...The Effect of ERP System Implementations on the Usefulness of Accounting Information Joseph F. Brazel Department of Accounting College of Management North Carolina State University Campus Box 8113 Raleigh, North Carolina 27695 Telephone: 919-513-1772 Fax: 919-515-4446 e-mail: joe_brazel@ncsu.edu Li Dang Department of Accounting College of Business Oregon State University Corvallis, Oregon 97331 Telephone: 541-737-6049 e-mail: li.dang@bus.oregonstate.edu October 2005 The authors thank the international ERP system supplier for providing them with the ERP system implementation data and Marianne Bradford and Jeff Wong for helpful comments. Funding for this research was partially provided by an NCSU Edwin Gill Research Grant. The Effect of ERP System Implementations on the Usefulness of Accounting Information ABSTRACT: ERP systems have become the system of choice for the majority of publicly traded companies and have radically changed the way accounting information is processed, analyzed, audited, and disseminated. In this study, we examine whether ERP system implementations have impacted the decision usefulness of accounting information. We find that ERP adoptions lead to a trade-off between increased information relevancy and decreased information reliability for external users of financial statements. After implementing the system, firms concurrently experience both a decrease in reporting lag and an increase in the level of discretionary accruals. Contrary to expectations...
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...files used to be a nightmare for the departments. Updating of data, entry of new details was cumbersome and often lead to redundancy of data. With the advent of ERP which provided for a single platform for unified database proved to be a landmark in the history of file management system. It is universally recognized by large and small-to medium-size enterprises (SME) that the capability of providing the right information at the right time brings tremendous rewards to organizations in a global competitive world of complex business practices. It all began with five IBM engineers from Manheim, Germany who worked day and nights and sacrificed the much awaited holidays to develop the next big thing in the history of software-ENTERPRISE RESOURCE PLANNING. As said by ” Kumar & Van Hillsgersberg, 2000 “ERP systems are configurable information systems packages that integrate information and information-based processes within and across functional areas in an organization. ‘ “One database, one application and a unified interface across the entire enterprise” (Tadjer, 1998)’-defines all. The year to mark was 1972, the softwares for each department were different and communication and integration of data was a tedious task. And then entered SAP which...
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...America. The candy business is seasonal and Christmas and Halloween account for 40% of annual sales. The company and brand are institutions of Americana and their wide variety of products are sold all over the world. The Hershey Company employs approximately 14,000 employees worldwide and relies on a multitude of suppliers and distributors to deliver their products. The business of selling chocolates and various confectionaries is a high volume-low profit margin undertaking with important seasonal deadlines. The company operates over a dozen manufacturing plants located domestically and internationally. Hershey had been trailing the industry standards with their information technology system. They needed to upgrade their technological resources to provide a more reliable and competitive advantage. According to Rick Benz Hershey vice-president of information systems, in 1996, Hershey initiated a plan to modernize its hardware and software to upgrade its service capabilities. The project dubbed Enterprise 21, was designed and initiated to be implemented incrementally over the next four years until the year 2000. The goals of the project were to upgrade and standardize company hardware, move from a mainframe-based network to a client-server network, and use these advancements in the firm’s IT infrastructure to support better efficiency with suppliers and customers. Industry demands had increased the importance and need for more...
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...SAP. But for the Montreal-based succession-planning software company to achieve the prized Tier 1 status, there would have to be a business case presented to the Board, one that justified, on an array of criteria, the rationale for this award. If it did happen, tiny Nakisa would take its place, in a very small and select circle, alongside such companies as Adobe, Cisco, and Microsoft. Five years ago, SAP would likely have built the application with its own engineering organization. Yusuf’s team had worked with SAP’s product management organization to put together a deck of slides on the Nakisa partnership to be presented to the SAP Board. Yusuf flipped through the deck and wondered if the recommendation to elevate Nakisa to Tier 1 status really made sense. Yusuf reflected for a moment on how far things had come in just a few years, to even be considering this. Prior to 2000, organizations in the enterprise resource planning software (ERP) industry—notably archrivals SAP and Oracle—played clear-cut roles in the complex process of developing and installing enterprise applications, even as the nature of the product demanded extensive collaboration between software supplier, enterprise customer, and the system integrators that drove implementation. SAP’s technology and its ability to create new areas of business process expertise for new applications were instrumental in making the firm the world’s leader in the Enterprise Resource Planning (ERP) field (see Exhibit 1). In the new...
