Accounting Workflows Deep Dive

Daily Tasks:
□ Cash position reconciliation (all bank accounts)
□ Credit card clearing account verification
□ Inter-company balance verification (if applicable)
□ Foreign exchange rate updates
□ Automatic journal entry review
□ Exception report review

Pre-Close Activities:
□ Confirm all PO receipts are properly recorded
□ Validate accrual estimates with department heads
□ Update depreciation calculations for any asset additions
□ Communicate cut-off procedures to all departments
□ Prepare standard journal entry templates
□ Review and update allocation bases
□ Confirm payroll processing schedule

Transaction Processing Priority:
1. Sales cut-off enforcement (last minute invoices)
2. Purchase invoice processing completion
3. Payroll journal entries posting
4. Bank deposit processing
5. Petty cash reconciliation
6. Credit card expense processing

Initial Analysis:
□ Run preliminary trial balance
□ Identify unusual balances for investigation
□ Begin bank reconciliation process
□ Start customer/vendor reconciliation
□ Process expense reports
□ Record cash receipts

Reconciliation Teams:
Team A (Cash Management):
□ Bank reconciliation (all accounts)
□ Investment account reconciliation
□ Foreign currency revaluation

Team B (Trade Balances):
□ Accounts receivable sub-ledger to GL reconciliation
□ Accounts payable sub-ledger to GL reconciliation
□ Customer statement reconciliation (major accounts)

Team C (Inventory & Operations):
□ Inventory sub-ledger to GL reconciliation
□ Work-in-progress validation
□ Cost of goods sold analysis

Bank Reconciliation Detail:
Beginning Balance:           $XXX,XXX
Add: Deposits in Transit     $XXX,XXX
Less: Outstanding Checks     $XXX,XXX
Add/Less: Bank Adjustments   $XXX,XXX
Ending Book Balance:         $XXX,XXX

Variance Investigation:
□ Outstanding items > 90 days
□ Unidentified deposits
□ Bank charges not recorded
□ Interest income accruals

Revenue Adjustments:
□ Unearned revenue recognition
□ Percentage completion adjustments
□ Rebate accruals
□ Warranty reserve adjustments

Expense Adjustments:
□ Depreciation expense
□ Amortization of intangibles
□ Bad debt provision
□ Inventory obsolescence reserve
□ Accrued bonuses and commissions
□ Professional fees accruals
□ Utility and insurance accruals

Cost Center Allocation Example:
Rent Expense Allocation:
- Basis: Square footage
- Total Rent: $50,000
- Allocation:
  * Manufacturing (60%): $30,000
  * Admin (25%): $12,500
  * Sales (15%): $7,500

Journal Entry:
Dr. Manufacturing Overhead    $30,000
Dr. Administrative Expense    $12,500
Dr. Sales Expense            $7,500
    Cr. Rent Expense Clearing        $50,000

Executive Summary:
1. Income Statement Variance Analysis
   - Revenue vs. Budget/Prior Year
   - Expense analysis by category
   - EBITDA calculation and analysis

2. Balance Sheet Analysis
   - Working capital changes
   - Cash flow implications
   - Key ratio calculations

3. Cash Flow Summary
   - Operating cash flow
   - Capital expenditures
   - Financing activities

SST Compliance Check:
□ Input tax reconciliation
□ Output tax validation
□ Bad debt relief calculations
□ Capital goods adjustments

Companies Act Compliance:
□ Related party transaction disclosure
□ Directors' loans and advances
□ Share capital movements
□ Dividend declarations

Financial Statement Review:
□ Mathematical accuracy verification
□ Comparative period consistency
□ Footnote completeness
□ Related party disclosures
□ Subsequent events review

Managerial Review:
□ KPI calculation accuracy
□ Budget variance explanations
□ Cash flow projections
□ Capital expenditure tracking

Monthly Recurring Entries:
1. Depreciation (Auto-calculated from asset master)
2. Amortization of prepaid expenses
3. Accrued interest calculations
4. Standard overhead allocations
5. Inter-company management fees

Real-time Close Status Dashboard:
- Bank reconciliation status by entity
- Outstanding reconciling items count
- Adjusting entries pending approval
- Financial statement review status
- Variance analysis completion

IC Transaction Categories:
1. IC-SALES: Inter-company sales of goods/services
2. IC-MGMT: Management fees and cost allocations
3. IC-LOAN: Inter-company loans and interest
4. IC-EQUITY: Capital contributions and distributions
5. IC-OTHER: Miscellaneous inter-company items

