General Ledger and Financial Reporting Controls

Threat: Inaccurate or invalid general ledger data

Control:

Data processing integrity controls

Restriction of access to G/L

Review of all changes to G/L data

Threat: Unauthorized disclosure of financial statements

Control:

Access controls

Encryption

Threat: Loss or destruction of data

Control: Backup and disaster recovery procedures

Threat: Inaccurate updating of G/L

Control:

Data entry processing integrity controls

Reconciliation and control reports

Audit trail creation and review

Threat: Unauthorized journal entries

Control:

Access controls

Reconciliations and control reports

Audit trail creation and review

Accruals

Made at the end of accounting period to reflect events that have occurred but are not in the financial statements (ex. wages payable)

Deferrals

Made at the end of accounting period to reflect exchange of cash prior to performance of related event (ex. payment of rent in advance)

Estimates

Portion of revenues or expenses expected to occur over multiple accounting periods (ex. depreciation)

Revaluations

Entries made to reflect differences between actual and recorded value of an asset or change in accounting principle

Corrections

Entries made to counteract effects of errors found in the general ledger

Threat: Inaccurate Adjusting entries

Control:

Data entry processing integrity controls

Spreadsheet error protection controls

Standard adjusting entries

Reconciliations and control reports

Audit trail creation and review

Threat: Unauthorized adjusting entries

Control:

Access controls

Reconciliations and control reports

Audit trail creation and review

Threat: Inaccurate financial statements

Control:

* Processing integrity controls

* Use of packaged software

* Training and experience in applying IFRS and XBRL

* Audits

Threat: Fraudulent financial reporting

Control: Audits

Threat: Poorly designed reports and graphs

Control:

a. Responsibility accounting

b. Balanced scorecard

c. Training on proper graph design

International Financial Reporting Standards (IFRS)

Understand the systems implications since the IFRS is different in financial reporting than GAAP

extensible Business Reporting Language (XBRL)

Specifically used for communicating financial data (required by the SEC if public company)

Responsibility accounting

Reporting results based upon managerial responsibilities in an organization

Flexible budget

Budget formula based upon level of activity (ex. production levels)

Balanced scorecard

Measures financial and nonfinancial performance using four dimensional goals: financial, customer, internal operations, and innovation and learning

Graphs

Data visualization and proper graph design

journal voucher file

The set of journal entries that updated the general ledger

instance document

A file that contains specific data values for a set of XBRL elements for a specific time period or point in time

XBRL element

An individual financial statement item

Balanced Scorecard

A multi-dimensional performance report

XBRL extension taxonomy

A file containing a set of customized tags to define new XBRL elements that are unique to a specific organization.

Dashboards

A detective control that can be used to trace changes in general ledger account balances back to source documents

XBRL taxonomy

A set of files that defines XBRL elements and specifies the relationships among them

XBRL linkbase

A file that defines relationships among XBRL elements

XBRL schema

A file that defines the attributes of XBRL elements

XBRL style sheet

A file that explains how to display an XBRL instance document

responsibility accounting

Evaluating performance based on controllable costs

flexible budget

Evaluating performance by computing standards in light of actual activity levels