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...The Impact of Enterprise Resource Planning in the Company Environment Introduction Since the Sarbanes-Oxley Act of 2002, companies are required to report effectiveness of their internal controls on purpose to reduce fraud. Enterprise Resource Planning (ERP) systems have taken advantage of this new focus on internal control because it offers an integration of an organization’s main business functions. Even though the value of ERP has been debated in trade periodicals, there is no large evidence of whether the benefits of ERP implementation exceed the costs and risks. This paper is designed to evaluate the impact of enterprise systems on a firm's environment, and how it reflects in the production and management of earnings. “The Impact of Enterprise Resource Planning (ERP) Systems on the Effectiveness of Internal Controls over Financial Reporting” by John J. Morris The study to produce the article was motivated by an empirical research question about the impact of ERP systems on internal control. Specifically, the study examined if firms that implemented ERP systems are more or less likely to report internal control weaknesses in their annual reports than firms that did not. This study used a sample of 108 firms that confirmed the execution of ERP systems between 1994 and 2003, and also an equal number of control firms, accorded by industry and size. The results show that firms that implemented ERP are less likely to report internal control weaknesses than the firms which did...
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...million of annual earnings. Riordan has facilities in San Jose, California, Albany, Georgia, Pontiac, Michigan, and Hangzhou, China. Riordan has demonstrated they can be very successful and contend with their competitors as a Fortune 1000 company. There are a few major economic influences affecting Riordan’s operations and strategy including interest rates, unemployment rate, inflation rate, gross domestic product, consumer confidence and currency exchange rates. History Dr. Riordan started Riordan Manufacturing after purchasing a in 1992 when he obtained the venture capital to purchase a fan manufacturing plant in Pontiac, MI. Riordan’s primary plant for making custom plastic parts is the Michigan plant. In 1993 the company also began to produce plastic containers for beverages out of Albany, GA. The most recent the venture for Riordan is its expansion to China as the main manufacturer of fans. Riordan’s main customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers. Riordan Accounting System Each Riordan location has separate, customized financial and accounting and those systems are costly and complicated to customize, update and test. The systems were not meant to work together and as a result they have compatibility and don’t function properly. Modern financial software is more sophisticated and offers a solution for Riordan. Enterprise Resource Planning (ERP) packages are...
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...Anthony Wataka Accounting Information Systems Information Security Management within ERP Systems Research Paper Introduction This paper will discuss research on Information Security Management (ISM) within Enterprise Resource Planning (ERP) Systems since information security continues to be a hot topic in the business world. The major focus of the paper will be threefold: an analysis of the ERP systems in the present day, a relation of these systems to the accounting and auditing world, and finally, the future of the technology, given its vast impact in the business world. Notable ERP Systems Research Key research pertinent to this paper includes the works of Grabski et al. (2011) who discuss various issues relating to the security environment, as regards the ERP systems. They talk about the risk associated with ERP systems implementation and define it as a “problem that has not occurred but has the potential to cause loss” (Grabski et al. 2011, p. 55). They mention that there is a need for ERP audit techniques, such as embedded audit modules, to control security risks (2011, p.55). This paper will utilize their research work to analyze auditing in an ERP environment by examining security risks and internal controls after ERP implementation. Additionally, Hunton et al. (2004) try to address the issue of risk associated with ERP systems, in the context of auditing (p.1-23). Hunton et al. (2004) analyze how financial auditors compare ERP systems related risks to...
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... 08 8.WHY SAP? 09 9. IMPLEMENTATION 10 10.SOLUTION 11 11.BENEFITS 12 12.REFERENCES 13 ABSTRACT Management Information System (MIS) provides information for the managerial activities in an organization. The main purpose of this research is, MIS provides accurate and timely information necessary to facilitate the decision-making process and enable the organizations planning, control, and operational functions to be carried out effectively. Management Information System (MIS) is basically concerned with processing data into information and is then communicated to the various Departments in an...
