MONASH

BUSINESS

Lecture 6: Enterprise Resource

Planning Systems, and other
accounting systems.

Chapter 2
International student attendance

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 Learning Objectives
• Part 1: Describe the data processing cycle used to
process transactions, including how data is input,
stored, and processed and how information is
outputted.
• Part 2: Understand the differences among various
types of accounting and enterprise software.
• Part 3: Discuss how organizations use enterprise
resource planning (ERP) systems to process
transactions and provide information.
Part 1: data processing cycle

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 Data Processing Cycle

Does the data processing help decision makers make the

correct decisions?
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 Data Input

Steps in Processing Input are:

 Capture transaction data triggered by a business
activity (event).
 Make sure captured data are accurate and complete.
 Ensure company policies are followed (e.g., approval
of transaction).

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What data are captured?

 Information collected for an activity includes:

– Activity of interest (e.g., sale)
– Resources affected (e.g., inventory and cash)
– People who participated in the activity (e.g.,
customer and employee)
 Information comes from source documents.

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Source Documents

 Captures data at the source when the transaction

takes place
– Paper source documents (e.g. invoices)
– Turnaround documents (is created by the
computer to be used for data entry e.g. inventory
stock cards, marking sheet etc)
– Source data automation (captured data from
machines, e.g., Point of Sale scanners at
grocery store)

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Data Processing

Four types of processing (CRUD):

 Creating new records (e.g., adding a customer)
 Reading existing data
 Updating previous record or data
 Deleting data
Data processing can be batch processed (e.g.,
post records at the end of the business day) or in
real-time (process as it occurs).
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Data Storage

 Data is stored in master files or transaction files.

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 How is data organized in the Data Storage?
 Important to understand how data is organized
– Chart of accounts
 (1) Coding schemas that are well thought out to
anticipate management needs are most efficient and
effective
– Transaction journals (e.g., Sales)
– Subsidiary ledgers (e.g., Accounts receivable)
– General ledger
Note: With the above, one can (2) trace the path of the
transaction (audit trail)

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What are the (1) coding schemes?
 Sequence codes—items numbered
consecutively to account for all items (i.e.,
prenumbered forms)

 Block code—blocks of numbers reserved for

specific categories of data (i.e., product numbers
that start with a 2 are refrigerators, e.g. 2000-
2999 for 2nd year units)

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Coding schemes
 Group codes—two or more subgroups of digits
used to code items (i.e., car vin #’s), e.g. 2851
where 2 represents 2nd year units, 85 represents
information systems subjects, and 1 is the first
sequence.

 Mnemonic codes—letters and numbers

interspersed to identify an item (i.e. Dry300W05
is low end (300), white (W) dryer (DRY) made by
Sears (05), e.g. ACW represents Accounting
Sunway)

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 (2) Example
of tracing
audit trail
 Audit trail for
Invoice #156
for $1,876.50
sold to KDR
Builders
Information Output

The data stored in the database files can be viewed

 Online (soft copy)
 Printed out (hard copy)
– Document (e.g., sales invoice)
– Report (e.g., monthly sales report)
– Query (question for specific information in a
database, e.g., Which division had the most sales
for the month?)
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Part 2: Small, medium and large
accounting software and the
influence of business process
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Small Business Accounting Software
 Small business:
– Typically 1-10 users and/or <$5 million in revenue
– Owners usually most concerned with cash flows, and
figuring out if they have been profitable.
 Features of Software
– Bookeeping and can generate numerous reports
including financial statements and budgets (including
in XBRL format)
– Scalability
– Internet connectivity
 Examples include Quickbooks by Intuit, Peachtree
Accounting, UBS and Mind Your Own Business (MYOB)
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Midrange & Large-Scale Accounting Software

Are useful when transaction processing needs

 grow in volume, and
 increase in complexity
 range in price from $2,000 to >$300,000
 Examples are Microsoft’s Dynamics GP, SAP
Business One, Epicor, Everest, & Made2Manage,
Accpac

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Midrange & Large-Scale Accounting Software
These software packages offer many features,
including:
 handle more than just accounting functions
 process transactions in multiple currencies
 split commissions among multiple
salespersons
 be deployed from an array of options including
desktop computers, a web browser, or a hosted
solution by a cloud service provider

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Business process influence the type of AIS used

 The purpose of any AIS is to capture info, process it and

transform into outputs for decision makers.
 Data and info required are affected by different business
process. Also different industries and even companies
have different business processes. See example in the
next few slides.

 Since the data and info required are different, these

would affect the requirements and the types of AIS used.

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Business Processes in Special Industries

 Vertical market refers to markets or industries that are

distinct in terms of the services they provide or the goods
they produce
e.g. professional services, not-for-profit, health care,
construction, banking and financial services, and
hospitality.
 These organisations may require more information than
is typically output from a traditional AIS
 Examples of specialised information needs include
– time and billing systems
– activity based costing systems
– point-of-sale systems

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Industries with Specialised AISs

Professional service organisations have several unique

operating characteristics:
 no merchandise inventory
 professional employees
 difficulty in measuring output

Not-for-profit
 professional employees and volunteers
 usually not affected by the market
 sometimes have a political environment
 extra focus on “funds” and (nonmonetary) “process”
measures

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Industries with Specialised AISs
Health care
 Share many of the professional and not-for-profit
organisations’ special AIS needs
 Special accounting needs because of third-party
billing - private and government
• standardised/specialised codes for services
• need to maintain (secure) patient information
• practice management and specialised health care
software can enhance data capture, process
monitoring, and reporting.

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Part 3: Enterprise system

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Enterprise Resource Planning (ERP) Systems

 Integrates activities from the entire organization

– Revenue Cycle
– Expenditure Cycle
– Production Cycle
– H/R Payroll Cycle
– General Ledger and Reporting System

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Enterprise-Wide Accounting Software
Enterprise resource planning (ERP) systems
 are integrated programs with a central data base
 do much more than process financial data (typically
integrated with CRM, business services, HR &
SCM)
 expand with the price and complexity of software
 help coordinate the operation of business functions
and provide a central repository for information

ERP systems include

 SAP All-in-One, Oracle, Microsoft Dynamics AX,
NetSuite Enterprise Solution
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What is ERP?

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Advantages of ERP System

 Integrated enterprise-wide single view of the

organization’s data which streamlines the flow of
information
 Data captured once (i.e., no longer need sales to
enter data about a customer and then accounting
to enter same customer data for invoicing)
 Greater visibility and monitoring capabilities for
management

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Advantages of ERP System

 Improve access of control of the data through

security settings
 Standardization of procedures and reports
 Improves customer service
 Increases productivity through automation

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Disadvantages of ERP System

 Costly.
 Need to re-engineer business processes to conform to
business process specified by ERP otherwise ERP
won’t work
 Significant amount of time to implement. Benefits
gained in 2-4 years time
 Customizing or standardizing a business process
 Complexity
 User resistance (learning new things is
sometimes hard for employees). Also, adversely
affect employee (some may lose their jobs)
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Summary of Software Packages

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 Summary
• Part 1: Describe the data processing cycle (input,
process, storage and output).
• Part 2: The differences among various types of
accounting and enterprise software.
• Part 3: What is ERP? What are the advantages
and disadvantages of ERP?