Post on 18-Jan-2018
transcript
History of Accounting
The German banker Jakob Fugger
and his principal accountant, M. Schwarz,
registering an entry to a ledger.
(1517)
The background shows a file cabinetindicating the European cities
where the Fugger Banker conducts business.
From the biography of M. Schwarz; Herzog-Anton-Ulrich-Museum,
Braunschweig, Germany
Inflows
Outflows
Luca Pacioli
ASSETS Claims on
those Assets
=
ASSETS
Owner(s)
Debtholders
=
ASSETS
Equity
Liabilities
=
RevenueExpense
BUSINESSACTIVITY
DEBIT ENTRY CREDIT ENTRY
DEBITS = CREDITS
Mistake
BUSINESSACTIVITY
DEBIT ENTRY CREDIT ENTRY
DEBITS = CREDITS
Checks and Balances
Checks and Balances
BUSINESSACTIVITY
…everyone else has to be
checked up on.
Checks and Balances
BUSINESSACTIVITY
Checks and Balances
BUSINESSACTIVITYACTIVITY
Segregation of Duties
Segregation of Duties
Segregate Authorization from Execution
Segregate Custody from Recordkeeping
CustomerSales Rep
NegotiatesSale
Obtain andenter
Sales Order
Sales Manager Customer
Yes
No
Sets Selling Prices
Price List
CreditApplication
Credit Manager
CreditCheck
Credit Approved?
Sets up Customer
CreditApplication
CreditApplication
CustMaster File
Outside CreditSources
ProductMaster File
Sales Rep
Sales Manager
Sets Selling Prices
Price List
Customer
CreditApplication
Credit Manager
CreditCheck
Credit Approved?
Yes
No
CreditApplication
Sets up Customer
CreditApplication
CustomerMaster File
Outside CreditSources
ProductMaster File
No
Sales Manager
Sets Selling Prices
Price List
CustomerSales Rep
NegotiatesSale
StandardPrice?
Yes
Obtain andenter
Sales Order
CustomerMaster File
Sales Mgr Approval?
Yes
No
ProductMaster File
Credit Limit?
Credit Manager
No
Sales Manager
Sets Selling Prices
Price List
CustomerSales Rep
NegotiatesSale
StandardPrice?
Yes
Obtain andenter
Sales Order
CustomerMaster File
Sales Mgr Approval?
Yes
No
ProductMaster File
Credit Limit?
Credit Manager
No
Sales Manager
Sets Selling Prices
Price List
CustomerSales Rep
NegotiatesSale
StandardPrice?
Yes
Obtain andenter
Sales Order
CustomerMaster File
Sales Mgr Approval?
Yes
No
ProductMaster File
Credit Limit?
Credit Manager
No
Sales Manager
Sets Selling Prices
Price List
CustomerSales Rep
NegotiatesSale
StandardPrice?
Yes
Obtain andenter
Sales Order
CustomerMaster File
Sales Mgr Approval?
Yes
No
ProductMaster File
OrderAcknowledgement
Credit Limit?
OpenSalesOrders
Internal Controls• Segregation of Authorization from Execution• Independent Verification
No
Sales Manager
Sets Selling Prices
Price List
CustomerSales Rep
NegotiatesSale
StandardPrice?
Yes
Obtain andenter
Sales Order
CustomerMaster File
Sales Mgr Approval?
Yes
No
ProductMaster File
OrderAcknowledgement
Credit Limit?
Credit Manager
OpenSalesOrders
OpenSalesOrders
Warehouse
PrintPickingTickets
PickingTicket
(2 copies)
Pick,PackMdse
PickingTicket
(2 copies)Shipping
Enter ShippingData
OpenSalesOrders
Internal Controls• Segregation of Authorization from Execution• Independent Verification• Segregation of Custody from Recordkeeping
CofGS
Bill of Lading(1 copy)
PickingTicket
(2 copies)Shipping
Enter ShippingData
OpenSalesOrders
PickingTicket
(1 copy)
Carrier’s Driver
Signed CopyBill of Lading
PickingTicket
(1 copy)
Billing
PrintInvoices
Invoice
Customer
Sales Summary
Sales Manager
A/RFile
Sales
Inventory
Internal Controls• Segregation of Authorization from Execution• Independent Verification• Segregation of Custody from Recordkeeping• Use of Documents• Serial Numbering of Documents• Use of Logs and Checklists• Use of Technology (computers)
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
X
Requisitioner
Manager
VP
Purchasing
Vendor Receiving A/P
Bank Reconciliation
Bank
Tapes
Tapes
Tapes
Tapes
Tapes
Tapes
Mail Clerk
Vendor Invoices
Accts Payable Clerk
Add totals
Vendor InvoicesTape
Accounts PayableData Entry Clerk
Enter Invoicesto Daily
Payables batchFile
Invoices withBatch Report Payables Daily
Batch File
Totals Match?
Invoices withBatch Report Update Payables
Transaction File
Payables File
Tape
Invoices withBatch Report
Tape
Payables FileDrawer by
Batch#
To Page104
NO YES
Weekly Payroll
Hiring Process
Internal Controls
• Prevent• Detect• Correct
Segregate Duties
• Custody from Recordkeeping• Authorization from Execution
Segregate Duties
• Custody from Recordkeeping• Authorization from Custody• Authorization from Recordkeeping• Initiation from Conclusion• Inbound from Outbound• Debit from Credit
Checks and Balances
BUSINESSACTIVITY
Authorization from Execution
Recordkeeping from Custody
Initiation from Conclusion
Inbound from Outbound
Debits from Credits