Accounting systems design & evaluation

9434SB

19 April 2002

Class 9

Exercises

• There are various system tools used in documenting systems. – Describe these tools and describe the circumstances

under which they are most useful

– Distinguish between system flow charts and program flow charts

– Compare the use of DFDs to the use of flowcharts

– Explain the difference between a context diagram, a logical DFD and a physical DFD

This lecture

• Functions/activities, input forms/ source documents and output reports for each subsystem– Payroll and human resource information system– Customer billing and payment– Purchase order and payment to suppliers– Fixed assets

DFD for the human resources cycle

PayrollDept

Employee

A.T.O.Preparereports

PayrollMaster File

PayrollDepartment

HumanResources

Preparepaycheque

DeductionRpt & PayrollSummaries

Time sheetApproval

PersonnelAction Forms

Tax reports

PaychequeAnd earningSummary

Timesheet

ChequeRegister

Payroll system

• Objectives: records and processes data used to pay employees for their services. A payroll application calculates the pay due employees, prints paycheques and maintains cumulative earnings records

• A separate system to allow for:– Withholding of deductions eg income tax and union

fees– Application controls to detect fraud

• Typically processed in batch mode

Activities in payroll systems

• Record/ input payroll transactions for the period

• Update payroll master file

• Update tax rate and deductions (eg PAYG, HECS, Super)

• Validate time and attendance data

• Prepare the payroll

• Disperse the payroll

• Calculate employer-paid benefit and taxes (eg payroll tax, FBT)

• Disperse payroll taxes and miscellaneous deductions

System flowchart: refer Illu. 19-27 Boockholdt pg 679

Payroll system (cont’d)

• Inputs– Personnel records and

action forms from HR

– Approved time sheets or timecard (Boockholdt Illu. 19-19)

– Deduction authorisation signed by employees

• Outputs– Paycheques

(Boockholdt Illu. 19-21)– Pay advice slip (Boockholdt

Illu. 19-21)– Employee listing– Payroll register (Boockholdt

Illu. 19-22)– Payroll master file

(Boockholdt Illu. 19-23 and 19-24)

– Cheque registers– Tax reports– Deduction reports

Sample GL entries generated by a payroll system

Dr marketing salaries

Dr Warehouse salaries

Dr Manufacturing overhead

Cr Payroll control

to record the gross payroll costs of employee services

Dr Payroll control

Cr PAYG payable

Cr Union fees payable

to record the payroll deductions for the period

Other activities in the Human Resources Management System

• Recruitment and hiring

• Training

• Assignment of job responsibilities

• Evaluation of performance

• Discharge of employees

Files maintained in a human resource information system

• Employee payroll master file

• Personnel reference and history file

• Time record transaction file

• Compensation reference file

• Personnel planning file

DFD for the billing and receipts cycle

Sales

Receive payment

ManageCustomer

A/C

Customers

Customers F.I.ReceivingDept

StockControl

Administration

SalesOrderInvoice

Sales AnalysisReports

Cash ReceiptsForecast

Aging ReportsBad Debt Reports

AR Master File

Deposit Slips& ChequesCheque &

RemittanceAdvice

Sales Return Notification

Debit/ Credit Memo

Sample subsystems supporting the billing and receipts cycle

• Order entry system

• Shipping system

• Billing system

• Cash receipt system

Objectives of the billing & cash receipt systems

• The purposes of the billing application are to prepare sales invoices for merchandise that has been shipped and to record the sale in the appropriate accounts

• The purpose of the cash receipt system is to record payments made by customers for credit sales. It also deletes paid invoice records from the invoice detail file.

