers * Cash flow budgets |
SEGREGATION OF DUTIES IN CASH COLLECTION

Following duties/functions should be done by two different persons: 1. Handling cash/checks and posting remittances to customer account 2. Handling cash/checks and authorizing credit memos 3. Handling cash/checks and reconciling the bank statement

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DOCUMENT INVOLVED

1. SALES ORDER * The document created during sales order entry process. * Sales order use to record the customer order data. * Sales order listing the information of the items numbers, quantities, prices and term of sales.

2. CREDIT LIMIT * The maximum allowable credit account balance for each customer, based on past credit history and ability to pay.

3. ACCOUNT RECEIVABLE AGING REPORT * A report listing customer account balance by length of time outstanding. * The report provides useful information for evaluating current credit policies, for estimating bad debts and for deciding whether to increase the credit limit for specific customer or not.

4. BACK ORDER * A document that created to authorize the purchasing department to purchase the items or production department to initiate production of items, when there is insufficient inventory in the warehouse to meet with customer orders.

5. PICKING TICKET * Document that authorize the inventory control function to release the merchandise to the shipping department. * The picking ticket is often printed so that the item numbers and quantities are listed in the sequence. This is can be the most efficient way to retrieve the items from warehouse.

6. PACKING SLIP * A document that listing the quantity and description of each item included in the shipment. * Packing slip and copy of bill of lading will accompany the shipment.

7. BILL OF LADING * Legal contract that defines responsibility for goods while they are in transit. * It identifies the carrier, source, destination, shipping instructions and the party (customer or vendor) that must pay the carrier.

8. SALES INVOICE * Document created to billing the customer. * A document that will notify the customer about the amount of a sale (amount to be paid) and where to send the payment.

9. OPEN INVOICE METHOD * Method for maintaining account receivable in which the customer typically pay according to each invoice. * Usually two copies of invoice are mailed to the customer, and customer will return one copy of the invoice together with the payment. The invoice that been return as remittance advice.

10. REMITTANCE ADVICE * Remittance advice can be copy of invoice, a tear-off portion monthly statement or others that will included/accompany with a customer’s payment. * Also called as turnaround document.

11. BALANCE FORWARD METHOD * Method of maintaining accounts receivable in which customers typically pay according to the amount shown on a monthly statement, rather than by individual invoices. * Remittances are applied against the total account balance, rather than specific invoices.

12. MONTHLY STATEMENT * A document that will summarizing all transactions that occurred during past month and informing customers of their current account balance. * Usually monthly statement that sent to customer will include the “tear-off portion”, that will be return together with the payment. * The “tear-off portion” will serve as remittance advice.

13. CYCLE BILLING * A process to divide customer account master file into subsets, and preparing the monthly statements according to the subset at a time. * The monthly statement will be mailed to customers. * For example, each week monthly statements would be prepared for one-fourth of the customer.

14. CREDIT MEMO * A document used to authorize the billing department to credit/reduce a customer’s account. * Usually issued for sales returns, allowance granted for damaged goods kept by customer, or to write off the customer account due to uncollectible account. * Credit memo will approved by credit manager. * A copy of credit memo will sent to account receivables for adjustment and another copy sent to customer for notify them (except due to uncollectible account).

15. REMITTANCE LIST * A document listing all checks received in the mail.

16. LOCKBOX * A postal address to which customers send their remittances (pengiriman wang). * This Post Office box is maintained by the participating bank, which picks up the checks each day and deposits them to the company’s account. * The bank sends the remittance advices, an electronic list of all remittances, and digital copies of all checks to the company.

17. ELECTRONIC LOCKBOX * A lockbox arrangement, in which the bank electronically sends the company information about the customer account number and the amount remitted as soon as it receives payment. * This enables the company to begin applying remittances to customer accounts before the photocopies of the check arrive.

18. CASH FLOW BUDGET * A budget that shows projected cash inflows and outflows for a specified period so that the organization can anticipate the need for short term borrowing.

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INFORMATION TECHNOLOGY USE IN RECENUE CYCLE TECHNOLOGY

1. ELECTRONIC DATA INTERCHANGE (EDI) * The use of computerized communications and a standard coding scheme to submit business documents electronically in a format that can be automatically processed by the recipient’s information system.

2. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEM (CRM) * Software that helps to organize information about customers in a manner. * Facilitates efficient customer service, generate additional sales and retain the customers.

