Review the websites for XBRL
Write a 2-3 page paper –
Discuss the audit implications of XBRL and the impact of XBRL on data analytics. Locate an article (from the library research databases) that demonstrates how XBRL is utilized.
Rubric –
1. demonstrated reading from websites provided
2. article included in discussion
3. 2-3 pages
Please take a look at the XBRL website
Click
https://www.xbrl.org/the-standard/what/an-introduction-to-xbrl/
link to open resource.
Take a look at this webpage from the SEC that gives the history of the SEC’s use of XBRL and structured data.
https://www.sec.gov/page/osdhistoryandrulemaking
4. audit implications provided
5. Impact on data analytics discussed
Chapter 8
Financial Reporting and
Management Reporting Systems
James A. Hall, Accounting Information Systems, 10th Edition. ©
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019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Objectives
Understand the operational features of the general ledger system (GLS), financial reporting system (FRS), and management reporting system (MRS).
Understand the factors that influence the design of the MRS.
Understand the elements of a responsibility accounting system.
Be familiar with the financial reporting issues surrounding XBRL.
Be familiar with data analytics concepts and techniques.
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The General Ledger System
The GLS is a hub connected to the other systems of the firm through information flows.
Transaction cycles process individual events that are recorded in special journals and subsidiary accounts.
Summaries of these transactions flow into the GLS and become sources of input for the MRS and FRS.
Information also flows from the FRS as feedback into the GLS.
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Relationship of GLS to Other Information Subsystems
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
THE JOURNAL VOUCHER
The source of input to the general ledger is the journal voucher.
A journal voucher identifies the financial amounts and affected general ledger (GL) accounts.
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Journal Voucher Record Layout for a General Ledger Master File
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
THE GLS DATABASE
The GLS database includes a variety of files:
General ledger master
Chart of accounts
General ledger history file
Journal voucher file
Journal voucher history file
Responsibility center file
Budget master file
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Record Layout for a General Ledger Master File
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GLS PROCEDURES
The Financial Reporting System
The law dictates management’s responsibility for providing stewardship information to external parties.
Much of the information provided takes the form of standard financial statements, tax returns, and documents required by regulatory agencies such as the Securities and Exchange Commission (SEC).
The primary recipients of financial statement information are external users, such as stockholders, creditors, and government agencies.
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SOPHISTICATED USERS
Because the community of external users is vast and their individual information needs may vary, financial statements are targeted at a general audience.
Sophisticated users are users of financial reports who understand the conventions and accounting principles that are applied and that the statements have information content that is useful.
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FINANCIAL REPORTING PROCEDURES
Financial reporting is the final step in the overall accounting process that begins in the transaction cycles. From this point, the following steps occur:
Capture the transaction.
Record in special journal.
Post to subsidiary ledger.
Post to general ledger.
Prepare the unadjusted trial balance.
Make adjusting entries.
Journalize and post adjusting entries.
Prepare the adjusted trial balance.
Prepare the financial statements.
Journalize and post the closing entries.
Prepare the post-closing trial balance.
11
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Financial Reporting Process
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Real-Time General Ledger and Financial Reporting System
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
XBRL—Reengineering Financial Reporting
XBRL (extensible Business Reporting Language) is an XML-based language that was designed to provide the financial community with a standardized method for preparing, publishing, and automatically exchanging financial information, including financial statements of publicly held companies.
The objective of XBRL is to facilitate the publication, exchange, and processing of financial and business information.
XML (extensible Markup Language) is a metalanguage for describing markup languages that can be used to model the data structure of an organization’s internal database.
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
XML
XML is a metalanguage for describing markup languages.
XML can be used to model the data structure of an organization’s internal database.
15
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Comparison of HTML and XML Documents
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
XBRL
XBRL taxonomy are classification schemes that are compliant with the XBRL Specifications to accomplish a specific information exchange or reporting objective such as filing with the Securities and Exchange Commission.
