Sap for Atlam

Sap for Atlam

SAP for ATLAM
Background
It had been December 2001 and the management of ATLAM, a wholly owned organization of MICT Berhad, had been asked to upgrade its accounting system with the PERT group-wide SAP system. The cost of implementing SAP in ALTAM is one of the main concern. Apart from that, it had been more of whether ATLAM’s staff would be ready to embrace the new systems. The purposed of SAP system was scheduled to be phased in by 1 April 2002 i.e. the star of the financial year.

Situation 1: Implementation of SAP system in ATLAM but parent company pays the cost
ATLAM has to evaluate the decision to upgrade the current accounting system to the SAP system. Although it is critical to assess the risks associated with decision, ATLAM has to ensure the best possible outcome for the organisation.   In order for better access of ATLAM’s IT facilities and the need for consolidation with PETRA’s servers to leverage group wide PETRANET network system, ATLAM need to consider implementing the SAP system for replacement of existing accounting system.
Recommendation
Due to some constraints that faced by ATLAM (timely and costly), it is recommended that the parent company of ATLAM pay for the SAP system. The SAP systems will be capitalized in the parent company’s book and depreciation will be calculated and recorded in their accounts. This cost will be incorporated in the group consolidated accounts and not the company accounts of ATLAM.

Situation 2: Implementation of SAP system in ATLAM and they pay the cost
Determination of SAP System as an asset
Systems, Application and Products in data processing (SAP) is an integrated business application software package covering key business functions of an organisation which are financial, human resource and operations.
Based on Financial Reporting Standard 116 by Malaysia Accounting Standards Board, SAP can be considered as tangible items taking into consideration the following:
  (a) Are held for use in the...

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