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Abstract:Nowadays we all know Accounting is very most important module in each company. So Companies are installing different software so efficiency and benefits are increase. ERP is very sound concept so company can perform activity easily and gains more benefits on same organization. In this paper we denote what is the Sarbanes-Oxley Act and how it related in ERP system.
In this paper we include accounting basic concepts and types of accounting. How SAP ERP software meets these functions of accounting and ERP related to Sarbanes-Oxley Act and as well as key features of Sarbanes-Oxley Act and types of Sarbanes-Oxley Act. Because of ERP we need not do any paper work and mostly account activity done automatically by system itself. So, Accounting will perform easily and accurate by accountant.
Classification of accounting
Accounting means recording, systematic, analysis and reporting of financial transactions of a business. Accounting is the sequence process of calculating activity of economy of business to provide useful information. There are mainly two type of accounting. 1) Financial accounting 2) Managerial accounting.
Financial Accounts –
Financial Accounting is basically concern with measuring, recording and classifying the transaction of a business. Below, there are denoting some financial statements. Balance Sheet, Cash Flow Statement, Notes to the Accounts etc. Financial accounting is used mainly by those outside of an organization. We can also call external accounting. Financial account’s format is
KASHYAP A. PATEL (3903856)
Assignment 1 pre-fix by several different entities. travel expense management. account payable. consolidation and special purpose ledger. We can include various sub module in SAP FI likewise bank accounting. plan and control the activities of a business and to assist management record. consolidation staging ledger. parallel accounting. These accounts are used to help in the decision-making process. general ledger. For Example: Stock Exchange. cost of sales ledger. SAP Features Credit Management Currency translation Intercompany transactions provide reports using different languages KASHYAP A. This account can prepare on separate business locations. We can also call internal accounting. products and departments. For Management account needs not any legal requirement and there is no fix format. PATEL (3903856) Page 2 . General Ledger of SAP FI provides unified format for different individual ledger like profit centre accounting. Accounting Standards and Company Law. Management Accounts- Managerial accounting is used for mainly by those within an organization. account receivable. Financial and Management Accounting in SAP ERP- SAP Finance gives totally information to finance manager with analytical tool to make real time decision even large organization also see financial status when required and can keep growth efficiently. and online splitting function on entry.
we can see most of every enterprise extend credit to customers. Foreign Currency code defined. Means. Nowadays. This credit amount extended is finding by credit of customer. PATEL (3903856) Page 3 . selling own goods but getting money at later point of time. Transaction ratio between foreign and local currency defined and exchange rate defined. KASHYAP A. Country currency (Company code) = Local currency. There are four types of credit check 1 Simple credit check 2 Automatic Credit check 3 Static Credit Check 4 Dynamic Credit Check Currency translation (FASB52):- The system provides standard functionality for processing transactions in foreign currencies and valuating transactions and accounts manage in foreign countries. For this we need some prerequisites likewise Local Currency defined in Company code. You can minimize risk by fixing credit limit for customers using credit management. Other benefit if you generate two different reports than you can check original exchange rate with another where posting date valid. Total number of delayed days for customers’ credit is based on terms of payment associated with transaction. All others = Foreign currency. This Function depends on Currency Translation Types.Assignment 1 Credit Management:Company performance is decrease when bad debts and a large number of outstanding receivables are increase.
A separate document with own document number will post by the system in each company codes. This act is a United States federal law. Intercompany AR Cr. sometimes employee has to generate reports for other branch for analysis which is locate in other country and employee cannot understand that language so at that time he can select another language and generate report in that language so this function is very useful. there are many language predefine. 1st company Dr.Assignment 1 Intercompany transactions:Lots of organization is part of an intercompany transaction. Intercompany AP 2nd company Dr. When company has branches in different countries. we can generate reports in different language. Line items are generating by the system automatically such as Accounts payable and accounts receivable and between company codes. The Sarbanes-Oxley Act Sarbanes-Oxley stands for Representative Michael Oxley and Senator Paul Sarbanes who drafted the Sarbanes-Oxley Act in July 30. Using Intercompany transactions you can settle the inter companies accounts payable and accounts receivable. Balance Sheet account Provide reports using different languages:- In SAP system. PATEL (3903856) Page 4 . In this system. KASHYAP A. Balance Sheet account Cr. In nutshell.Reliability of corporate disclosures made pursuant to the securities laws and to protect investors by improving the accuracy can achieve with the Sarbanes-Oxley act. We can together individual documents with help of a common cross-company code. 2002' .