Inputs and activities of the billing and cash receipt systems

Activities• Generate sales• Receive payments• Manage customer

accounts

Inputs• Customer purchase orders

• Sales order (Boockholdt Illu. 17-3)

• Remittance advices(Boockholdt Illu. 17-5)

• Credit memo authorisation

Outputs of the billing and cash receipt systems

• Financial statement information

• Customer Billing Statement (Boockholdt Illu. 17-8) or Invoices (Boockholdt Illu. 17-4)

• Aging Report (Boockholdt Illu. 17-9)

• Bad Debts Report

• Cash Receipts Forecast

• Customer Listing

• Sales Analysis Reports (Boockholdt Illu. 17-11)

• Credit Memos

DFD of the purchases cycle

StockControl

ProductionDepartments

CreditorsMaster File

Merchant

Admin

Receivegoods orservices

Purchasegoods orservices

Maintaincreditors

Delivery Notice

Receiving Report

Payment

Purchase Order

Receiving Rpt

OrderForm

Notice of Receipt

Cash RequirementForecast

Purchase Analysis

Sample subsystems in the purchases cycle

• Purchasing system

• Receiving system

• Voucher system

• Cash disbursement system

• Inventory and Material Requisition systems

Objectives of the purchasing and cash disbursement systems

• The purposes of the purchasing application are to identify materials, supplies, and equipment for acquisition; to select a supplier for these items; and to ensure that the items are requested and received.

• The purpose of the cash disbursement system is to ensure that payments are made to vendors in the proper amount and at the proper time.

Inputs and activities of the purchases cycle

Activities• Procurement ie.

Purchase goods and services

• Track and receive goods and services

• Maintain creditors and make payments

Inputs• Order Form or Purchase

Requisition (Boockholdt Illu. 18-3)

• Notice of Receipt or Receiving Report (Boockholdt Illu. 18-5)

• Delivery Notice

• Debit memo

Outputs of the purchasing and cash disbursement systems

• Financial statement information• Purchase orders (Boockholdt Illu. 18-4)• Vendor cheques (Boockholdt Illu. 18-7)• Cheque Register Boockholdt Illu. 18-9)• A Vendor Control Report (Boockholdt Illu. 18-8)• Discrepancy Reports• Cash Requirement Forecast

(Boockholdt Illu. 18-12)• Purchase Analysis Reports

– Open Invoices Report (Boockholdt Illu. 18-10)– Voucher Aging report (Boockholdt Illu. 18-12)

DFD for the non-current assets cycle

SupplierUser departments& Management

Buyer

Record disposal of

assets

Record repair, maintenance &

changes in locationsRecord

cost of newassets

DepreciateNon-current

assetsNon-Current Assets File

ShippingReportInvoice

RequestForDisposal

Invoice

PurchaseRequisition

Non-currentAsset ChangeForm

UpdateReports

Objectives and outputs of the non-current asset system

• To ensure effective and accurate processing of the purchase, maintenance, valuation and disposal of an organisation’s fixed assets.

• Outputs include:– Financial Statement information

– Fixed Asset Register

– Depreciation Register

– Repair and Maintenance Report

– Retired Assets Report

Inputs and activities of the non-current assets system

Activities• Record cost of new

assets• Depreciate non-current

assets• Record repair,

maintenance and change in asset location

• Record disposal of assets

Inputs• Purchase

requisition• Request for

disposal• Non-Current Asset

Change Form• Invoice

In summary

• Functions/activities, input forms/ source documents and output reports for each subsystem– Payroll and human resource information system (Notes:

9-4 to 9-10;TB: 5.1 to 5.4, Boockholdt pg 668-680)

– Customer billing and payment (Notes: 9-11 to 9-15; TB: 6.1; Boockholdt pg 538-568)

– Purchase order and payment to suppliers (Notes: 9-16 to 9-20; TB 6.1; Boockholdt pg 597-626)

– Non-current assets (Notes: 9-21 to 9-23; TB: 6.1)

Exercises

• TB Chapter 5 – Questions 1 to 4

• ACCA Paper 5 Exam (Jun 2000):Question 9

• Model Exam Question 5– Compile a system flowchart for the granting of

credit in a large wholesaling organisation