Topic 2.3 Accounting Software

Question 1

What does the general ledger and reporting system process involve?

Answer 1

• update general ledger
• post adjusting entries
• prepare financial statements
• produce managerial reports

Question 2

What are the threats throughout the general ledger and reporting cycle?

Answer 2

1) inaccurate or invalid general ledger data
2) unauthorised disclosure of financial statements
3) loss or destruction of data

Question 3

What are the controls of general ledger and reporting cycle threats

Answer 3

1) a. Data processing integrity controls
B. Restriction to access of g/l
C. Review of all changes to g/l data

2) a. access controls
B. Encryption

3) backup and disaster recovery procedures

Question 4

What are the threats of updating the general ledger

Answer 4

1) inaccurate updating of general ledger

2) unauthorised journal entries

Question 5

What are the controls of updating the general ledger

Answer 5

1) a. Data entry processing integrity controls
B. Reconciliations and control reports
C. Audit trail creations and review

2) a. Access controls
B. Reconciliations and control reports
C. Audit trail creation and review

Question 6

What are the types of adjusting entries

Answer 6

Accruals
- made at end of year e.g wages payable

Deferrals
- payments made in advance e.g rent or insurance

Estimates
- portion or expenses expected to occur over a number of periods e.g depreciation

Revaluations
- entries made to reflect differences between actual and recorded value of an asset

Corrections
- entries made to fix up errors

Question 7

Threats of posting adjusting entries

Answer 7

1) inaccurate adjusting entries

2) unauthorised people posting them

Question 8

Controls of threats of posting adjusting entries

Answer 8

Audit trail

Access to the errors

Question 9

Threats of preparing financial statements

Answer 9

1) inaccurate financial statements
2) fraudulent financial reporting
3) poorly designed reports and graphs

Question 10

Controls to threats of the financial statements

Answer 10

Processing integrity controls

Use of packaged software

Training and experience with IRFS

Audits