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Lecture 2

AFM341 Lecture 2: Accounting Information Systems

Accounting & Financial Management
Course Code
Alec Cram

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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
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