XBRL instance documents (the actual financial reports) are the mapping of the organization’s internal data to XBRL taxonomy elements.
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Overview of XBRL Reporting Process
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Internal Corporate Database
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GL to Taxonomy Mapper
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Database Structure with XBRL Tag
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
XBRL Instance Document
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
A BRIEF HISTORY OF XBRL REPORTING
Since October 2005, U.S. banking regulators have required quarterly “Call Reports” to be filed in XBRL.
In April 2005, the SEC began a voluntary financial reporting program that allows registrants to supplement their required filings with exhibits using XBRL.
In September 2006, the SEC announced its new electronic reporting system to receive XBRL filings. The new system is called IDEA, short for Interactive Data Electronic Application.
In May 2008, the SEC issued rules requiring large publicly held companies to adopt XBRL by December 15 to meet financial reporting requirements.
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Controlling the GL/FRS
SOX legislation requires that management design and implement controls over the financial reporting process.
Potential risks to the FRS include the following:
A defective audit trail
Unauthorized access to the general ledger
GL accounts that are out of balance with subsidiary accounts
Incorrect GL account balances because of unauthorized or incorrect journal vouchers
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
COSO CONTROL ISSUES
Transaction Authorization
Segregation of Duties
Access Controls
Accounting Records
Independent Verification
The journal voucher listing is a listing that provides relevant details about each journal voucher received by the GL/FRS.
The general ledger change report presents the effects of journal voucher transactions on the general ledger accounts.
IT Application Controls
25
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Journal Voucher Listing
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
General Ledger Change Report
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
INTERNAL CONTROL IMPLICATIONS OF XBRL
Taxonomy Creation
Taxonomy Mapping Error
Validation of Instance Documents
28
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Management Reporting System
Management reporting is often called discretionary reporting because it is not mandated, as is financial reporting.
An MRS that directs management’s attention to problems on a timely basis promotes effective management and thus supports the organization’s business objectives.
29
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FACTORS THAT INFLUENCE THE MRS
Management Principles
The formalization of tasks is the subdivision of organizational areas into tasks that represent full-time job positions. An organizational chart shows typical job positions in a manufacturing firm.
Responsibility refers to an individual’s obligation to achieve desired results. Authority is the right to make decisions pertaining to areas of responsibility.
Span of control refers to the number of subordinates directly under a manager’s control.
The principle of management by exception is a concept that managers should limit their attention to potential problem areas rather than being involved with every activity or decision.
30
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Organizational Chart for a Manufacturing Firm
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Impact of Span of Control on Organizational Structure
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FACTORS THAT INFLUENCE THE MRS (continued)
Management Function, Level, and Decision Type
Implementation is the carrying out, execution, or practice of a plan, a method, or any design for doing something. Short-term planning involves the implementation of specific plans that are needed to achieve the objectives of the long-range plan.
Strategic planning decisions is planning with a long-term time frame that is associated with a high degree of uncertainty.
Tactical planning decisions is the planning performed by the middle-level manager to achieve the strategic plans of the organization.
Management control decisions are a technique for motivating managers in all functional areas to use resources as productively as possible.
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Management Level and Decision Type
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Classification of Decision Types by Decision Characters
35
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FACTORS THAT INFLUENCE THE MRS (continued)
Management Function, Level, and Decision Type (continued)
Operational control decisions are a technique that ensures that the firm operates in accordance with pre-established criteria.
The variance is the difference between the expected price—the standard—and the price actually paid.
Problem Structure
A structured problem is a problem in which data, procedures, and objectives are known with certainty.
An unstructured problem is a problem for which there are no precise solution techniques.
36
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Problem Structure-Management Level, and Information System Usage
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FACTORS THAT INFLUENCE THE MRS (continued)
Types of Management Reports
A management report is a discretionary report used for internal decision making. Management reports are not mandated like income statements, balance sheets, etc.
Information content is the ability of a report to reduce uncertainty and influence behavior of the user.