The basic objective of this act are restore the public confidence in publicity trade securities and public accounting. With the Sarbanes-Oxley Companies without ERP will have more time but Company with ERP systems will have an easier time complying. PATEL (3903856) Page 5 . Each title consists of several sections: Responsibility of corporate Criminal Fraud Accountability and Corporate Interest’s Analyst Conflicts Corporate Fraud Accountability Enhanced Financial Disclosures Reports and Studies White Collar Crime Penalty Enhancement Commission Resources and Authority PCAOB Auditor Independence Corporate Tax Returns In this act.Assignment 1 The act contains 11 titles. all financial reports are necessary to include an internal control report. KASHYAP A. Key Features of the Sarbanes-Oxley Act:Implications of the Sarbanes-Oxley Act for ERP Systems Company has to document and verify controls for getting requirement of internal control report. and Assure ethical business practices through heightened levels of executive awareness and accountability.
Profile Generator provide easy step of selecting function that employee could to permit to perform. For a single item sets limit on dollar and total value of document. between individual transactions and company’s financial statements there are direct links so easily fraud can be detected. Data firstly recorded in database after than only you can remove in SAP ERP system. Basically limits for employee are set to checking employee’s ability. And also database keep record of change records. Financial Transparency In SAP ERP.Assignment 1 Archiving There are no more ways for deleting items in SAP ERP system. And in this system employee can done transaction when it required. Tolerance Groups In SAP ERP system you can set the limit size of transaction that only user can process its call tolerance. With ERP system. you can drill down on generated reports to the main document that created it. User Authorizations There are different levels of authorization in SAP ERP system that can manage by SAP user administration. PATEL (3903856) Page 6 . KASHYAP A. Archive we can say permanent storage. Because of this process auditors can easily confirm the integrity of reports.
vermicelli and variety of ice creams. Now from my SAP ERP System Company has clear seen the progress of work in every stage. Shipment and Processing and Tally was Used for accounting.0they selected implementation partner is OBT Global Pvt. Materials Management.In this manufacturing process lots of complicated stage occur and every segment requires full attention and proper planning from starting to end. The company exports in different countries as well as. Canada and Europe.25 lakh meters per day. Cut-Sew. And other products also include like different pickles. partially pre cooked food. Costing. So for the accurate billing and production company adopted my SAP ERP software. GHCL implemented. Problem All complicated stage manages in spreadsheet manually. Company has set up the grey fabric unit in Vapi in Gujarat and production power of 1. Quality Management and Sales & Distribution modules in the first phase. MTR FOOD CHAIN COMPANY India's leading purveyors of packaged foods is MTR Foods Ltd. at its Vapi plant. PATEL (3903856) Page 7 . Solution GHCL totally accepted that for the betterment of company SAP required. to implement my SAP ERP ECC 6. The company is one of only a few that sells packaged food nationwide.GHCL motto was to achieve fully opaque into its grey cloth manufacturing process or in Home Textiles business . So it takes lot of time and it is not confirm its affective to solve the issues.Assignment 1 Success Stories GHCL Gujarat Heavy Chemicals Ltd is divided in two parts Home Chemicals and Textiles . Ltd. Every excel sheet checking is also the biggest challenge of different stage of production in. They make many types of products likewise chips. For example Counties are Australia. Finance. Production Planning. ready to eat meals and vegetarian snack food. Thus. CHALLENGES KASHYAP A. US. So for the heavy company normal window software is not appropriate choice. Weaving.
SOLUTION This company install SAP R/3 4. IBM Global Services implemented all modules of SAP. They have achieved so many benefits likewise Cost control. But due to the legacy system we cannot proper estimate the cost of the product pre and post. There are many ways for transfer finish goods. They are listed below.7 version. 1) quality assurance 2) financial accounting 3) production planning 4) sales & distribution 5) material management After this company decided according requirement to re-engineer their business processes which are suitable in r/3 system.Assignment 1 For processed food each plant requires unique raw material. Suzlon Energy The company Suzlon Energy is eco friendly. They provide the wind energy and control many sites at a time where wind energy generate . there are so many modules but this company select five core modules. L&T InfoTech selected for implementation partner. Challenges KASHYAP A.The huge data of the different sites compile and manipulate with the help of SAP ERP. In this SAP ERP. So work is time taken and errors also occur. fatter margins. Improvement in working capital. For example: Company need raw material for processed food in bulk. To managing the complicated supply chain is hard. Tally and Excel. PATEL (3903856) Page 8 . Now company has first challenged how to get transparency and quality in supply chain. Now company has got aprox 900 user licenses of SAP. Cost control and Tabs on defaulters. Everything in the process is derived manually with FoxPro.