Inter-Company Account Structure:
2800-2899: Inter-Company Payables
  2801: IC Payable - Subsidiary A
  2802: IC Payable - Subsidiary B
  2803: IC Payable - Parent Company

1300-1399: Inter-Company Receivables
  1301: IC Receivable - Subsidiary A
  1302: IC Receivable - Subsidiary B
  1303: IC Receivable - Parent Company

8000-8099: Inter-Company Revenue
  8001: IC Revenue - Sales to Subsidiaries
  8002: IC Revenue - Management Fees

5800-5899: Inter-Company Expenses
  5801: IC Expense - Purchases from Subsidiaries
  5802: IC Expense - Management Fees

Scenario: Malaysian subsidiary sells RM100,000 of goods to Singapore subsidiary

Malaysian Entity (1100) Books:
Dr. Inter-Company Receivable - Singapore    RM100,000
    Cr. Inter-Company Sales Revenue                RM100,000

Singapore Entity (1200) Books:
Dr. Inter-Company Purchases               SGD25,000*
    Cr. Inter-Company Payable - Malaysia           SGD25,000

*Assuming exchange rate of 4.0 MYR/SGD

Inter-Company Reconciliation - Entity 1100 vs 1200
As of [Month End Date]

Entity 1100 Records (MYR):
IC Receivable Balance:           RM XXX,XXX
IC Sales Current Month:          RM XXX,XXX
IC Payments Received:           (RM XXX,XXX)

Entity 1200 Records (SGD Equivalent):
IC Payable Balance:             SGD XXX,XXX
IC Purchases Current Month:      SGD XXX,XXX  
IC Payments Made:              (SGD XXX,XXX)

Variance Analysis:
□ Exchange rate differences
□ Timing differences
□ Cut-off differences
□ Recording errors

1. Revenue/Expense Eliminations
   - Inter-company sales elimination
   - Management fee eliminations
   - Interest income/expense eliminations

2. Balance Sheet Eliminations
   - Inter-company receivables/payables
   - Inter-company loan eliminations
   - Investment vs. equity eliminations

3. Profit Eliminations
   - Unrealized profit in inventory
   - Unrealized profit in fixed assets
   - Profit on inter-company services

Elimination Entry - IC Sales/Purchases:
Dr. Inter-Company Sales Revenue      $XXX,XXX
    Cr. Inter-Company Cost of Sales        $XXX,XXX

Elimination Entry - IC Balances:
Dr. Inter-Company Payables          $XXX,XXX
    Cr. Inter-Company Receivables         $XXX,XXX

Translation Methodology:
1. Assets & Liabilities: Current rate (closing rate)
2. Equity: Historical rates
3. Revenue & Expenses: Average rate for the period
4. Translation adjustments: Other Comprehensive Income

Singapore Subsidiary Translation to MYR:
SGD Trial Balance → MYR Consolidated

Current Assets:     SGD 1,000,000 × 3.05 = MYR 3,050,000
Fixed Assets:       SGD 2,000,000 × 3.05 = MYR 6,100,000
Current Liabilities: SGD 500,000 × 3.05 = MYR 1,525,000
Revenue:            SGD 5,000,000 × 3.02 = MYR 15,100,000
Expenses:           SGD 4,000,000 × 3.02 = MYR 12,080,000

Translation Adjustment: Balancing figure to OCI

Material Variances:
1. Material Price Variance = (Actual Price - Standard Price) × Actual Quantity
2. Material Usage Variance = (Actual Usage - Standard Usage) × Standard Price

Labor Variances:
1. Labor Rate Variance = (Actual Rate - Standard Rate) × Actual Hours
2. Labor Efficiency Variance = (Actual Hours - Standard Hours) × Standard Rate

Overhead Variances:
1. Overhead Spending Variance = Actual Overhead - Budgeted Overhead
2. Overhead Volume Variance = (Standard Hours - Actual Hours) × Standard Rate

Activity Centers and Drivers:
1. Machine Setup
   - Driver: Number of setups
   - Rate: MYR 500 per setup

2. Quality Inspection
   - Driver: Inspection hours
   - Rate: MYR 80 per hour

3. Material Handling
   - Driver: Number of moves
   - Rate: MYR 25 per move

4. Packaging
   - Driver: Number of units packaged
   - Rate: MYR 5 per unit

Product X Production Run:
Direct Materials:             MYR 10,000
Direct Labor:                MYR 5,000