38
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
PROGRAMMED REPORTING
Programmed reports provide information to solve problems that users have anticipated.
Scheduled reports are reports produced according to an established time frame.
On-demand reports are triggered by events.
Report attributes are the characteristics of a report. To be effective, a report must possess the following attributes: relevance, summarization, exception orientation, accuracy, completeness, timeliness, and conciseness.
The decision-making process is a cognitive process leading to the selection of a course of action among variations.
39
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Examples of Programmed Reports
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
PROGRAMMED REPORTING (continued)
Responsibility Accounting
Responsibility accounting is the concept that every economic event affecting the organization is the responsibility of and can be traced to an individual manager.
SETTING FINANCIAL GOALS: THE BUDGET PROCESS: The budget is a process that helps management achieve their financial objectives by establishing measurable goals for each organizational segment.
MEASURING AND REPORTING PERFORMANCE: Responsibility reports are reports containing performance measures at each operational segment in the firm, which flow upward to senior levels of management.
RESPONSIBILITY CENTERS: Responsibility centers are the organization of business entities into areas involving cost, profit, and investment.
41
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Upward and Downward Flow of Information
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Top-Down Flow of Budget Information
43
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Bottom-Up Flow of Performance Information
44
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
PROGRAMMED REPORTING (continued)
Responsibility Accounting (continued)
A cost center is an organizational unit with responsibility for cost management within budgetary limits.
A profit center is an organizational unit with responsibility for both cost control and revenue generation.
An investment center is an organizational unit that has the objective of maximizing the return on investment assets.
45
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Cost Center Performance Report
46
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Profit Center Performance Report
47
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Investment Center Performance Report
48
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
BEHAVIORAL CONSIDERATIONS
Goal congruence is the merging of goals within an organization.
Information overload occurs when a manager receives more information than can be assimilated.
Inappropriate performance measures is when behavior and performance measures are inconsistent with the objectives of the firm.
49
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Multiperiod Investment Center Report
50
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Data Analytics and Ad Hoc Reporting
Data analytics represents a significant departure from the traditional structured reporting.
Small data analytics characterizes techniques that employ data that are in a format and of a volume that allows them to be analyzed and acted upon by traditional technologies.
Big data analytics is characterized and defined by the three Vs: extreme volumes of data, the rapid velocity at which the data must be processed, and the wide variety of structured and unstructured data types that need to be integrated.
51
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SMALL DATA ANALYTICS
Data warehouse is a database constructed for quick searching, retrieval, ad hoc queries, and ease of use.
Data mining is the process of selecting, exploring, and modeling large amounts of data to uncover relationships and global patterns that exist in large databases but are hidden among the vast amount of facts.
The verification model is a drill-down technique to either verify or reject a user’s hypothesis.
The discovery model uses data mining to discover previously unknown but important information that is hidden within the data.
52
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
BIG DATA ANALYTICS
The concept of big data was introduced in 1941, its current rendition is characterized and defined by the three Vs:
Volume
Volume is the “V” most associated with big data, and refers to terabytes, petabytes, and even exabytes of data.
Velocity
Velocity refers to the speed at which big data must be analyzed.
Variety
Variety is the primary driver of volume.
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
BIG DATA ANALYTICS (continued)
Big Data Reporting Systems
Prescriptive analytics tells the user what actions should be taken in response to specific questions.
Predictive analytics encompasses a variety of statistical techniques that draw upon current and past data to calculate the statistical likelihood of future scenarios occurring.
Descriptive analytics is a mathematical process that describes real-world events and the relationships between factors responsible for them.
Diagnostic analytics techniques view past performance to determine why something happened the way it did.
Big Data Analytics Risks and Controls
54
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
BIG DATA ANALYTICS (continued)
Data Security
FIREWALLS
ACCESS PRIVILEGES
PASSWORD CONTROL
SYSTEM AUDIT TRAILS
OUTSOURCING CONTROLS
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James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
