1. Enterprise Resource Planning, 1st Edition by Mary Sumner
Chapter 5:
ERP Systems: Accounting and Finance
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

2. 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 by Mary Sumner

3. 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 by Mary Sumner

4. Accounting Processes Operational management level
Production of transactions
Paychecks, invoices, checks, purchase orders
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

5. Management Control Processes
Budgeting
Analysis of allocations, expenditures, revenues
Cash management
Cash flow analysis
What-if analysis
Capital budgeting
Evaluation tools: NPV, IRR, pay-back period
Investment management
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

6. Accounting Systems Traditional Financial accounting
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 by Mary Sumner

7. Accounting Systems v. ERP Modules
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 by Mary Sumner

8. © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

9. ERP Financial Accounting Module
External reporting
Set by general accounting standards
Legal requirements
Includes accounts receivable subsystem
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 by Mary Sumner

10. 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 by Mary Sumner

11. ERP Systems Provide on-line, real-time data Operational data ABC 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 by Mary Sumner

12. © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

13. Define each of the “in-technologies and systems”.
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 by Mary Sumner

14. New types of accounting software
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 by Mary Sumner

15. Internet-based commerce
Featured Article: The Changing Landscape of Computerized Accounting Systems, continued
Internet-based commerce
Hottest technology
E-business
Quicken allows remote entries through Web
EDI and EFT
E-commerce
Amazon.com and on-line securities trading
Dell Computer
ERP
Internet additions
Prices decreasing
© Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

16. Structured Query Language
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 by Mary Sumner

17. 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 by Mary Sumner