Enterprise Resource Planning, 1st

ERP Systems: Accounting and

Finance

5-1

Objectives

Understand ERP financial systems

Review the interrelationships among
business processes supporting finance
and accounting

5-2

Case: Atlantic Manufacturing

Inaccurate and/or incomplete

paperwork produces problems
Exchange of information between
departments made manually
Unable to supply quantity discount
information to sales force
Lack of coordination between
departments
5-3

Accounting Processes

Operational
management
level

Production of
transactions

Paychecks,
invoices,
checks,
purchase
orders

5-4

Management Control Processes

Budgeting

Cash management

Cash flow analysis

What-if analysis

Capital budgeting

Analysis of allocations, expenditures, revenues

Evaluation tools: NPV, IRR, pay-back period

Investment management

5-5

Accounting Systems

Traditional
Provide operational-level software

Produce invoices, checks, statements

Financial accounting
Financial statements for external reporting
purposes

Management accounting
Information on profitability
5-6

Accounting Systems v. ERP

Modules

ERP

Information shares integrated database

Provides up-to-date information
Seamless
Creates document flow of transactions

Accounting systems
Manual or separate transfer of information
Multiple platforms
5-7

5-8

ERP Financial Accounting

Module

External reporting

Includes accounts receivable subsystem

Set by general accounting standards

Legal requirements

Interfaces with cash management

Monitors accounts and updates, handles
payments, creates due date lists, produces
statements

Accounts payable

Handles payments, applies available discounts to

maximize profits
5-9

Management Accounting
Modules

Internal accounting perspectives for directing and controlling

operations
Information on variances between planned and actual data
Key activities

Cost center accounting

Internal orders as a basis for collecting and controlling costs
Activity-based costing of business processes
Product cost controlling for profitability analysis
Profitability analysis by market segment
Profit center accounting of individual areas of organization
Consolidation of financial data for accounting perspectives

Enable management to better allocate resources, maximizing

profitability and performance
Central clearinghouse for accounting information

5-10

ERP Systems

Provide on-line, real-time data

Operational data

Feedback on quality and efficiency of processes

Information must be timely and specific
Used for real-time operational control

ABC data

Information on profitability and products

Real-time data
Estimates are sufficient
Strategic information
Basis for continuing improvement to operations
5-11

5-12

Featured Article: The Changing

Landscape of Computerized Accounting
Systems

Define each of the in-technologies

and systems.
What is their relationship to the
success of ERP?

5-13

Featured Article: The Changing Landscape of

Computerized Accounting Systems, continued

New types of accounting software

Fair pricing
Database management standardized

Ease of mobility

PC-based

New markets

ERPs dominate highest end

Mid-levels are SQL-based and non-SQL-based
Low-end systems range from very low end to
more robust
E-commerce and e-business drive most mid- and
high-level systems, as well as a few low-level
5-14

Featured Article: The Changing Landscape of

Computerized Accounting Systems, continued

Internet-based commerce

Hottest technology
E-business

E-commerce

Quicken allows remote entries through Web

EDI and EFT
Amazon.com and on-line securities trading
Dell Computer

ERP

Internet additions
Prices decreasing
5-15

Featured Article: The Changing Landscape of

Computerized Accounting Systems, continued

Best practices
Improve bottom line
Create air of control

Structured Query Language

Database of choice

5-16

Summary

Most accounting processes operate at the

operational management level

Additional software enables financial and

management accounting
Each department or division may operate
different software and databases

ERP systems integrated database allow for

seamless information sharing

Easier reporting
Includes all operational data and ABC data
Coordinates with management accounting
modules
5-17