Role of a CA in Implementing an ERP

Bharath Rao , Last updated: 07 February 2014  

Role of a CA in Implementing an ERP Business Expansion and Development is a continuous process with every successful Enterprise. In this era of technological growth, we now observe all over the world, a “Big Bang” explosion among the enterprises. Enterprises are growing in terms of size and presence, product offerings and service offerings. However Economic Growth has also brought new Difficulties in Manageme

Business Expansion and Development is a continuous process with every successful Enterprise. In this era of technological growth, we now observe all over the world, a “Big Bang” explosion among the enterprises. Enterprises are growing in terms of size and presence, product offerings and service offerings.  However Economic Growth has also brought new Difficulties in Management.

Economic Growth is excellent for any economy as we can witness a better standard of life and better employment opportunities. However Difficulties in Management of the Enterprise is a matter of great concern due to new and complex challenges. The following are instances of difficulties which are faced in common by many growing enterprises:- co-ordination issues between departments, lack of uniform business processes, communication gaps, privacy of data, data redundancy,too much of paperwork, regulatory compliances and accounting frauds, and as such,  job of managing an enterprise has been made extremely challenging.

To meet this challenge, a solution called ERP has been presented to the enterprises. The magic of ERP works by literally running the whole enterprise using a single interface. All the business processes, accounting functions, communications etc. are integrated. The ERP is used to run the day to day processes of the enterprise in a seamlessly integrated and efficient manner. Every transaction is passed through the ERP, be it an internal transaction or a regular business transaction. General Internal Controls are enforced by the ERP solution and every accounting impact that arises as a result of these functions is automatically recorded as per the required accounting standards. The end result is centralized administrative controls andmonitoring for smooth functioning of the Enterprise.An effective implementation of an ERP would lead to very strict internal controls, accuracy in maintaining  accounting records, saving of time and optimum use of scarce resources and thus would lead the management to focus more on Business rather than on internal affairs.

ERP is an abbreviation for Enterprise Resource Planning. ERP is another genre of software. Major players of the ERP market are SAP (SAP AG), Oracle e-business suite (Oracle Corporation), Microsoft Dynamics (Microsoft) etc.

There is a difference between ‘Installation’ and ‘Implementation’ of an ERP. Installation simply means that the representative of the service provider installs the ERP solution on the servers and workstations of the Enterprise. Implementation is a different concept altogether. It refers to configuring the installed ERP to merge the business processes, regulatory requirements, accounting Functions and the Internal Controls that are required for the enterprise.

A Chartered Accountant being an auditor and also as an accountant is aware about the business processes and workflows of an enterprise. A Chartered Accountant can provide consultancy services in implementation of an ERP. A CA can be the right person to provide correctguidance.

The implementation of an ERP can be broadly categorized into three sections viz. Process, Access and Compliance.

Process: All the Workflows and Processes of various functions of the enterprise have to be redefined, re-designed and implemented. Implementing an ERP is a time consuming process and is not a simple task. The time an enterprise would opt for ERP will also be the best time to perform a Business Process Engineering. All existing processes and workflows can be redesigned in order to make them smaller and simpler and to retain the existing level of revenues that are generated by the said function. A process is a series of workflows of a specific function.A CA can conduct a risk assessment on the controls that are present in the enterprise and new processes can be designed with the motive of mitigating the risks present. Internal Controls also can be redesigned and enforced through the ERP.  A CA can design the structure of the process and workflows that would be most beneficial to the enterprise.

Access: Access should be given to the end users in a ‘need to know basis’ and at a ‘minimum requirement basis’ to the employees. It is essential to have adequate Internal Controls to prevent data leakage and abuse. Segregation of Duties (SODs) is a concept that is being practiced by the enterprises. SOD in layman’s language means the maker and the checker should not be the same person. Deciding and defining the roles and responsibilities to be performed at the enterprise can be provided by the CA.The Correct combination of the roles and responsibilities to ensure that there is no conflict of the SOD can be designed by the CA.

Compliance: Laws and regulations of various countries need to be followed by the enterprise where it is having its presence and operations. Each country may have its own Generally Accepted Accounting Standards. In India we have the Accounting Standards, Ind AS, IFRS as the GAAPapplicableto the enterprises. Other regulations include the Clause 49, the Sarbanes Oxley Act, Data Privacy Acts of other countries etc. It is extremely important for the enterprise to comply with every regulation. The ultimate goal of any regulation is to maintain uniformity of accounts and to present a “True and Fair” view of the Financial Statements. A Chartered Accountant is known for his superiority in Accounting Knowledge. It is most crucial that the accounting transaction has to be recorded at the correct point in the workflow. Deciding the accounting policy and practices to be implemented in the enterprise can be performed by the CA.

The successful implementation of the ERP is possible only by the design and implementation of the correct solution. Hence it is essential for a CA to ensure that each and every function of the business of the enterprise is considered and taken care of through the ERP. All resources are to be effectively used and no deviations from regulations are to occur.

A CA traditionally used to provide services like Auditing and Assurance, Accounting and Compliances to enterprises. We can now observe that the services that could be provided by a CA have increased in variety and complexity.With the continuous improvement of Technology, services of a CA are being requisitioned at a whole new level by the enterprises. The dependence of enterprises on Chartered Accountants still exists and is growing especially where the CA has equipped himself with knowledge of emerging technologies and skill sets. A CA can now be an architect of the Enterprises that are focused on taking advantage of emerging opportunities.

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