Activity-Based Overhead:
Machine Setup (5 setups):     MYR 2,500
Quality Inspection (20 hrs):  MYR 1,600
Material Handling (100 moves): MYR 2,500
Packaging (1,000 units):      MYR 5,000
Total ABC Cost:               MYR 26,600

Units Produced: 1,000
Cost per Unit: MYR 26.60

Department A (Mixing):
Beginning WIP:               MYR 5,000
Materials Added:             MYR 45,000
Labor Added:                MYR 15,000
Overhead Applied:            MYR 20,000
Total Costs:                MYR 85,000

Equivalent Units:
Completed & Transferred: 10,000 units (100% complete)
Ending WIP: 2,000 units (60% complete) = 1,200 equivalent units
Total Equivalent Units: 11,200

Cost per Equivalent Unit: MYR 85,000 ÷ 11,200 = MYR 7.59

Job Order #: JO-2024-001
Customer: ABC Manufacturing
Product: Custom Machinery
Start Date: 01/01/2024
Completion Date: 31/03/2024

Direct Materials:
Date    Description      Qty    Rate    Amount
01/05   Steel Plates     100kg  MYR50   MYR5,000
01/15   Electronics      5 sets MYR500  MYR2,500
Total Direct Materials:          MYR7,500

Direct Labor:
Date    Employee    Hours   Rate    Amount
01/10   Operator 1  40     MYR25   MYR1,000
01/20   Technician  20     MYR35   MYR700
Total Direct Labor:              MYR1,700

Overhead Applied:
Basis: Direct Labor Hours (60 hours)
Rate: MYR40 per hour
Total Overhead:                  MYR2,400

Total Job Cost:                  MYR11,600

Daily Controls:
□ Transaction authorization limits
□ Approval workflows
□ Data validation rules
□ Segregation of duties
□ Regular reconciliations

Monitoring Activities:
□ Monthly financial review
□ Budget variance analysis
□ Internal control testing
□ Compliance monitoring
□ Exception reporting

Independent Assurance:
□ Annual audit plan execution
□ Control effectiveness testing
□ Fraud risk assessment
□ Management reporting
□ Corrective action follow-up

Purchase-to-Pay Process:
Function                    Person A  Person B  Person C
Purchase Requisition         ✓
Purchase Order Approval               ✓
Goods Receipt Confirmation   ✓
Invoice Processing                             ✓
Payment Authorization                ✓
Bank Reconciliation          ✓

Order-to-Cash Process:
Function                    Person A  Person B  Person C
Sales Order Entry           ✓
Credit Approval                      ✓
Goods Shipment             ✓
Invoice Generation                   ✓
Payment Receipt                               ✓
Customer Reconciliation     ✓

Monthly Control KPIs:
1. Days Sales Outstanding (DSO): Target < 45 days
2. Days Payable Outstanding (DPO): Target 30-45 days
3. Bank Reconciliation Completion: Target < 3 days
4. Month-end Close: Target < 5 days
5. Budget Variance: Target < 5% unfavorable
6. Control Exceptions: Target < 10 per month

BigLedger Group Structure:
BigLedger Holdings Bhd (70200-A)
├── BigLedger Software Sdn Bhd (100% subsidiary)
├── BigLedger Services Sdn Bhd (100% subsidiary)
├── BigLedger Regional Pte Ltd (Singapore, 80% subsidiary)
└── BigLedger Innovation LLC (USA, 60% subsidiary)

Consolidation Requirements:
Entity                    Ownership   Control   Consolidate
BigLedger Software        100%        Yes       Full
BigLedger Services        100%        Yes       Full
BigLedger Regional        80%         Yes       Full
BigLedger Innovation      60%         Yes       Full
Associated Company        25%         No        Equity Method

Parent Company Books:
Investment in Subsidiary    MYR 1,000,000

Subsidiary Books:
Share Capital              MYR 800,000
Retained Earnings          MYR 200,000
Total Equity              MYR 1,000,000

Consolidation Elimination:
Dr. Share Capital - Subsidiary     MYR 800,000
Dr. Retained Earnings - Subsidiary  MYR 200,000
    Cr. Investment in Subsidiary        MYR 1,000,000

