The presentation is part of a lecture series on Management Information Systems. It is an overview of the General Ledger and Financial Reporting System (GLFRS) as part of the Accounting Information system (AIS). It also covers an assessment of the role of accounting software and Extensible Business Reporting Language (XBRL). DOI: http://dx.doi.org/10.13140/RG.2.2.22328.47369 Updated at: https://www.researchgate.net/publication/353851801_General_Ledger_and_Financial_Reporting_System_GLFRS

1. GENERAL LEDGER AND FINANCIAL
REPORTING SYSTEM
(GLFRS)
Prepared by: Erhomosele Osareme (B Sc., M Sc., ACA)
Department of Accounting
University of Jos
Nigeria

2. CONTENT
• Meaning and scope of GLFRS
• Functions of the GLFRS
• Accounting Software
• Extensible Business Reporting Language(XBRL)
• Control objectives, threats and procedures
• Summary and discussion

3. MEANING AND
SCOPE OF
GLFRS

4. THE GENERAL LEDGER
A general ledger represents the record-keeping
system for a company’s financial data, with debit
and credit account records validated by a trial
balance.
The Ledger the contains a permanent record of all
the financial transactions of the entity. It operates
using the double entry principle.

5. FINANCIAL REPORTING
Financial reporting is a standard accounting
practice that uses financial statements to disclose
a company’s financial information and activities
over a predetermined period of time to users of
such information.

6. GLFRS DEFINITION
General ledger and financial reporting system is
an information system that translates financial
events collected by the TPS into permanent
financial information; as well as, store, report and
communicate such information to management
and other users.

7. FUNCTIONS
OF THE
GLFRS

8. FUNCTIONS OF GLFRS
The GLFRS is responsible for certain activities
within the context of AIS (Accounting Information
System). These activities include:
1. Updating the General ledger
2. Posting adjusting entries
3. Preparing financial statements
4. Supporting management information needs

9. UPDATING THE
GENERAL
LEDGER
1

10. UPDATING THE GENERAL LEDGER
Updating the general ledger consists of posting
journal entries from two sources:
o Summary routine transactions from the
accounting subsystems.
o Individual non-routine transactions from the
accounting officer (E.g. Issuances or payment of
debt and the associated interest).

11. UPDATING THE GENERAL LEDGER
o Each journal entry is documented on what is
referred to as a journal voucher.
o The Journal voucher stores essential
information about an accounting transaction.
o The journal vouchers are then collected into
what is referred to as a Journal voucher file.
o The non-adjusted trial balance is then
prepared.

12. UPDATING THE GENERAL LEDGER
Information captured in the journal voucher may
include:
o Unique identifying number
o Transaction date
o Transaction amount
o Transaction description
o Authorizing signature…Etc.

13. POSTING
ADJUSTING
ENTRIES
2

14. POSTING ADJUSTED ENTRIES
o Adjusting journal entries are entries made at
the end of the accounting period to add to,
subtract from or correct the already existing
entries.
o The purpose of adjusting entries is to comply
with the accrual basis of accounting.

15. POSTING ADJUSTED ENTRIES
o They are usually made by the chief accounting
officer as they are non-routine in nature and
critical to the integrity of the accounts.
o Adjusting journal entries are also documented
on journal vouchers and stored in the Journal
voucher file.

16. POSTING ADJUSTED ENTRIES
o Thereafter, an adjusted trial balance is
extracted from the new balances in the ledger
accounts.
o It is the adjusted trial balance that is used to
prepare the financial statements.

17. TYPES OF ADJUSTING ENTRIES
o Accruals
o Deferrals
o Estimates
o Re-evaluations
o Error corrections

18. TYPES OF ADJUSTING ENTRIES
1. Accruals: Transactions that have occurred but
for which the related cash have not been paid or
received.
Example- Sales made on credit to customers.
2. Deferrals: Transactions which are yet to occur
but for which the related cash has already been paid
or received in advance.
Example- Rent expense paid in advance.

19. TYPES OF ADJUSTING ENTRIES
3. Estimates: Accounting transactions whose
amounts cannot be measured precisely and
therefore have to be approximated.(E.g. Provisions
for bad debts and depreciation).
4. Re-evaluations: Accounting entries made in
order to reconcile existing records in the accounts
with changes in the substance or form of the
relevant items (E.g. revaluation of assets).

20. TYPES OF ADJUSTING ENTRIES
5. Error corrections: Accounting entries used to
correct misstatements that have been made
previously in the accounts. Errors are classified as
either those which affect the trial balance or those
that do not affect the trial balance.

21. PREPARING
FINANCIAL
STATEMENTS
3

22. PREPARING FINANCIAL STATEMENTS
o Financial statements are prepared from the
adjusted trial balance.
o Financial statements are the authentic records
of an entity that convey, to the users, the
financial activities of the entity for a specified
period.
o There are 4 main financial statements (IFRS 1).

