AFM341 Lecture 2: Accounting Information Systems
SchoolUniversity of Waterloo
DepartmentAccounting & Financial Management
This preview shows page 1. to view the full 4 pages of the document.
Class 2: Accounting Information Systems
● ERPs are systems that integrate together many aspects of an organization’s operations, such as
accounting, finance, and manufacturing.
● The use of an ERP can provide process efficiencies, improved data quality, and reporting speed,
but are costly, complex, and don’t always deliver the promised functionality.
● SAP and Oracle are two well-known brands of ERP software
● Relational databases stores data in related, two-dimensional tables
Enterprise Resource Planning Systems
● ERP: software system that integrates activities from across the entire organization, including:
○ Revenue Cycle
○ Expenditure Cycle
○ Production Cycle
○ H/R Payroll Cycle
○ General Ledger and Reporting System
● ERP systems can also be configured to communicate with outside stakeholders, such as
suppliers or customers (e.g., regarding inventory levels, recent shipments, or invoices)
● Past - stand-alone, functional systems
● Present - enterprise systems
Key ERP Benefits
● Centralized database:
○ Provides an integrated, single view of the organization’s data and financial situation.
This can break down barriers between departments and enable a more natural flow of
information across business units
○ Data is only entered once (typically in real-time), rather than duplicated across multiple
databases. This results in more consistent and reliable reporting
○ A ‘single source of truth’ allows management to have enhanced visibility into the
current state of organizational operations and governance practices
● Centralized security: controlling user access to all aspects of the ERP are facilitated centrally
● Standard policies and procedures: uniform policies and procedures across business units can
ease training and compliance efforts, as well as increase efficiency via automation
ERP System Risks
● Costly (midsized companies could spend $10M-$20M; large firms could spend $50M-$500M+).
Fees include software, consulting, process rework, testing, data conversion.
● Significant amount of time to implement: technical and business staff
● Customizing or standardizing a business process limits flexibility and innovation
You're Reading a Preview
Unlock to view full version