Chapter 5 Accounting and Finance  Information Systems
Chapter 5 Learning Objectives <ul><li>State and describe Accounting and Finance functional area activities </li></ul><ul><...
Introductions <ul><li>Accounting system data is used: </li></ul><ul><ul><li>By decision-makers throughout a company to pla...
Basic Financial Statement <ul><li>Balance Sheet:  shows company’s financial health at a point in time </li></ul><ul><li>In...
Using ERP for Accounting and Finance <ul><li>Unintegrated systems usually require research effort by accountants to assemb...
SAP R/3 Modules and Accounting <ul><li>Sales and Distribution (SD) </li></ul><ul><li>Production Planning (PP) </li></ul><u...
Credit Management <ul><li>Companies routinely sell to customers on credit </li></ul><ul><li>Sellers must manage credit to ...
Product Profitability Analysis <ul><li>Accurate data required to properly determine the profitability of a company’s produ...
Inconsistent Record Keeping <ul><li>Companies may have divisions that keep records in different systems or with different ...
Inventory Costing <ul><li>A manufactured items costs consist of three elements: </li></ul><ul><ul><li>Cost of raw material...
Inventory Costing <ul><li>Direct costs (material and direct labor) can be associated with products or batches of materials...
Distribution of Indirect Costs <ul><li>Indirect costs are frequently allocated based on machine hours or labor hours used ...
ERP and Inventory Cost Accounting <ul><li>Adjusting accounting records for cost variances can be difficult with unintegrat...
Activity-Based Costing (ABC) and ERP <ul><li>In ABC, “activities” associated with overhead-cost generation are used to all...
Problems in Closing Books <ul><li>Currency Translation – Daily fluctuation of exchange rates more easily handled by ERP sy...
Management Reporting with ERP <ul><li>Document Flow allows for better management of the numerous transactions that are rel...
Sales Order Document Flow in SAP R/3
Management Reporting and Analysis <ul><li>Storing accounting records in a database allows for easier analysis </li></ul><u...
Chapter Summary <ul><li>Accounting systems are required to record transactions for preparing financial statements and prov...
Chapter Summary continued <ul><li>Closing the books at the end of an accounting period can be difficult with an unintegrat...
Chapter Summary continued <ul><li>The use of an integrated IS and common database to record data has important management ...
Upcoming SlideShare
Loading in …5
×

ERPCh5.ppt

1,169 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,169
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
49
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • MRP allows plant manager to plan production and raw materials for many periods. It works backwards from a sales forecast to create a production schedule. From there, given supplier lead times and finished product recipes, MRP works backwards to schedule raw material purchases. This is impossible to figure w/o a computer.
  • ERPCh5.ppt