Due to disconnection of sites company will not control the efficiency and deficiency of material. IBM project started in May 2004 and it was completed in November 2004. Cost was not properly managed and budget also. They decided IBM is implementation partner and purchase whole set of SAP ERP 4.7 include all modules. Poor management of SAP ERP from both side 1) the Shane Company senior management and 2) project management side. Initially Shane Company claimed their bankruptcy on SAP software that this bankruptcy came because of SAP project delays and cost revenue of SAP project.Assignment 1 Initially company was using hereditary system which could not able to integrate and compile all information of sites . In this system they can achieve official financial sheet on March 31st and improve planning of financial. SAP ERP Implementation Failure: Shane Company – SAP ERP project failure overview (2008) Shane Company has 23 branches in 14 different states and field for bankruptcy in Jan of 2009. They have achieved better inventory management and process of invoice became streamline.So the Company could not handle the main site area. At analysis time project expected budget was around $10 million but at ending time when calculated the sum up it was $36 million and other main factor is project planned for 1 year but in real project toke approximately 3 years. Solution After evaluating all ERP package they decide SAP ERP system in their company because of SAP gives better road map and sound management capabilities. Page 9 KASHYAP A. Now company can able to take strategic decision on its business. An improper implementation plan and budget. PATEL (3903856) . After blaming on sap later on they knew main failure factor was vendor who name is Ciber Novasoft. distribution and Quality of work as well as financial work also.
Distribution systems and external shipping had more disrupt from interface problems. Requirements and scope. Company revenue of approximately is around $18. Whirlpool’s implementation partner of SAP was Deloitte. KASHYAP A.000 employees. According to owner risks of the project is classified into customer mandate. Now Shipments were cancelled for 6 – 8 weeks so many customers cancelled orders and went elsewhere.4 billion and company has more than 70 manufacturing centre in the world and has more than 70. there are so many warnings comes and some of them serious problems. Whirlpool Corporation (failure in 1999) The Whirlpool Corporation was founded in 1911 and it is an American multinational manufacturer. In 1999 when SAP ERP had been install and last phase come up it was go-live. They want to implement sap r3 and pinnacle warehouse automation. They think every problem are known so they can easily solve problem in next week after going live. But Previous day of go live. It was a 5$ Billion Company. Customer mandate The customer mandate depends on commitment from both uses and management. execution and environment. Reports reveal that some users were not committed even though senior management commitment was high. There was moral problem among the employees of warehouse. Fox Meyer Drugs (failure in 1995) United states’ fourth largest distributor of pharmaceuticals is fox Meyer drugs. Three warehouse were closed and there loss of $ 34 million. PATEL (3903856) Page 10 . warehouse automation threatened their jobs. At that time Deloitte and Management of Whirlpool decided to go live anyway.Assignment 1 Undefined processes with untested system functionality.
Immediate after the project started. the project execution was an issue. SAP ERP is very sound ERP software which is satisfies all account activity with accuracy. Project dramatically changed with the UHC contract like profibility was erased. PATEL (3903856) Page 11 . project cost raised and company’s narrow margins were lowered. And From success story and failure story we can say this is very critical software. There were more than 50 consultants Environment When FoxMeyer realize the project in trouble its dependence on vendors and consultants prevented it from seeing how could now gain control. Accounting is part and parcel of any organization and Accounting has mainly two types internal and external. This event exacerbated the need for unexpected volume of R/3 transaction. Conclusion:In nutshell. KASHYAP A. Before the contract testing being done for indicate if r/3 can run or not on HP 9000 servers.Assignment 1 Requirements and scope FoxMeyer signed a large contract to supply university Health system consortium. Execution Because of shortage of knowledgeable and skill person. For successful implement we need care many points which are denote in Success and failure story. WORDCOUNT:-2452.
Viewed on14thDecember.< http://www.quickmba.pdf> o SAP FICO-2011.com/solutions/businesssuite/erp/financials/pdf/Entpr_Gov_SO_Compliance. viewed on 11th December.com/2009/10/intercompany-transactions-in-sap-ap-ar.< http://www.Classification of accounting .scribd.< http://help.sap.blogspot. PATEL (3903856) Page 12 .<http://www. viewed on 11th December.2011.htm > o Credit Management/Risk Management. Features of SAP.com/accounting/ > o Tutor2u-2009 Features of mySAP.tutor2u. Viewed on 12th December.com/doc/18740959/managementaccountingnotes> o Currency Transaction .com/printdocu/core/print46c/en/data/pdf/FIARCR/FIARCR.sap.< http://www.html > o Enterprise governance and sox with mySAP erp financial.php/business-studies/C123/> o Scribd-2011.Features of SAP. Classification of accounting.com/saphelp_nw04/helpdata/en/ec/076f3b6c980c3be10000000a11402 f/frameset. < http://sap-f2.Viewed on 11th December.Assignment 1 Bibliography:o Quickmba-2010.pdf> KASHYAP A.net/blog/index. Viewed on 12th December.2011.mySAP ERP meets the implication of SOX.sap. Features of SAP. Viewed on 12th December <http://help.
PATEL (3903856) Page 13 .com/20050124/management. viewed on 15 December http://www.expresscomputeronline.Assignment 1 o ExpressComputer-2003. Success of SAP ERP implementations.shtml > o r3now-2005 . viewed on 15 December <http://www.r3now.com/sap-erp-project-failures-lessons-learned-and-minicase-studies-3> KASHYAP A.failure of SAP ERP implementations .
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