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...CONSULTAFRIC PARTNERS EY is a global leader in assurance, tax, transactions and advisory services. Locally, we are committed to doing our part in building a better working world for our people, for our clients and for our communities. Globally, we are also united by our shared values, which inspire our people worldwide and guide them to do the right thing, and our commitment to quality, which is embedded in who we are and everything we do. Advisory Services Who we are One business, one Advisory practice We operate as the most globally integrated firm, with one methodology, across all our geographical areas. It's a structure that enables us to mobilize our people quickly, and allocate them to projects in the right place, at the right time. Through our industry-focused approach and worldwide reach, we help clients like you manage risk, improve performance and sustain the results. How we work We help drive your business performance Some consulting firms think only about business strategy; some physically deploy technology; but our Advisory services help execute enterprise-wide performance transformation initiatives. We help turn strategy into reality. KPMG in Kenya provides Audit, Tax, and consulting delivering a globally consistent set of multidisciplinary financial and accounting capabilities based on deep industry knowledge. KPMG professionals in Kenya work for a wide range of clients, from global organizations to entrepreneurial start-ups., Audit We provide clients with...
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...and appliance manufacturers . Currently, Riordan Manufacturer has three plants located in Pontiac, Michigan; Hangzhou, China; and Albany, Georgia. Each plant supplies specialized products to customers. Riordan’s corporate headquarters is in San Jose, California and is also the location for the company’s research and development. With the popularity of these high-tech designed products Riordan is increasing in sales and growth. Riordan Manufacturing’s global business currently employs 550 people at the four locations. The company projects it will have annual earnings of over $46 million, and because Riordan Industries owns it; a Fortune 1000 enterprise, continued growth, and expansion is likely. To improve management of this profitable and growing company; it needs to review existing business systems. This review will show the current system including: finance and accounting, sales and marketing, human resources, legal, and operations. After this review has been accomplished; recommended business system and subsystem needs will be addressed. The goal is to create a system plan for the entire Riordan Manufacturing Corporation that will improve upon the current system design to provide better management. Finance and Accounting System Currently, Riordan’s finance and accounting System has not been able to provide a flawless and fluid operation. With the company revenue in excess of $1 billion dollars, it is...
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...Background…………………………………………………………………………….4 Business Systems Overview...…………………………………………………………………….4 Riordan Business Systems……………………………………..………………………………….5 Accounting and Finance……………………………………………………………….….5 Sales and Marketing…………………………………………………………….…………8 HR……..………………………………………………………………………….……….9 Legal……………………………………………………………………………………..11 Operations………………………………………………………………………………..12 IT Security……………………………………………………………………………………….13 Conclusion……………………………………………………………………………………….14 References………………………………………………………………………………………..15 Appendices: Service Requests…………………………………………………………………...16 Appendix A: Accounting and Finance...…………………………………………………16 Appendix B: Sales and Marketing……………………………………………………….17 Appendix C: Human Resources - HRIS…………………………………………………18 Appendix D: Human Resources – CM...……………………………………...…………19 Appendix E: Operations – CAD...……………………………………………………….20 Appendix F: Operation – ERP…..……………………………………………………….21 Appendix G: Operations - Legal…...…………………………………………………….22 Appendix H: IT Security…………...…………………………………………………….23 Abstract This is a formal response to Service Request, SR-rm-012 Business Systems, which requests analysis and recommendation of Riordan Manufacturing’s current business systems. This paper evaluates the electronic and hard-copy information systems in each of Riordan’s departments. Each section contains a system overview and relationships with other systems. The descriptions include the system’s purpose, function, limitations, advantages...