3. ELECTRONIC FUNDS TRANSFER (EFT) * The transfer of funds between two or more organizations or individuals using computers and other automated technology. * This eliminates the delay associated with the time the remittance is in the mail.

4. FINANCIAL ELECTRONIC DATA INTERCHANGE (FEDI) * The combination of EFT and EDI that enables both remittance data and funds transfer instructions to be included in one electronic package.

EXPENDITURE CYCLE: PURCHASING TO CASH DISBURSEMENTS **(PENGELUARAN BAYARAN)

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DEFINITION OF EXPENDITURE CYCLE

Activities and information processing related to purchasing and payment of Goods and services.

Primary Objective: * Minimize the total cost of acquiring and maintaining inventories, supplies, and the various services the organization needs to function

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BASIC EXPENDITURE CYCLE ACTIVITIES & GENERAL THREATS

BASIC EXPENDITURE CYCLE ACTIVITIES

1. Ordering materials, supplies, and services 2. Receiving materials, supplies, and services 3. Approving supplier invoices 4. Cash disbursements

GENERAL EXPENDITURE CYCLE THREATS

1. Inaccurate or invalid master data 2. Unauthorized disclosure of sensitive information 3. Loss or destruction of data 4. Poor performance

GENERAL EXPENDITURE CYCLE CONTROLS

1. Data processing integrity controls 2. Restriction of access to master data 3. Review of all changes to master data

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ORDERING (MATERIALS, SUPPLIES AND SERVICES) THREATS AND CONTROLS | 1. Inaccurate inventory records * Perpetual inventory system * Bar coding or RFID tags * Periodic physical counts of inventory * Perpetual inventory system 2. Purchasing items not needed * Review and approval of purchase requisitions * Centralized purchasing function 3. Purchasing at inflated prices * Price lists * Competitive bidding * Review purchase order 4. Purchasing goods of inferior quality * Tracking and monitoring product quality by supplier * Requiring suppliers to possess quality certification 5. Unreliable suppliers * Review and approval of purchases from new suppliers * Collecting and monitoring supplier delivery performances data 6. Purchasing from unauthorized suppliers * Purchasing only from approved suppliers 7. Kickbacks * training employees in how to respond to offers of gifts from suppliers * job rotation and mandatory vacations * suppliers audit |

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RECEIVING (MATERIALS, SUPPLIES AND SERVICES)

THREATS AND CONTROLS | 1. Accepting unordered items * Requiring existence of approved purchase order prior to accepting any delivery 2. Mistakes in counting * Do not inform receiving employees about quantity ordered * Require receiving employees to sign receiving report * Incentives (bonus in catching discrepancies) * Use of bar-codes and RFID tags * Configuration of the ERP system to flag discrepancies between received and ordered quantities that exceed tolerance threshold for investigation * Segregation of duties: custody of inventory versus receiving 3. Verifying receipt of services (painting or maintenance) * Hold the appropriate supervisor responsible for all costs incurred * Periodic audits about the services 4. Theft of inventory * Restriction of physical access to inventory * Documentation of all transfers of inventory between receiving and inventory employees * Periodic physical counts of inventory and reconciliation to recorded quantities |

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APPROVING SUPPLIERS INVOICE

INVOICING SUPPLIERS

VOUCHER SYSTEM | NON-VOUCHER SYSTEM | * Disbursement voucher is also created when a supplier invoice is approved for payment. * Identifies the supplier, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances * ADVANTAGES * Reduce number of checks * Can utilize pre-sequential-numbered voucher control * Allows for separation of invoice approval from invoice payment | * Each approved invoice is posted to individual supplier records in the accounts payable file and is then stored in an open-invoice file. * When a check is written to pay for an invoice, the voucher package is removed from the open-invoice file, the invoice is marked paid, and then the voucher package is stored in the paid-invoice file. | THREATS AND CONTROLS | 1. Errors in supplier invoices * Verification of invoice accuracy * Requiring detailed receipts for procurement card purchases * Evaluated receipt settlement * Match PO with receiving report * Restriction of access to supplier master data * Verification of freight bill and use of approved delivery channels 2. Mistakes in posting to accounts payable * Data entry edit controls * Reconciliation of detailed accounts payable records with the general ledger control account. |

