BSB110 Lecture Notes - Lecture 7: Internal Control, General Ledger, Accounts Payable
Accounting – Accounting Information Systems
Principles
- Cost benefit analysis
oIs it worth implementing an accounting information system?
- Useful output
oIs the information relevant
oIt is timely
oMay miss out on critical decision-making information if recording is not timely
- Comparable
oMultiple dimensions
oGeography considerations
- Flexibility
oCompatible with business life cycle
oTechnological advances, increased competition, changing accounting principles,
organisational growth, government regulation and de-regulation
Implementing an accounting system
- Run along with old system in case there are any problems
- Any tweaking required?
Developing an Accounting System
- Must have controls to ensure assets are safeguarded and relevant, timely, and faithfully
represented information is provided
- Risks of confidential and sensitive information being leaked are minimised
- Phases
oAnalysis – Planning and identifying information needs and sources
oDesign – Creating forms, documents, procedures, job descriptions and reports
oImplementation – Installing the system, training personnel, and making the system
fully operational
oFollow up – Monitoring effectiveness and correcting any weaknesses
Internal Control Systems
- Essential part of risk management
- Put in place in the organisation to minimise business risks
- Two aspects
oAdministrative
Provide operational efficiency and adherence to policy and procedures
Physical
Policies and Procedures
oAccounting
Methods and procedures used to protect assets and ensure that
transactions are recorded appropriately
How do businesses make sure they have accounting controls in place when
they process their transactions so they are reporting as accurately as
possible?
- Management Responsibility
oPart of good corporate governance for managers to be responsible for developing
appropriate controls
oManagers cannot abuse their power
oManagers should not be the owners
- Internal auditing
oIdentify if people are adhering to procedures
oMonitor effectiveness of internal controls
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Useful output: is the information relevant, it is timely, may miss out on critical decision-making information if recording is not timely. Flexibility: compatible with business life cycle, technological advances, increased competition, changing accounting principles, organisational growth, government regulation and de-regulation. Run along with old system in case there are any problems. Must have controls to ensure assets are safeguarded and relevant, timely, and faithfully represented information is provided. Risks of confidential and sensitive information being leaked are minimised. Put in place in the organisation to minimise business risks. Provide operational efficiency and adherence to policy and procedures. Methods and procedures used to protect assets and ensure that transactions are recorded appropriately. Management responsibility: part of good corporate governance for managers to be responsible for developing appropriate controls, managers cannot abuse their power, managers should not be the owners. Internal auditing: identify if people are adhering to procedures, monitor effectiveness of internal controls.
