Accounting Information Systems: The Processes and Controls, 2nd Edition

RISKS AND CONTROLS IN GENERAL LEDGER PROCESSES (STUDY OBJECTIVE 6)

In terms of the five internal control activities described in Chapter 3, following are common procedures associated with the general ledger.

AUTHORIZATION OF TRANSACTIONS

The general ledger accumulates subtotal data from the previous processes within the company. For example, sales subtotals are posted to the general ledger sales account. Each of those individual sales was authorized when the sale occurred. Chapter 8 describes the authorization of sales. However, there must also be proper authorization to begin the process of posting from the sales journal to the general ledger.

In the case of a manual accounting system, a journal voucher is prepared by a manager in the sales department, and that approved journal voucher is forwarded to the general ledger department. The journal voucher includes the dollar amounts, the accounts affected, and an authorized signature. Posting to the general ledger should not occur without a signed, authorized journal voucher from the department that accounted for the process. For example, wages and deductions are not posted to the general ledger until the payroll department forwards a signed journal voucher. The signed journal voucher serves as authorization to post the payroll data to the general ledger.

In a computerized accounting system, paper journal voucher documents may not exist. In these systems, individual transactions may be entered into special modules, but not posted ...