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CASH DISBURSEMENT

THREATS AND CONTROLS | 1. Failure to take advantage of discounts for prompt payment * Filing of invoices by due date for discounts 2. Paying for items not received * Requiring that all supplier invoices be matched to supporting documents that are acknowledged by both receiving and inventory control * Requiring a complete voucher package for all payments * Policy to pay only from original copies of supplier invoices 3. Duplicate payments * Cancelling all supporting documents when payment is made 4. Theft of cash * Physical security of blank checks and check-signing machine * Periodic accounting of all sequentially numbered checks by cashier * Access controls to EFT terminals * Separation of check-writing function from accounts payable * Requiring dual signatures on checks greater than a specific amount * Regular reconciliation of bank account with recorded amounts by someone independent of cash disbursements procedures 5. Check alteration * Check protection machines * Use of special inks and papers 6. Cash flow problems * Cash flow budget |

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INVENTORY CONTROL METHODS

1) ECONOMIC ORDER QUANTITY (EOQ) * The optimal order size to minimize the sum of ordering, carrying, and stock out costs. * Calculate how much to order and when to order. * Ordering costs are expenses associated with processing purchase transaction. * Carrying costs are the costs associated with holding inventory. * Stock out costs, such as lost sales or production delays, result from inventory shortages.

2) MATERIAL REQUIREMENTS PLANNING (MRP) * An approach to inventory management that seeks to reduce required inventory levels by improving the accuracy of forecasting techniques to better scheduled purchases to satisfy production needs. * MRP system reduces uncertainties about when raw materials are needed and therefore enable companies to carry less inventory. * Schedule production to meet forecasted sales, thereby creating an “optimal” quantity of finished goods inventory. * Use for products that have predictable pattern of demand such consumer staples (makanan atau barangan asas)

3) JUST-IN-TIME (JIT) INVENTORY SYSTEM * System that minimizes or virtually eliminates manufacturing inventories by scheduling inventory deliveries at the precise times and location needed. * Instead of making infrequent bulk deliveries to central receiving and storage facility, suppliers deliver materials in small lots at frequent intervals to the specific locations that require them. * Schedule production in response to customer demand, thereby eliminating finished goods inventory, but they are required to carry sufficient quantities of raw materials in order to quickly adjust production in response to customer demand. * Use for products that relatively short life cycles and which the demand cannot be accurately predicted, such as toys associated with specific movies.

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DOCUMENT INVOLVED

1. REORDER POINT * The level to which the inventory balance of an item must fall before an order to replenish (menambah) stock is initiated.

2. PURCHASE REQUISITION * A document or electronic form that identifies the requisitioner specifies; the delivery location and date needed. * The purchase requisition will identifies the items numbers, descriptions, quantity, and price of each item requested, and may suggest a vendor.

3. PURCHASE ORDER * A document that formally requests a vendor to sell and deliver specified products at designated prices. * It is also a promise to pay and becomes a contract once the vendor accepts it.

4. BLANKET PURCHASE ORDER * A commitment to purchase specified items at designated prices from a particular supplier for a set time period, often a year.

5. VENDOR-MANAGED INVENTORY * Practice in which manufacturers and distributers manage a retail customer’s inventory using EDI. * The suppliers access its customer’s point of sale system in order to monitor inventory and automatically replenish products when they fall to agreed-upon levels.

6. KICKBACKS * Gifts given by vendors to purchasing agents for the purpose of influencing their choice of suppliers.

7. RECEIVING REPORT * A document that record details about each delivery, including the date received, shipper, vendor and quantity received.

8. DEBIT MEMO * A document used to record a reduction to the balance due to a vendor (account payable) * Usually due to return outwards.

9. VOUCHER * A document that summarizes the data relating to disbursement and represents final authorization of payment.

10. VOUCHER PACKAGE * The set of documents used to authorize payment to a vendor. It consists of a purchase order, receiving report, and vendor invoice.

11. DISBURSEMENT VOUCHER * A document that identifies the vendor, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances.

12. PROCUMENT CARD * A corporate credit card that employees can use to purchase specific kinds of items.

13. IMPREST FUND * A cash account with two characteristics: 1) It is set at a fixed amounts, such as $100, 2) Vouchers are required for every disbursement. * At all times, the sum of cash plus vouchers should be equal the preset fund balance.

THE PRODUCTION CYCLE

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DEFINITION OF PRODUCTION CYCLE THREATS AND CONTROLS | Poor product design resulting in excess costs * Accounting analysis of costs arising from product design choices * Analysis of warranty and repair costs |

Business activities and information processing activities related to manufacturing of products.