    1. 1. Chapter 5 Accounting and Finance Information Systems
    2. 2. Chapter 5 Learning Objectives <ul><li>State and describe Accounting and Finance functional area activities </li></ul><ul><li>Identify and describe problems that arise in Accounting and Finance as a result of unintegrated information systems </li></ul><ul><li>Describe how ERP systems can solve Accounting and Finance data problems that arise in an unintegrated system </li></ul><ul><li>Explain accounting and management-reporting benefits of an ERP system </li></ul>
    3. 3. Introductions <ul><li>Accounting system data is used: </li></ul><ul><ul><li>By decision-makers throughout a company to plan and manage day-to-day activities </li></ul></ul><ul><ul><li>By managers to make long-range operating forecasts </li></ul></ul><ul><ul><li>By accountants to generate a company’s financial statements and other reports </li></ul></ul>
    4. 4. Basic Financial Statement <ul><li>Balance Sheet: shows company’s financial health at a point in time </li></ul><ul><li>Income Statement: shows a company’s sales, cost of sales and profit or loss for a period. </li></ul><ul><li>“ Closing the books” means checking to see that financial statements are accurate and up to date. Usually done quarterly or monthly. </li></ul>
    5. 5. Using ERP for Accounting and Finance <ul><li>Unintegrated systems usually require research effort by accountants to assemble required data </li></ul><ul><li>ERP systems capture accounting data in real time as business transactions occur </li></ul><ul><ul><li>Transfer of finished goods from assembly line to warehouse results in changes to Accounting records as well as Materials Management records. </li></ul></ul>
    6. 6. SAP R/3 Modules and Accounting <ul><li>Sales and Distribution (SD) </li></ul><ul><li>Production Planning (PP) </li></ul><ul><li>Materials Management (MM) </li></ul><ul><li>Financial Accounting (FI) </li></ul><ul><li>Controlling (CO) </li></ul><ul><li>Human Resources (HR) </li></ul><ul><li>Asset Management (AM) </li></ul>
    7. 7. Credit Management <ul><li>Companies routinely sell to customers on credit </li></ul><ul><li>Sellers must manage credit to avoid default by customers </li></ul><ul><li>Sellers manage customer credit using credit limits </li></ul><ul><li>Accurate and timely data required to manage credit </li></ul>
    8. 8. Product Profitability Analysis <ul><li>Accurate data required to properly determine the profitability of a company’s products </li></ul><ul><li>Inaccurate data can result from: </li></ul><ul><ul><li>Inconsistent record keeping </li></ul></ul><ul><ul><li>Inaccurate inventory-costing systems </li></ul></ul><ul><ul><li>Problems consolidating data from subsidiaries </li></ul></ul>
    9. 9. Inconsistent Record Keeping <ul><li>Companies may have divisions that keep records in different systems or with different structures </li></ul><ul><li>Summarizing the data to provide management summaries may require additional processing by middleware systems (e.g. spreadsheets) </li></ul>
    10. 10. Inventory Costing <ul><li>A manufactured items costs consist of three elements: </li></ul><ul><ul><li>Cost of raw materials </li></ul></ul><ul><ul><li>Cost of direct labor </li></ul></ul><ul><ul><li>Cost of overhead (utilities, general factory labor, supplies, manager’s salaries, storage and insurance costs) </li></ul></ul>
    11. 11. Inventory Costing <ul><li>Direct costs (material and direct labor) can be associated with products or batches of materials relatively easily </li></ul><ul><li>Indirect costs (overhead) are difficult to assign to particular products or batches, but are a significant portion of a product’s cost </li></ul>
    12. 12. Distribution of Indirect Costs <ul><li>Indirect costs are frequently allocated based on machine hours or labor hours used to make a product </li></ul><ul><li>Standard costs are used to adjust accounting records for changes due to production and sale of products </li></ul><ul><li>Cost variances must be recorded to reconcile actual and standard costs </li></ul>
    13. 13. ERP and Inventory Cost Accounting <ul><li>Adjusting accounting records for cost variances can be difficult with unintegrated information systems </li></ul><ul><li>ERP systems are configured with methods for computing variances so that the process is automated </li></ul><ul><li>Real time data in ERP systems means that accurate cost data will be available </li></ul>
    14. 14. Activity-Based Costing (ABC) and ERP <ul><li>In ABC, “activities” associated with overhead-cost generation are used to allocate costs more precisely </li></ul><ul><li>Defining “activities” to relate overhead costs to products can be difficult </li></ul><ul><li>ABC requires more record keeping, which can be simplified using an ERP system </li></ul>
    15. 15. Problems in Closing Books <ul><li>Currency Translation – Daily fluctuation of exchange rates more easily handled by ERP systems </li></ul><ul><li>Intercompany Transactions – Companies cannot make profits by selling products to themselves, so profits can’t be recorded from intercompany sales </li></ul>
    16. 16. Management Reporting with ERP <ul><li>Document Flow allows for better management of the numerous transactions that are related to a customer order </li></ul>
    17. 17. Sales Order Document Flow in SAP R/3
    18. 18. Management Reporting and Analysis <ul><li>Storing accounting records in a database allows for easier analysis </li></ul><ul><li>Data warehousing provides separate, summarized data for reporting to avoid disruption of transaction processing </li></ul><ul><li>SAP R/3 provides specialized information systems for analysis (LIS, SIS) </li></ul>
    19. 19. Chapter Summary <ul><li>Accounting systems are required to record transactions for preparing financial statements and providing information for managerial analysis and planning </li></ul><ul><li>Unintegrated information systems have difficulty providing up-to-date and accurate accounting information </li></ul>
    20. 20. Chapter Summary continued <ul><li>Closing the books at the end of an accounting period can be difficult with an unintegrated IS, but is relatively easy with an integrated IS </li></ul><ul><li>Integrated IS systems with a common database can provide more accurate record keeping, providing better cost data for managerial decision making </li></ul>
    21. 21. Chapter Summary continued <ul><li>The use of an integrated IS and common database to record data has important management reporting benefits, allowing built-in drill-down and query tools </li></ul>

    ×