Enterprise resource planning 1st by mary summer chapter 05

Enterprise Resource Planning, 1st Edition by Mary Sumner Chapter 5: ERP Systems: Accounting and Finance © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 5-1 Objectives • Examine accounting systems within ERP • Understand ERP financial systems • Review the interrelationships among business processes supporting finance and accounting © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 5-3 Accounting Processes • Operational management level – Production of transactions • Paychecks, invoices, checks, purchase orders © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 5-7 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 5-11 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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? © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition 5-17 ... information – Multiple platforms © Prentice Hall, 2 005: Enterprise Resource Planning, 1st Edition 5-7 © Prentice Hall, 2 005: Enterprise Resource Planning, 1st Edition 5-8 ERP Financial Accounting Module... improvement to operations © Prentice Hall, 2 005: Enterprise Resource Planning, 1st Edition 5-11 © Prentice Hall, 2 005: Enterprise Resource Planning, 1st Edition 5-12 Featured Article: The Changing... • Structured Query Language – Database of choice © Prentice Hall, 2 005: Enterprise Resource Planning, 1st Edition 5-16 Summary • Most accounting processes operate at the operational management