OBJECTIVES

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BASIC EXPENDITURE CYCLE ACTIVITIES & GENERAL THREATS

BASIC EXPENDITURE CYCLE ACTIVITIES

1. Product design 2. Planning and scheduling 3. Production operations 4. Cost accounting

GENERAL REVENUE CYCLE THREATS

1. Inaccurate or invalid master data 2. Unauthorized disclosure of sensitive information 3. Loss or destruction of data

GENERAL REVENUE CYCLE CONTROLS

1. Data processing integrity controls 2. Restriction of access to master data 3. Review of all changes to master data 4. Access controls 5. Encryption 6. Backup and disaster recovery procedures

1. PRODUCT DESIGN

2. PLANNING AND SCHEDULING

THREATS AND CONTROLS | Over- or underproduction * Production planning systems * Review and approval of production schedules and orders * Restriction of access to production orders and production schedules |

3. PRODUCTION OPERATIONS THREATS AND CONTROLS | 1. Theft of inventory * Physical access control * Documentation of all inventory movement * Segregation of duties—custody of assets from recording and authorization of removal * Restriction of access to inventory master data * Periodic physical counts of inventory and reconciliation of those counts to recorded quantities 2. Theft of fixed asset * Physical inventory of all fixed assets * Restriction of physical access to fixed assets * Maintaining detailed records of fixed assets, including disposal 3. Poor performance * Training * Performance reports 4. Loss of inventory or fixed assets due to fire or other disasters * Physical safeguards (e.g., fire sprinklers) * Insurance 5. Disruption of operations * Backup and disaster recovery plans |

4. COST ACCOUNTING THREATS AND CONTROLS | 1. Inaccurate cost data * Source data automation * Data processing integrity controls 2. Inappropriate allocation of overhead costs * Time-driven activity-based costing 3. Misleading reports * Innovative performance metrics |

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ASSIGNNING PRODUCTION COST

1. Job-Order Costing * A cost system that assigns costs to specific production batches, or jobs. It Used when the product or service is being produced can be distinctly identified.

2. Process Costing * A cost system that assigns costs to each process, or work center, in the production cycle, and then calculates the average cost for all units produced. * Used when the product or service is similar and produced in mass quantities.

3. Activity-Based Costing * A cost system that traces costs to the activities that create them. * Once costs are traced to their specific activities, they are allocated to their corresponding products or departments. * Uses a greater number of overhead pools i. Batch ii. Product iii. Organization * Identifies cost drivers iv. Cause-and-effect relationship
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DOCUMENT INVOLVED

1. BILL OF MATERIALS * A document that specifies the part number, description, and quantity of each component used in a product.

2. OPERATIONS LIST * A document that specifies the labor and machine requirements needed to manufacture a product. * It indicates how a product moves through the factory, specifying what is done at each step and how much time each operation should take.

3. MANUFACTURING RESOURCE PLANNING (MPR-II) * An extension of materials resource planning that seeks to balance existing production capacity and raw materials needs to meet forecasted sales demand. * Also referred to as push manufacturing because goods are produced in expectation of customer demand.

4. LEAN MANUFACTURING * Referred to as pull manufacturing because goods are produced in response to customer demand. * The goal of lean manufacturing is to minimize or eliminate inventories of raw materials, WIP, and finished goods.

5. MASTER PRODUCTION SCHEDULE (MPS) * A document specifies how much of each product is to be produced during the planning period and when that production should occur.

6. PRODUCTION ORDER * A document authorizing the manufacture of a specified quantity of a particular product. * It lists the operations to be performed, the quantity to be produced, and the location to which the finished product is to be delivered.

7. MATERIALS REQUISITION * A document that authorizes the removal of the necessary quantity of raw materials from the storeroom to the factory location where the production operations are to begin.

8. MOVE TICKET * A Document that identify the internal transfer of parts, the location to which they are transferred, and the time of transfer.

9. COMPUTER-INTEGRATED MANUFACTURING (CIM) * A manufacturing approach in which much of the manufacturing process is performed and monitored by the computerized equipment, in part through the use of robotics and real time data collection of manufacturing activities.

10. MANUFACTURING OVERHEAD * All manufacturing costs that are not economically feasible to trace directly to specific jobs or processes.

