A basic general understanding regarding the CAs role in giving his services to an entity for the purpose of implementing an ERP.
A presentation on the said topic was given by me at Chennai SICASA ICAI.
Role of a CA in Implementing an ERP
Business Expansion and Development is a continuous phase for any Enterprise. In this era where there is
technological growth, we now observe a “Big Bang” explosion among the enterprises present all over the world.
Enterprises are growing in terms of size and presence, service offerings and product offerings which have all resulted
in two things, Economic Growth and Difficulties in Management.
Economic Growth is excellent for any economy as we can witness a better standard of life and many more merits
and are welcomed by everyone. However Difficulties in Management of the Enterprise is a matter of great concern
as there is considerable amount of items which are at stake. The following are a few difficulties which were faced in
common by many growing enterprises, Co-ordination between departments, regulatory compliances, Accounting
Frauds, Lack of uniform business processes, communication gaps, privacy of data, data redundancy and too much of
paperwork and thus had made the job of managing an enterprise extremely challenging.
Thus a solution called ERP was presented to the enterprises. The magic of the ERP was that literally running the
whole enterprise using a single interface. All the business processes, accounting functions, communications etc.
were integrated. 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. The ERP is used to run the day to day show of the enterprise. 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 any and every accounting impact that arises as a result of the above functions is automatically
recorded in the required accounting standards are performed by the ERP. Central Administration and a smooth
functioning enterprise is an end result.
There is a difference between ‘Installation’ and ‘Implementation’ of an ERP. Installation simply means 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 of the enterprise, regulatory requirements, Accounting Functions those are applicable and the Internal
Controls that are required to the enterprise. An effective implementation of an ERP would lead to very strict internal
controls, accuracy in maintaining books of accounts, savings of time and thus would lead the management to focus
more of the time on Business rather than internal affairs.
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 right best person to provide the correct guidance.
The implementation of an ERP can be broadly categorized into three sections viz. Access, Process and Compliance.
Compliance: Laws and regulations of various countries need to be followed by the enterprise having its presence in
the respective countries. Each country may have its own Generally Accepted Accounting Standards. In India we have
the Accounting Standards, Ind AS, IFRS as the GAAP to the enterprises as applicable. 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 showcase 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 to be passed at the correct
point of the workflow. Deciding the accounting policy to be implemented for the enterprise can be performed by the
Process: All the workflows and Processes of various functions of the enterprise have to be implemented.
Implementing an ERP is a time consuming process and not a simple task enterprise would opt for will also be the
best time to perform a Business Process Engineering. All existing processes and workflows can be redesigned in
order to make it smaller and simpler but to retain the level of inflows 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 is
present in the enterprise and the new processes can be designed with the motive of mitigating the risk that is there.
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 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 the roles and responsibilities that is possible to be performed
at the enterprise can be provided by the CA.The Correct combination of the responsibilities and roles to ensure that
there is no conflict of the SOD can be designed by the CA.
The successful implementation of the ERP is possible only if the correct solution is presented. Hence it is essential for
a CA to ensure that each and every function of the Business of the enterprise is taken care of. All resources are
effectively used and no deviations from regulations are to be ensured. In brief, A CA used to provide services like
Auditing, Book Keeping and Compliances to the enterprise. We can now observe that the services that could be
provided by the CA are increased and there is a heavy dependence from the enterprise on Chartered Accountants.
We can now be an architect for the enterprise, give a solution for running their business. Thus with the continuous
improvement of Technology, services of a CA is required at a whole new level by the enterprise.