Heagy PPTs C5

Chapter 5

Reporting Process, Coding Methods, and
Audit Trails

Learning Objectives
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List, describe, and illustrate principles that form a foundation for effective reporting.
Understand XBRL reporting and the basics of preparing an instance document.
Describe the objectives and methods of common coding systems.
Design coding systems for various accounting entities and events.
Describe the concept and dimensions of an audit trail. Design a coding system to support audit trails.

Reporting Principles
Necessity for Concise Reports
 Emphasis on Both Physical and Monetary
Measures
 Frequency of Reporting
 Responsibility Reporting
 Reporting by Function
 Comparative Reporting
 Exception Reporting
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REPORTING PRINCIPLES
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Necessity for Concise Reports:
- Concise reports contain only the data that are essential to the performance of the recipient’s duties.
- Concise reports are important for two reasons:
(1) Most operations have relatively few critical success factors, and a manager’s attention should be focused on these factors.
(2) People’s ability to simultaneously process multiple data elements is limited, and report contents should not exceed these limitations.

REPORTING PRINCIPLES
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Emphasis on Both Physical and Monetary
Measures:
- A large portion of the information used by managers is non-financial. - Managers can both observe and influence these tangible measures, while related monetary measures will often be influenced by other factors over which the same managers have little or no control.

Reporting Principles
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Frequency of Reporting:
- Significance of the Data
- Nature of the Activity
- Type of Data Reported

Reporting Principles
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Responsibility Reporting:
- Reporting data to a manager that measures activities over which the manager has some authority and for which the manager is held responsible.
- When operations must be divided into functional areas, such as purchasing, sales, and accounting, considerable subdivision in