ERP SYSTEM
Advantages of ERP:
1. Data input is captured or keyed
once, rather than multiple times,
as it entered in different system.
Downloading data from one
system to another is no longer
needed.
2. The organization gains better
success control. An ERP can
consolidate multiple permission
and security model in one single
data access structure.
3. Customer service
improve because
employees can quickly
access orders,
inventory, shipping
information and past
customer transaction details.
4. Manufacturing plant receive
new order in real time, and the
automation of manufacturing
processes can leads to increased
productivity.
Disadvantages of ERP:
1. Higher cost in purchasing the
software, not only that it has
higher cost in training the
software because we need to
pay the expert in this software.
2. Amount of time is required, it
take years to select and
implement the ERP system into
the business. As a result, the
ERP implementation is very
high risk of project failure.
3. Complexity, this comes
from integrating many
different business
activities and system.
Major reason for adopting
ERP:
1. Integrate financial information.
2. Integrate order information.
3. Standardize and speed up the
operation process.
4. Reduce inventory.
5. Standardize Human Resource
information.
Benefits of ERP:
Internal:
1. Common data information
2. A real time system
3. Increased in productivity
4. Reducing operating cost
External:
1. Improved customer service and
order fulfillment
2. Improved in communication
with supplier and customer
3. Enhanced competitive position
4. Increased in sale and profit
How does ERP works:
First is purchasing materials. Second is
buying a raw materials
where they need to check
the availability of the
product, and put some
request. If the product is
not in stock they have to start with the
production, then finish in the
production then delivered to the
warehouse. And they now can start
check the availability.

Common threats to AIS
recommended 4
1. Natural and political disaster –
actions to reduce
fire or excessive heat, war or
attack by the terrorist.
2. Software error and equipment
malfunctions – hardware or
software failure, software error
or bugs.
3. Unintentional act (human error)
– innocent errors or omission or
system that do not meet the
company need or cannot handle
intended task.
4. Intentional act (computer
crimes) – corruption or
sabotage.
COMPUTER FRAUD
Treadway (Mitigate) Commission
fraud:
1. Establish
an organizational environment
that contributes the integrity the
financial reporting process
2. Identify and understand the
factors that lead to fraudulent
financial reporting
3. Access the risk of fraudulent
financial reporting
4. Design and implement the
internal control and provide
reasonable assurance preventing
fraudulent financial reporting
Types of Fraud:
1. Input Fraud – The simplest
and common way to commit
the computer fraud is to alter or
falsify the computer input. It
requires little skill and need
only understand how the system
operates so they can cover their
tracks.
2. Processor Fraud – include the
unauthorized system use,
including the theft of computer
time and services.
3. Computer Instruction Fraud –
include tempering the company
software, copying software
illegally, using software in an
unauthorized manner and
developing software to carry out
unauthorized activity.
4. Data Fraud – Illegally using,
copying, searching, browsing
and harming the company data
constitutes data fraud.
5. Output Fraud – stealing,
copying or misusing computer
to printout or displayed
information.
 The Fraud Triangle
1. Pressure – is the person’s
incentive or motivation for
committing fraud, 3 types:
 Financial pressure often
motivate
misappropriation fraud
by employee
 Emotional pressure
 Person’s lifestyle
pressure
2. Opportunity – is the condition
or situation for a people or
organization to do this 3 things :
 Commit the fraud
 Conceal the fraud
 Convert the theft or
misrepresentation to
personal gain
3. Rationalization – it occurs when
the company justify their illegal
behavior.
 Fraud occurs when people have
high pressure, an opportunity to
commit, conceal or to convert
and the ability to rationalize
away their personal integrity,
less likely to occur when people
have few pressure, little
opportunity and have high
personal integrity.
 Fraud can be prevented by
eliminating or minimizing one
or more fraud triangle elements.
Although, company can reduce
or minimize their pressure and
nationalization, the greatest
opportunity to prevent lies in
minimizing or reducing
opportunity by implementing a
good system in internal control.
Information Systems Controls for
System Reliability
Trust Services Framework
1. Security – Access to the system
and its data controlled and
restricted to legitimate users.
2. Confidentiality – Sensitive
organizational information is
protected from unauthorized
disclosure.
3. Privacy – Personal information
about the customer is collected,
used, disclosed and maintain
compliance with internal
policies and external regulatory
requirement and it’s protected
from unauthorized disclosure.
4. Processing Integrity – Data is
process accurately, completely,
in a timely manner and only
with proper authorization.
5. Availability – Systems and its
information is available to meet
the operational and contractual
obligations.
 2. Accurate inventory records are
Sales Order Entry
Threat and Control during the sales
order entry:
3. Loss of Customer.
1. Sales order entry is that
important data about the order
will be either missing or
inaccurate and may be
negatively affect the customer
perceptions and affect future
sales. [CONTROL]: Using ERP
system can ensure that all
required data, such as shipping,
billing and address are entered.
Revenue Cycle
important to prevent both
Threat and Control
stockouts and excess inventory
cause it may result in lost sales 1. Inaccurate and invalid master
if customer are not willing to data. [CONTROL]: Use various
wait and instead purchase from processing integrity control, and
other source. [CONTROL]: it is important to restrict access
Sales forecast are another tool to that data and configure the
to help companies better predict system so that only authorized
inventory needs and thereby employees can make changes to
reduce the risk of stockouts or master data.
carrying excess inventory.
Accountants can also prepare
reports that enable sales
manager to identify the need to
adjust those forecast.
[CONTROL]: Customer service
is important that many
companies use special software
packages called Customer
Relationship Management
(CRM) to support the process
and help the organize detailed
information about customer.
Control & Accounting Information
System
Objective of internal control to
implement in providing reasonable
assurance:
1. Maintains records in sufficient
details to report company assets
accurately and fairly
2. Provide accurately and reliable
information
3. Promote and improve
operational efficiency
4. Comply with applicable laws
and regulations.
Important Function in Internal
Control:
1. Preventive Control – Deter
problem before they arise,
EXAMPLE: hiring qualified
personnel or segregating
employee duties.
2. Detective Control – Discover
problem that are not prevented,
EXAMPLE: duplicated
checking of calculation or
preparing bank reconciliation.
3. Corrective Control – Identify
and correct problem as well as
correct and recover from
resulting error,
EXAMPLE: maintaining
backup copies of file or
correcting data entry error.
Transaction Process
Source Document
Most business use to collect data about
their business activities.
Source Data Automation
Devices capture transaction data in
machine-readable form at the time and
place of their origin.
Turnaround Document
Company output sent to an external
party, who often adds data to the
document, and then are returned to the
company as an input document.
Well-designed source documents and
screen improve accuracy and
completeness by providing
instructions or prompt about what
data to collect, using checkoff boxes
to present the available options.