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Role of Internal Auditor in ERP Development for practically streaming organization process:

The Internal Auditors can be saviors for organizations mounted with their edging skills. Their roles can be compared with the role of our health doctors wherein they cure the disease of patients wherein Internal auditors can identify operational and financial leakages symptoms and cures the organization's processes but the role of Internal auditors should not be limited to curing weak processes but injecting Immunity of smooth functioning continuously in the organization. The internal auditors are value adders to the organization and working for the organization, tuning with the owner's/management's mindset. The role of Internal auditors is immense for streaming operations indulging with required controls to minimize operational, financial, managerial risks of the organizations. As in the era of escalation of business operations and thereby related transactions, system based processing of transactions is the key to warrant the working productivity with required controls.

As many organizations have initiated with acquainting with system based processing, the development of a well-regulated system is inevitable. System development may be through customized ERP or standardized ERP, depends on the structure of the working environment. If opportunities permit internal auditors for the development of customized ERP, it has to be executed addressing all challenges and solutions to challenges. The mindset of internal auditors invited for ERP development should be aligned with the working environment of the organization backed with inevitable controls. The customized ERP development process should not be biased to any particular department / team. It should be for and of the organization, as a whole. The Internal auditors are expected to have thorough knowledge of the organization's business and business branches.

Role of Internal Auditors in ERP development for Business Firms

Further following major factors to address in development of ERP system:

1. Organizational structure with work force quality and users defining.

2. Management's ability of governing and reporting requirement by connected Stakeholders.

3. Product/service manufactured / traded/rendered by organization.

4. Cost Benefit analysis for ERP implementation.

5. Processing of inputs to outputs, particularly for manufacturing units.

6. Responsible ombudsperson/s & his quality for handling ERP working, periodic Maintenance and updation in ERP.

7. Knowledge and ability of ERP programmer to address customized commands During the System development. Also, professional background of the developer To consider.

8. Post development support rendered by ERP developer and ability to address User's query.

9. Control structure over data processing in ERP and data security.

10. Computability and versality of ERP across varied devices for data processing and retrieving as well as backup plan and system disaster management plan.


ERP development and smooth working is not an overnight process. Depends upon the adaptability of organization to the system, smooth processing and expected results from ERP may take longer time than targeted. Focus should be laid on quality of results expected from ERP rather than hectic to finish the development procedure. Department wise field based thorough knowledge should be in central focus of Internal auditor.

Further, continuous engagement and touch with organization's working environment and respective users is only tool for internal auditor to smoothen development path. For instance, if ERP is to be developed for manufacturing unit then, the auditor should have walk through every process check points from raw material ordering, procurement, processing, production of finished goods, dispatching and documentation involved in the aforesaid processes. Convenience of users for data processing should also be one of the vital priority.

Moreover, any system development should be such which also directs or signals the organization in every operational, commercial, financial , risk management and any business connected decisions. Practically, due to organizational challenges, 100% adaptability to system may not be viable. Internal auditors may come across criticism and challenges during implementation and post implementation stage but being patience, has to overcome them.


During and post implementation, group discussion with ERP users and brainstorming, addressing their queries and deriving solution should be integral part of the implementation program. System driven controlled processing should be on central focus for the internal auditors. But the thing also to keep in mind that ERP or any system are for convenient and control the data processing as human brains are has far better ‘microchip'.

Thanks for bestowing precious time in reading my experience based thought on ERP development.


Published by

Mohanish Shah
Category Professional Resource   Report

  3 Shares   1899 Views



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