Scenario: Parent sells inventory to subsidiary at 25% markup
Sale Price: MYR 125,000
Cost: MYR 100,000
Unrealized Profit: MYR 25,000

Elimination Entry:
Dr. Inter-company Sales Revenue    MYR 125,000
    Cr. Inter-company Cost of Sales     MYR 125,000

Dr. Inter-company Cost of Sales    MYR 25,000
    Cr. Inventory                       MYR 25,000

Subsidiary Financial Position:
Share Capital:             MYR 1,000,000
Retained Earnings:         MYR 500,000
Current Year Profit:       MYR 200,000
Total Equity:             MYR 1,700,000

Parent Ownership: 80%
Minority Interest: 20%

Minority Interest in:
Net Assets: MYR 1,700,000 × 20% = MYR 340,000
Current Year Profit: MYR 200,000 × 20% = MYR 40,000

Formula: (Cost - Residual Value) ÷ Useful Life

Example:
Asset Cost: MYR 100,000
Residual Value: MYR 10,000
Useful Life: 9 years
Annual Depreciation: (MYR 100,000 - MYR 10,000) ÷ 9 = MYR 10,000

Formula: Book Value × Depreciation Rate

Example:
Asset Cost: MYR 100,000
Depreciation Rate: 20%
Year 1: MYR 100,000 × 20% = MYR 20,000
Year 2: MYR 80,000 × 20% = MYR 16,000
Year 3: MYR 64,000 × 20% = MYR 12,800

Formula: (Cost - Residual Value) × (Units Produced ÷ Total Expected Units)

Example:
Machine Cost: MYR 200,000
Residual Value: MYR 20,000
Expected Production: 1,000,000 units
Current Year Production: 100,000 units
Depreciation: (MYR 200,000 - MYR 20,000) × (100,000 ÷ 1,000,000) = MYR 18,000

Expenditure Evaluation:
□ Does it extend useful life beyond original estimate? → Capital
□ Does it increase capacity or efficiency? → Capital
□ Does it improve quality of output? → Capital
□ Is it routine maintenance? → Revenue
□ Is it repair to restore original condition? → Revenue
□ Is amount < MYR 1,000? → Revenue (materiality threshold)

Purchase of Equipment:
Dr. Plant and Equipment - Cost     MYR 150,000
Dr. GST Input Tax                  MYR 9,000
    Cr. Accounts Payable/Cash           MYR 159,000

Installation Costs:
Dr. Plant and Equipment - Cost     MYR 5,000
    Cr. Cash                            MYR 5,000

Total Capitalized Cost: MYR 155,000

Asset Details:
Original Cost: MYR 80,000
Accumulated Depreciation: MYR 60,000
Book Value: MYR 20,000
Sale Price: MYR 15,000

Disposal Entry:
Dr. Cash                           MYR 15,000
Dr. Accumulated Depreciation       MYR 60,000
Dr. Loss on Disposal               MYR 5,000
    Cr. Plant and Equipment - Cost      MYR 80,000

External Indicators:
□ Significant decline in market value
□ Adverse changes in technology/market/legal environment
□ Increase in market interest rates
□ Net assets > market capitalization

Internal Indicators:
□ Obsolescence or physical damage
□ Adverse changes in asset use
□ Economic performance worse than expected
□ Evidence of asset obsolescence

Asset Carrying Amount: MYR 500,000
Fair Value Less Costs to Sell: MYR 400,000
Value in Use: MYR 450,000
Recoverable Amount: MYR 450,000 (higher of the two)
Impairment Loss: MYR 500,000 - MYR 450,000 = MYR 50,000

Impairment Entry:
Dr. Impairment Loss               MYR 50,000
    Cr. Accumulated Impairment         MYR 50,000

Pre-Verification:
□ Update asset register
□ Generate physical verification reports
□ Assign verification teams
□ Prepare asset tags

During Verification:
□ Locate physical asset
□ Verify asset condition
□ Check asset tags
□ Note discrepancies
□ Update location codes

Post-Verification:
□ Reconcile physical vs. book records
□ Investigate variances
□ Update asset master data
□ Report missing/damaged assets
□ Process adjustments

Asset Category                    Annual Allowance
Plant and Machinery              10%
Heavy Machinery                  20%
Motor Vehicles                   20%
Office Equipment                 20%
Computers                        20%
Buildings (Industrial)           3%
Buildings (Non-Industrial)       3%