23. TYPES OF FINANCIAL
STATEMENTS
o Statement of comprehensive income
o Statement of financial position
o Statement of changes in equity
o Statement of cash flows

24. oPurpose is to determine the
financial performance of the
entity over a given period.
oOffsets the entity’s expenses
and losses against its revenue
and gains in order to arrive at a
net performance measure.
Statement of comprehensive
income

25. oPurpose is to determine the
financial position of the entity
at the end of a given period.
oA compilation of all the assets,
liabilities and equity of the
entity.
oAssets = Equity + Liabilities
Statement of financial position

26. oPurpose is to show the
movement or changes in the
components of Equity during
the period.
oIt highlights the contributions
and distributions to equity
participants.
Statement of changes in Equity

27. oPurpose is to ascertain the
pattern of cash usage by the
entity during the period.
oIt shows the proportion of cash
utilized in operating, investing
and financing activities.
Statement of cash flow

28. REGULATORY FRAMEWORK
FOR PREPARATION OF
FINANCIAL STATEMENTS
Regardless of the GLFRS being manual or
computerized, the regulatory framework
for preparing financial statements should
be taken into consideration.
There are basically three levels of
regulation for financial statement

29. o Generally Accepted
Accounting Principles (GAAP)
o Accounting standards
o National laws
Regulatory framework

30. SUPPORTING
MANAGEMENT
NEEDS
4

31. SUPPORTING MANAGEMENT NEEDS
o The MRS (Management Reporting System) is
largely responsible for taking care of
management’s information needs.
o However, the GLFRS also support management
needs via some financial reporting tools.

32. SUPPORTING MANAGEMENT NEEDS
1. Budget: routine report generated by the
GLFRS for the purpose of financial and strategic
planning by management.
2. Ratio analysis: tool that the GLFRS furnishes
management with in order to assess the
performance of the entity in the areas of
profitability, liquidity, gearing, efficiency,
investment potential, Etc.

33. SUPPORTING MANAGEMENT NEEDS
3. Infographics: Collection of visual
representations and minimal text to convey
information, data or knowledge quickly and
clearly.
Examples of infographics include charts, graphs,
icons, symbols, pictures, shapes, Etc.
Infographics has become a key tool for
presentation of financial statements and other

34. ACCOUNTING
SOFTWARE

35. GLFRS AND ACCOUNTING SOFTWARE
o The GLFRS like other subsystems of the AIS can
be manual or computerized.
o Computerized GLFRS are the trend and future.
o All activities of the GLFRS are now being
executed using accounting software such as
Peachtree, Quick books, Etc.

36. GLFRS AND ACCOUNTING SOFTWARE
Accounting software can
handle a wide range of
accounting functions and
activities. This feature
makes them suitable for
the GLFRS.

37. GLFRS AND ACCOUNTING SOFTWARE
Another stand out feature of Accounting
software is the capacity to share financial reports
and information over a network.

38. GLFRS AND ACCOUNTING SOFTWARE
Use of accounting software generally results in higher
quality of accounting information. Benefits of using
accounting software include:
o Speed
o Cost saving
o Accuracy
o Data integrity
o Reliability…Etc.

39. GLFRS AND ACCOUNTING SOFTWARE
In spite of its advantages, the use of accounting software
also comes with some risks and challenges:
o Technical knowledge requirement
o Cyber security issues
o Technical faults and errors
o Development costs…Etc.

40. EXTENSIBLE
BUSINESS
REPORTING
LANGUAGE
(XBRL)

41. XBRL – THE BACKGROUND
o Paper based reporting has largely been replaced by
digital reporting.
o However, a drawback with digital reporting is that
there are several standards for the exchange of
electronic documents, consequently many EDI
(Electronic Data Interchange) systems are not
compatible with each other.

42. XBRL – PROFILE
o XBRL is an XML based standard that standardizes the
preparation, validation, publication, exchange,
consumption and analysis of financial info.
o Created to eliminate multiplicity in EDI standards.
o Initiated by the American Institute of Certified Public
Accountants(AICPA) in 1998.

43. XBRL – PROFILE
XBRL is the open international standard for digital
business reporting, managed by a global not for profit
consortium, XBRL International.
XBRL Consortium has over 600 member organisations
drawn from both private and public sectors.

44. XBRL – PROFILE
o Used in more than 50 countries by accountants,
analysts, data providers, investors, corporations,
regulators and governments.

45. XBRL – HOW IT WORKS
XBRL uses tags to identify each piece of financial data,
which then allows it to be used programmatically by an
XBRL-compatible program.
These tags allow financial data to be computer or
machine readable; thus, standardizing the preparation
and sharing of financial statements and reports.

46. XBRL – GLOSSARY
1. Taxonomy: Digital dictionary of financial terms. It
defines the terms and their interrelationships.
2. Tagging: Process of applying the entity’s unique
financial data to an element within the taxonomy. The
tagging process is performed during the creation of an
instance document.

47. XBRL – GLOSSARY
3. Instance document: File that includes the company
specific business reporting information in a structured
manner that computers can intelligently recognize and
exchange.
4. Rendering: Process of translating instance
document into a human readable format using XBRL
software.