11. COST DRIVER * Anything that has a cause-and-effect relationship to costs. * For example, the number of purchase orders processed is a purchasing department cost driver

12. THROUGHPUT * The total amount of useful work performed by a computer system during a given period of time. * A measure of production efficiency representing the number of “good” units produced in a given period of time.

THE HUMAN RESOURCES MANAGEMENT AND PAYROLL CYCLE

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DEFINITION OF HRM/ PAYROLL CYCLE

The recurring set of business activities and related data processing operations associated with effectively managing the employee workforce.

Task in managing employees: 1. Recruiting and hiring new employees 2. Training 3. Job assignment 4. Compensation (payroll) 5. Performance evaluation 6. Discharge of employees due to voluntary or involuntary termination

OBJECTIVES

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BASIC HRM/PAYROLL CYCLE ACTIVITIES & GENERAL THREATS

BASIC HRM/PAYROLL CYCLE ACTIVITIES

1. Update master data 2. Validate time and attendance 3. Prepare payroll 4. Distribute payroll 5. Disburse taxes and miscellaneous deductions

GENERAL HRM/PAYROLL CYCLE THREATS

1. Inaccurate or invalid master data 2. Unauthorized disclosure of sensitive information 3. Loss or destruction of data 4. Hiring unqualified or larcenous employees 5. Violations of employment laws

GENERAL REVENUE CYCLE CONTROLS

1. Data processing integrity controls 2. Restriction of access to master data 3. Review of all changes to master data 4. Access controls 5. Encryption 6. Backup and disaster recovery procedures 7. Sound hiring procedures, including verification of job applicants’ credentials, skills, references, and employment history 8. Criminal background investigation checks of all applicants for finance-related positions 9. Thorough documentation of hiring, performance evaluation, and dismissal procedures 10. Managerial reports

1. UPDATE MASTER DATA/FILE THREATS AND CONTROLS | 1. Unauthorized changes to payroll master data * Segregation of duties: HRM department updates master data, but only payroll department issues paychecks * Access controls 2. Inaccurate updating of payroll master data * Data processing integrity controls * Regular review of all changes to master payroll data |

2. VALIDATE TIME AND ATTENDANCE THREATS AND CONTROLS | 1. Inaccurate time and attendance data * Source data automation for data capture * Biometric authentication * Segregation of duties (reconciliation of job-time tickets to time cards) * Supervisory review |

3. PREPARED PAYROLL THREATS AND CONTROLS | 1. Errors in processing payroll * Data processing integrity controls: batch totals, cross-footing of the payroll register, use of a payroll clearing account, and a zero-balance check * Supervisory review of payroll register and other reports * Issuing earnings statements to employees * Review of IRS guidelines to ensure proper classification of workers as either employees or independent contractors |

4. DISTRIBUTE/DISBURSE PAYROLL THREATS AND CONTROLS | 1. Theft or fraudulent distribution of paychecks * Restriction of physical access to blank payroll checks and the check signature machine * Restriction of access to the EFT system * Pre-numbering and periodically accounting for all payroll checks and review of all EFT direct deposit transactions * Require proper supporting documentation for all paychecks * Use of a separate checking account for payroll, maintained as an imprest fund * Segregation of duties (cashier versus accounts payable; check distribution from hiring/firing; independent reconciliation of the payroll checking account) * Restriction of access to payroll master database * Verification of identity of all employees receiving paychecks * Re-depositing unclaimed paychecks and investigating cause |

5. DISBURSE TAXES AND MISSCELANEOUS DEDUCTIONS THREATS AND CONTROLS | 1. Failure to make required payments * Configuration of system to make required payments using current instructions from IRS (Publication Circular E) 2. Untimely/ Inaccurate payments * Processing integrity controls * Supervisory review of reports * Employee review of earnings statement |

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DOCUMENT INVOLVED

1. TIME CARD * A document that records the employee’s arrival and departure times for each work shift. * The time card records the total hours worked by an employee during a pay period.

2. TIME SHEET * A data entry screen (or paper document) used by salaried professionals to record how much time was spent performing various tasks for specific clients.

3. PAYROLL REGISTER * A report listing of payroll data for each employee for a payroll period.

4. DEDUCTION REGISTER * A report listing the miscellaneous voluntary deductions for each employee.

5. EARNING STATEMENT * A report listing the amount of gross pay, deductions, and net pay for the current period and the year-to-date totals for each category.

