05_Finance & Accounting

Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*Enterprise Resource Planning, 1st Edition by Mary SumnerChapter 5:ERP Systems: Accounting and Finance

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

Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*ObjectivesExamine accounting systems within ERPUnderstand ERP financial systems Review the interrelationships among business processes supporting finance and accounting


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*Case: Atlantic ManufacturingInaccurate and/or incomplete paperwork produces problems Exchange of information between departments made manuallyUnable to supply quantity discount information to sales forceLack of coordination between departments


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*Accounting ProcessesOperational management levelProduction of transactionsPaychecks, invoices, checks to vendors, purchase orders


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*Management Control ProcessesBudgetingAnalysis of allocations, expenditures, revenuesBudgetary analysis includes comparing current budget allocations to prior years allocations and comparing current revenues and expenditures to prior years budget and expenditures.Cash managementCash flow analysisWhat-if analysisCash management ensures the organization has sufficient cash to meet its needs and to place excess funds into use through investments.Capital budgetingEvaluation tools: Net Present Value (NPV), Internal Rate of Return (IRR), pay-back periodCapital budgeting processes analyze the impact of possible acquisitions.


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*Accounting SystemsTraditionalProvide operational-level softwareProduce invoices, checks, monthly statementsFinancial accountingFinancial statements for external reporting purposes (e.g. Balance Sheet and P&L statements). External reporting requirements are established by general accounting standards, as well as legal requirements.Management accountingInformation on product profitability and cost centre profitability, which enables managers to make business decisions.


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*Accounting Systems v. ERP ModulesERPInformation is shared in an integrated databaseProvides up-to-date informationSeamlessCreates a document flow of all transactionsAccounting systemsManual or separate transfer of informationMultiple platforms


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*ERP Financial Accounting ModuleExternal reportingSet by general accounting standardsLegal requirementsPost all accounting transactions which are reflected in general ledgers.Includes Accounts Receivable subsystemInterfaces with cash managementMonitors accounts and updates, handles payments, creates due date lists, produces statementsAccounts Payable subsystemHandles payments, applies available discounts to maximize profits


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*Management Accounting ModulesInternal accounting perspectives for directing and controlling operationsInformation on variances between planned and actual dataKey activitiesCost center accounting Internal orders as a basis for collecting and controlling costsActivity-based costing of business processesProduct cost controlling for profitability analysisProfitability analysis by market segments (which includes products, customers and orders)Profit center accounting of individual areas of organizationConsolidation of financial data for accounting perspectivesEnable management to better allocate resources, maximizing profitability and performanceCentral clearinghouse for accounting information that is created, updated and used by many different functional areas including financial accounting, materials management, production planning, HR and sales & distribution.


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*ERP SystemsProvide on-line, real-time data for decision making decisions. ERP system offers 2 types of data:-Operational dataFeedback on quality and efficiency of processesInformation must be timely and specificIncludes information on cycle time and defects and the cost of people and machines used in operationsUsed for real-time operational controlABC (Activity-Based Costing) dataInformation on profitability and productsReal-time dataEstimates are sufficientStrategic informationBasis for continuing improvement to operations


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*Featured Article: The Changing Landscape of Computerized Accounting SystemsDefine 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 Sumner5-*Featured Article: The Changing Landscape of Computerized Accounting Systems, continuedNew types of accounting softwareFair pricingDatabase management standardizedEase of mobilityPC-basedNew marketsERPs dominate highest endMid-levels are SQL-based and non-SQL-basedLow-end systems range from very low end to more robustE-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 Sumner5-*Featured Article: The Changing Landscape of Computerized Accounting Systems, continuedInternet-based commerceHottest technologyE-businessQuicken allows remote entries through WebEDI and EFTE-commerceAmazon.com and on-line securities tradingDell ComputerERPInternet additionsPrices decreasing


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*Featured Article: The Changing Landscape of Computerized Accounting Systems, continuedBest practicesImprove bottom lineCreate air of controlStructured Query LanguageDatabase of choice


Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner5-*SummaryMost accounting processes operate at the operational management levelAdditional software enables financial and management accountingEach department or division may operate different software and databasesERP systems integrated database allow for seamless information sharingEasier reportingIncludes all operational data and ABC dataCoordinates with management accounting modules


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05_Finance & Accounting

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