Lecture 16: ERP Systems
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Created by:
RiskandControls on March 23, 2011
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Terms | Definitions |
|---|---|
 Enterprise Resource System (ERP) Software | A system that integrates all departments and functions across an organization into a single computer system; helps facilitate communications among departments |
| SAP (Systems, Applications, and Products) | The global leader with 30 to 60% of the ERP market |
| SAP R/3 | Includes support for multicountry, multicurrency environments and wide scalability |
| Oracle | The second largest ERP vendor |
| Peoplesoft | -Purchased by Oracle -Strength in HR management -Widely used in the federal government |
| Benefits of ERP | 1) ERPs employ proven best practices, 2) Enable Organizational standardization 3) Improve information management including eliminating duplicative systems, providing on-line and real-time info, and facilitating intra- and inter-organizational communication and collaboration |
| What are the two main ERP applications? | Core Applications and Business Analysis Applications |
| Core Applications | Applications that operationally support the day-to-day activities of the business, support mission-critical tasks through simple queries of operational databases. Include sales and distribution, business planning, production planning, shop floor, control, and logistics modules |
| online transaction processing (OLTP) | events consisting of large numbers of relatively simple transactions such as updating accounting records that are stored in several related tables |
| Business Analysis Applications | - decision support tool for management critical tasks through analytical investigation of complex data associations - supplies management with real-time info - takes information and converts it to data to make useful |
| Why ERP is different | 1)The system usually resides on multiple computers, 2) the system allows flexible configuration, customization, and maintenance 3) On-line and real-time processing (all databases are updated simultaneously and all stored together) 4) Databases can be accessed by an module |
| Key Business Exposures | 1) Single point of failure since all data processing is within one application 2) Complexity makes it difficult to understand 3) User acceptance influences likelihood of success 4) extensive training for many users 5) Inexperience with implementation may cause challenges |
| What are the Key ERP PROCESS issues? | There are many high costs, maintenance requirements (upgrades and compatability), extensive reorganization of the company |
| What are the key ERP PEOPLE issues? | Employee resistance, retraining and reorientation, more data collection screens required, lack of qualified personnel, security, and employee retention |
| What are the key ERP TECHNOLOGY issued? | 1) difficulty of migration from legacy systems to ERP database, 2) lack of interoperability among different vendors, 3)and continual maintenance requirements |
| HTML: Hyper Text Markup Language | The format used to produce Web pages by defining the layout, fonts, and graphics |
| What does Hypertext allow readers to do? | Hypertext links to other documents on the Web and enables the reader to jump to another document located anywhere on the World Wide Web |
| XML (eXtensible Markup Language) | A meta-language for describing markup languages |
| XBRL (eXtensible Business Reporting System) | an XML base language for standardizing methods for preparing, publishing, and exchanging financial information |
| The Advantages of XBRL | 1) business offers expanded financial info to all interest parties instantaneously 2) companies using XBRP database technology can further speed the process of reports and 3) Consumers import XBRL documents into internal databases and analysis tools to facilitate decision-making |
| Taxonomy Creation | incorrect taxonomy results in invalid mapping that may cause material misrepresentation of financial data |
| Validation of instance documents | ensure that appropriate taxonomy and tags have been applied |
| Audit scope and timeframe | impact on auditor responsibility as a consequence of real-time distribution of financial statements |
| online analytical processing (OLAP) | enterprise resource planning tool used to supply management with real time information. it also permits timely decisions that are needed to improve performance and achieve a competitive advantage |
| Data warehouse | database constructed for quick searching, retrieval, ad hoc queries, and ease of use |
| What is the primary reason for data warehousing? | The primary reason for data warehousing is to optimize business performance |
| Big Bang Method of ERP implementation | attempt by organizations to switch operations from their old legacy systems to a new system in a single event that implements the ERP across the entire company; more ambitious and risk than phased-in method |
| Phased-In Method of ERP Implementation | approach for implementing ERP systems in a phased manner; a popular alternative to the Big Bang method |
| What are some of the major implications for Internal Control and Auditing when dealing with ERP systems? | 1) Transaction authorization, 2) Segregation of duties 3) supervision 4) accounting records 5)independent verification 6) access controls 7) traditional access control models 8) role-based access control (RBAC) and 9) internal control issued related to ERP roles |
| What are the key concerns when dealing with internal control issued related to ERP roles? | 1) the creation of unnecessary roles 2) the rule of least access should apply to permission assignments and 3) monitor role creation and permission-granting activities |
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