6. PAYROLL CLEARING ACCOUNT * A general ledger account used to check the accuracy and completeness of recording payroll costs and their subsequent allocation to appropriate costs centers.

7. FLEXIBLE BENEFIT PLAN * A plan under which each employee receives some minimum coverage in medical insurance and pension contributions, plus additional benefit “credits”, that can be used to acquire extra vacation time or additional health insurance. * These plans are sometimes called cafeteria-style benefit plan because they offer a menu of options.

8. PAYROLL SERVICE BUREAU * An organization that maintains the payroll master file for each of its clients and performs their payroll processing activities for a fee.

9. PROFESSIONAL EMPLOYER ORGANIZATION (PEO) * An organization that processes payroll and also provide human resource management services such as employee benefit design and administration.

GENERAL LEDGER AND REPORTING SYSTEM

THREATS AND CONTROLS | 1. Inaccurate updating of general ledger * Data entry processing integrity controls * Reconciliations and control reports * Audit trail creation and review 2. Unauthorized journal entries * Access controls * Reconciliations and control reports * Audit trail creation and review |
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DEFINITION

The information-processing operations involved in updating the general ledger and preparing reports that summarize organizational activities.

PRIMARY FUNCTION
Is to collect and organize 1. The accounting cycle activities 2. Financing activities 3. Investing activities 4. Budget activities 5. Adjustments

GENERAL LEDGER AND REPORTING ACTIVITIES

THREATS AND CONTROLS | 1. Inaccurate adjusting entries * Data entry processing integrity controls * Spreadsheet error protection controls * Standard adjusting entries * Reconciliations and control reports * Audit trail creation and review 2. Unauthorized adjusting entries * Access controls * Reconciliations and control reports * Audit trail creation and review | 1. Update general ledger 2. Post adjusting entries 3. Prepare financial statements 4. Produce management reports

GENERAL LEDGER AND REPORTING THREATS

1. Inaccurate or invalid general ledger data 2. Unauthorized disclosure of financial statement 3. Loss or destruction of data

GENERAL LEDGER AND REPORTING CONTROLS 1. Data processing integrity controls 2. Restriction of access to general ledger 3. Review of all changes to general ledger data 4. Access controls 5. Encryption 6. Backup and disaster recovery procedures

1. UPDATE GENERAL LEDGER

2. POST ADJUSTING ENTRIES

3. PREPARE FINANCIAL STATEMENT THREATS AND CONTROLS | 1. Inaccurate financial statements * Processing integrity controls * Use of packaged software * Training and experience in applying IFRS and XBRL 2. Fraudulent financial reporting * Audits |

4. PRODUCE MANAGEMENT REPORT THREATS AND CONTROLS | 1. Poorly designed reports and graphs * Responsibility accounting * Balanced scorecard * Training on proper graph design |

------------------------------------------------- eXtensible Business Reporting Language (XBRL)
XBRL is a variant of XML (eXtensible Markup Language) specifically designed for use in communicating the content of financial data.
It does this by creating tags for each data item that look much like tags used by HTML.

1. Instance Document * An XBRL report that contains tagged data from financial statements : Marked up or tagged with data describing the data * Each piece of data in XBRL is an element

2. Taxonomy * Set of XBRL files defining the various elements and the relationships between them * A schema * Contains the definitions of every element that could appear in an instance document

3. Linkbases * One or more XBRL files that describes relationships between elements found in a specific instant document * Reference : Identifies relevant authoritative pronouncements * Calculation : Specifies how to combine elements * Presentation : How to group elements * Label : Associates human-readable labels with elements

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BALANCED SCORECARD * A management report that provides four dimension of organizational performance: * Financial * Customer * Internal operations * Innovation and learning * Showing goals and measures * Targets * Actual

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DOCUMENT INVOLVED

1. JOURNAL VOUCHER * A form used to document one or more journal entries such as those made to update the general ledger.

2. JOURNAL VOUCHER FILE * A file that stores all journal entries used to update the general ledger.

3. TRIAL BALANCE * A report listing the balance of all general ledger accounts. * It is so named because one of its purposes is to allow the accountant to verify that the total debit balances in various accounts equal to total credit balances in other accounts.

4. STYLE SHEET * An XBRL file that provides instructions on how to display (render) an instance document on either a computer screen or printed report.

5. FLEXIBLE BUDGET * A budget in which the amounts are stated in term of formulas based upon actual level of activities.

BEST OF LUCK
Haslinda Lieynda