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...how information systems integrate and support enterprisewide business processes, as well as the business functions of marketing, manufacturing, human resource management, accounting, and finance. LEARNING OBJECTIVES After reading and studying this chapter, you should be able to: 1. Identify the following cross-functional enterprise systems, and give examples of how they can provide significant business value to a company: a. Enterprise application integration b. Transaction processing systems c. Enterprise collaboration systems 2. Give examples of how Internet and other information technologies support business processes within the business functions of accounting, finance, human resource management, marketing, and production and operations management. SUMMARY • Cross-Functional Enterprise Systems. Major e-business applications and their interrelationships are summarized in the enterprise application architecture of Figure 7.2 . These applications are integrated cross-functional enterprise systems such as enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM). These applications may be interconnected by enterprise application integration (EAI) systems so that business professionals can more easily access the information resources they need to support the needs of customers, suppliers, and business partners. Enterprise collaboration systems (ECS) are cross-functional systems...
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...Global Supply Chain Advantages Paper Lisa Agnew, Heidi Lankford, Renae Pace, Courtney Ray Strategic Supply Chain Management ISCOM 370 Adrian Crystal Martin January 31, 2010 University of Phoenix Online Riordan Manufacturing Supply Chain Riordan Manufacturing is a worldwide manufacturer of plastics. The organization employs 550 people and has projected annual earnings of $46 million. The company’s products include plastic fans and fan parts produced at its facilities in Hangzhou, China and custom plastic parts produced at its plant in Pontiac, Michigan. The company's major customers for its standard and customized fans are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, and appliance manufacturers. Recently, the company has experienced some issues with its. On-time deliveries in the China plant have averaged only 93% over the past year, which is inadequate for a Six Sigma company focused on exceeding ISO 9000 manufacturing standards. The senior management team must examine all steps in the material requirements planning, supply chain management, and production and inventory processes to look for potential areas to eliminate waste and redundancies, gain efficiencies through automation or other process changes, and improve the process design and supply chain for the manufacturing of its electric fans. Production and Inventory Processes Change Recommendations After reviewing the production process of the plant in Hangzhou, China...
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...used to handle the differing operational, management, and strategic-level needs. [Figure 2-1] FIGURE 2-1 Types of information systems 3 Different Kinds of Systems • Organizations can be divided into strategic, management, and operational levels and into four major functional areas: sales and marketing, manufacturing and production, finance and accounting, and human resources. Information systems serve each of these levels and functions. • Operational-level systems support operational managers’ needs for current, accurate, and easily accessible information primarily used to keep track of the elementary activities and transactions of the organization. Management-level systems serve the monitoring, controlling, decision-making, and administrative activities of middle managers. • • Strategic-level systems help senior managers with long-range planning needed to meet changes in the external and internal business environment. There are also different information needs for the various business functions: sales and marketing, manufacturing, finance, accounting, and human resources. • • A large organization typically has operational, management, knowledge, and strategic level systems for each of these functional areas. Prepared by: Mrs Sanjana Motee Bedaysee 4 Four Major Types of Systems • Four major types of...
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...11FN-097 Soumyarup Chatterjee 11FN-106 Sourabh Bhave 11FN-107 Microsoft | ERP Implementation in SMEs | Introduction In the post-liberalization and opening up of the economy business era, ease in international trade barriers, economic liberalization, globalization, privatization, disinvestments and deregulations have thrown several challenges to small and medium-sized enterprises (SMEs) in the fast-developing economies like India. Compressed product development cycles, cut throat domestic and global competition, economic downturns, rapidly changing customer demands and volatile financial markets have increased the pressure on SMEs to come up with effective and competitive capabilities to survive and succeed. Enterprise resource planning (ERP) is often considered as one of the solutions for their survival (Rao, 2000). Up to mid-1990s, SMEs sector in India had operated under much-protected economic regime characterized by limited competition and highly regulated business environment. This business atmosphere had resulted in limited focus on process efficiencies, centralized control structures, highly formalized business settings and lack of professional business practices (Ranganathan and Kannabiran, 2004). However, following the economic liberalization and opening up of the economy to foreign multi-national companies, Indian SMEs have to adopt modern business practices and strategies, which in turn can provide them a cutting edge over its competitors. ERP software...
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