Temporary Differences Tracking:
Book Depreciation (Straight Line): MYR 20,000
Tax Depreciation (Reducing Balance): MYR 25,000
Temporary Difference: MYR 5,000 (Book > Tax)

Deferred Tax Calculation:
Temporary Difference: MYR 5,000
Tax Rate: 24%
Deferred Tax Asset: MYR 1,200

Journal Entry:
Dr. Deferred Tax Asset            MYR 1,200
    Cr. Tax Expense                    MYR 1,200

Revenue Recognition Scenarios:
1. Goods Sold: Revenue recognized on delivery
2. Services Rendered: Revenue recognized on completion
3. Long-term Contracts: Percentage completion method
4. Subscriptions: Recognized over subscription period
5. Commissions: Recognized when earned

Expense Recognition Scenarios:
1. Goods Purchased: Expense when goods are used
2. Services Received: Expense when service is consumed
3. Insurance: Expense over coverage period
4. Rent: Expense over occupancy period
5. Salaries: Expense when services are rendered

Scenario 1: Unbilled Professional Services
Services rendered but not yet billed: MYR 25,000

Month-end Accrual:
Dr. Accrued Revenue               MYR 25,000
    Cr. Professional Service Revenue    MYR 25,000

Following Month (when invoiced):
Dr. Accounts Receivable           MYR 25,000
    Cr. Accrued Revenue                MYR 25,000

Scenario 2: Interest Income on Fixed Deposits
Fixed deposit: MYR 1,000,000 @ 3% per annum
Monthly interest accrual: MYR 2,500

Month-end Accrual:
Dr. Accrued Interest Receivable   MYR 2,500
    Cr. Interest Income                 MYR 2,500

Scenario 1: Accrued Audit Fees
Annual audit fee: MYR 60,000
Monthly accrual: MYR 5,000

Month-end Accrual:
Dr. Professional Fees Expense    MYR 5,000
    Cr. Accrued Expenses               MYR 5,000

When Invoice Received:
Dr. Accrued Expenses             MYR 60,000
    Cr. Accounts Payable               MYR 60,000

Scenario 2: Accrued Utilities
Estimated monthly utility cost: MYR 8,000

Month-end Accrual:
Dr. Utilities Expense            MYR 8,000
    Cr. Accrued Utilities              MYR 8,000

When Actual Bill Received (MYR 8,200):
Dr. Accrued Utilities            MYR 8,000
Dr. Utilities Expense            MYR 200
    Cr. Accounts Payable               MYR 8,200

Scenario: Customer pays MYR 120,000 for 12-month service contract

Initial Payment:
Dr. Cash                         MYR 120,000
    Cr. Deferred Revenue              MYR 120,000

Monthly Revenue Recognition:
Dr. Deferred Revenue             MYR 10,000
    Cr. Service Revenue               MYR 10,000

Scenario: Software subscription - MYR 36,000 for 3 years
Monthly recognition: MYR 1,000

Each Month:
Dr. Deferred Revenue             MYR 1,000
    Cr. Software License Revenue      MYR 1,000

Balance Sheet Impact:
Current Portion (next 12 months): MYR 12,000
Non-current Portion: MYR 24,000

Scenario: Annual insurance premium MYR 24,000 paid in advance

Initial Payment:
Dr. Prepaid Insurance            MYR 24,000
    Cr. Cash                           MYR 24,000

Monthly Amortization:
Dr. Insurance Expense            MYR 2,000
    Cr. Prepaid Insurance              MYR 2,000

Scenario: Office rent MYR 30,000 paid quarterly in advance

Quarterly Payment:
Dr. Prepaid Rent                 MYR 30,000
    Cr. Cash                           MYR 30,000

Monthly Amortization:
Dr. Rent Expense                 MYR 10,000
    Cr. Prepaid Rent                   MYR 10,000

Revenue Accruals:
□ Unbilled professional services
□ Completed work not yet invoiced
□ Interest income on deposits
□ Rental income receivable
□ Dividend income declared but not received

Expense Accruals:
□ Audit and professional fees
□ Utilities consumed but not billed
□ Bonus and commission provisions
□ Vacation pay accruals
□ Interest expense on loans
□ Warranty expense provisions

Prepayment Reviews:
□ Insurance coverage periods
□ Software license periods
□ Maintenance contract periods
□ Rent payment coverage
□ Professional membership fees