48. XBRL – GLOSSARY
5. XBRL Tools: XBRL software used for creating
taxonomies, tagging, instance document creation and
rendering.

49. XBRL – BENEFITS
o Automation
o High quality information
o Cost reduction
o Improved accessibility
o Inter-operability

50. XBRL – IMPLICATION FOR GLFRS
XBRL has revolutionized the practice of accounting and
financial reporting. Financial information is only as
valuable as its quality and XBRL clearly improves the
quality of financial reporting. Nonetheless, other factors
like size of the business, diversity of stakeholders, Etc.;
also play key roles in determining the value of XBRL to
an organisation.

51. CONTROL
OBJECTIVES,
THREATS
AND
PROCEDURES

52. CONTROL OBJECTIVES
o Control in any system is important if it is to
accomplish the objectives for which it exists.
o Controls within the GLFRS are meant to guaranty, to
a reasonable extent, the achievement of the goals of
the system.

53. CONTROL OBJECTIVES
Why control?
o Accuracy of accounting records
o Proper authorization for transactions
o Timely delivery of relevant reports
o Compliance with applicable laws and standards
o Security of entity’s accounting data and records
o Safeguard of entity’s assets…Etc.

54. THREATS AND PROCEDURES
o There are potential threats that management must
pay attention to while setting up or operating the
GLFRS. These threats can prevent the GLFRS from
meeting its objectives.
o Consequently, certain control procedures should be
put in place to mitigate these threats.

55. THREATS AND PROCEDURES
Threat 1: Errors in updating the general ledger
Control procedure Tasks description
1. Input controls • Date checks
• Field checks for validity of data entry
• File and account numbering and labelling
• Zero- balance checks (debits = credits)
• Recast account values and totals for accuracy
• Completeness check
• Automated task flow
• Establish conditional data entry protocols

56. THREATS AND PROCEDURES
Threat 1: Errors in updating the general ledger
Control procedure Tasks description
2. Reconciliation and
control reporting
• Prepare bank reconciliation statement periodically
• Prepare trial balance periodically
• Prepare debtors , creditors and expenses control
reports
• Suspense account analysis
• Journal voucher sequencing

57. THREATS AND PROCEDURES
Threat 1: Errors in updating the general ledger
Control procedure Tasks description
3. Audit trail • Maintain master and current files
• Parallel record keeping (manual and digital)
• Compare backup with existing records
• Maintain task flow chart
• Authorization fields included in records and
documents

58. THREATS AND PROCEDURES
Threat 2: Financial statement fraud
Control procedure Tasks description
1. Audit • Internal audit
• External audit
• Maintain data warehouse
• Cloud storage

59. THREATS AND PROCEDURES
Threat 2: Financial statement fraud
Control procedure Action description
2. Internal controls • Segregation of duties
• Authorization and approval thresholds
• Hardware access restrictions
• Maintenance and security protocols

60. THREATS AND PROCEDURES
Threat 2: Financial statement fraud
Control procedure Action description
3. Forensics • User documentation
• Alarm/warning systems
• Rules and regulations handbook
• Organisational chart

61. THREATS AND PROCEDURES
Threat 3: Data security risks
Control procedure Tasks description
1. Back up and
recovery
• Maintain cloud storage
• Appropriate labelling of storage mediums/tools
• Maintain multiple backups
• Always test Back up before storage
• Schedule back up frequently and consistently

62. THREATS AND PROCEDURES
Threat 3: Data security risks
Control procedure Tasks description
2. Access controls • Use of biometrics
• Physical restrictions (lock and key, vaults)
• Database restrictions and protocols
• Maintain log files for all activities
• User IDs and passwords

63. THREATS AND PROCEDURES
Threat 4: Cyber attacks
Control procedure Tasks description
1. Malware control • Install anti-malware programs
• Set up and regularly update network Firewall
• Email monitoring and sifting
• Monitor software updates

64. THREATS AND PROCEDURES
Threat 4: Cyber attacks
Control procedure Tasks description
2. Mole detection • Maintenance personnel vetting
• Use of IDs and passwords
• Establish outsourcing protocols
• Continuous surveillance

65. THREATS AND PROCEDURES
Threat 5: Poor performance
Control procedure Tasks description
1. Performance
reporting
• Prepare performance reports
• Set up monitoring and evaluation systems
• Maintain performance comparison dashboard
• Use multiple performance measurement tools

66. THREATS AND PROCEDURES
Threat 5: Poor performance
Control procedure Tasks description
2. System design and
development
• Implement XBRL
• Use accounting software
• Periodic systems testing and maintenance

67. SUMMARY AND DISCUSSION
The GLFRS is the fulcrum of the accounting
process. If we get it right at this stage of the
accounting process, we are more likely to
provide the kind of quality information required
by today’s users.
1. What other improvements do you think can
be made to the GLFRS?
2. Is digitalization of the accounting practice a

68. General Ledger and
Financial reporting
System
(GLFRS)
© 2021