Topic 7:

ACCOUNTING IN ERP
SYSTEMS
LECTURER: BÙI XUÂN HUY
Learning objectives
After completing this chapter, you will be able
to:
 Financial vs managerial accounting
Identify and describe problems associated with
accounting and financial reporting in
unintegrated information systems.
Explain how ERP systems can help solve
accounting and financial reporting problems

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Learning objectives
After completing this chapter, you will be able
to:
Example
o Payable accounting
o Receivable accounting

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Accounting Activities
Financial Accounting:
o Making financial statement from
documenting all the transaction of company
(that have an impact on it’s financial state)
to create reports for investors and external
parties and agencies
o Financial statement must follow the rules
and guidelines of General Department of
Taxation, Ministry of Finance.

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Accounting Activities
Financial Accounting include:
o Balance sheet  the over view of financial
health.

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Accounting Activities
Financial Accounting include:
o Income statements or profit and loss (P&L)
statement  indicators of success or
problems

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Accounting Activities
Closing its books (kết sổ/khóa sổ)
o The balances for temporary or nominal
accounts  retained earning account (tài
khoản lợi nhuận giữ lại) and be set to zero.
o If data is inaccurate  adjusting
o The role of accurate and timely data  the
role of information system

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Accounting Activities
In ERP system
o The balance sheet and P&L statement =
database report (You see again: The
importance of database)
Display data at different levels of details and
format  suit the needs of different user

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Accounting Activities
In ERP system
Time

... 2010 2011 ...

Q1/2011 Q2/2011 Q3/2011 Q4/2011

T7/2011 T8/2011 T9/2011

T1 T2 T3 T4 T5 T6 T7 T8 T9 T10 T11 T12

Time

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Accounting Activities
Managerial accounting
o Determining the cost and profitability in
management view  decisions
o Supporting to internal users / financial
accounting : supporting to external users

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Using ERP for Accounting
Information

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 Using ERP for Accounting
Information
General ledger (GL)- sổ cái
GL get transaction data directly and
simultaneously from
o Sales and distribution  Accounts
Receivable Entry
o Material Managements  Accounts Payable
Entry
o Financial accountingmanage ARE, APE,
close GL, generate financial statement

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Using ERP for Accounting
Information
o Controlling: tracking the cost associated
with producing product price, promotion,
capital investment
o Human Resource  cost for activities
related to people
o Asset Management  fixed asset purchases
and related depreciation

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Some Cases

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Operational Decision-making
Problem: Credit management
Industrial Credit Management
o Setting and controlling credit limit of
customer
o Update Accounts Receivable balance and
cash balance in real time  Accurate and
timely order processing
o Show some case in Credit Mangement?
o Flow information
◦ A/F  …. ??

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Product profitability analysis
 Based on accounting data.
Inaccurate or incomplete data  flaw analyses
 Three main reason for this problem
o Inconsistent record keeping
o Inaccurate inventory costing systems
o Problem consolidating data from subsidiaries
Flow information
o A/F …?

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Product profitability analysis
 Inconsistent Record Keeping
o This is the problem of unsharring systems
Inconsistent in data
Inconsistent in time

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Product profitability analysis
 Inaccurate inventory costing systems
o Inventory cost accounting background
How many item’s cost elements:
(1) the cost of raw materials (direct cost)
(2) the cost of labor employed directly in the
production of the item (direct cost)
(3) all other costs called overhead  chi phí
vận hành thường ngày (undirect cost)

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Product profitability analysis
 Inaccurate inventory costing systems
o Inventory cost accounting background
How many item’s cost elements:
 Direct cost: fairly accurately
 Undirect cost/overhead cost: difficult to
establish

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Product profitability analysis
 Inaccurate inventory costing systems
o Inventory cost accounting background
 Standard cost established by studying
historical direct and indirect cost patterns
Actual costs = standard cost + cost variances

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Product profitability analysis
Product Cost analysis in ERP
o Task gathering the information required to
develop product cost can be a major
challenge

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Product profitability analysis
Product Cost analysis in ERP
o Get direct Material Cost from BOM module (1)
o Get direct labor cost from product routing: (2)
 Equipment set up time
 Production rate
 Labor requirements
o (1) and (2) will be combined with material cost
information (in FA module)
 Product cost analysis

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Product profitability analysis
Product Cost analysis in ERP
o Product cost variants means a version of a
produce plan or analysis

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Product profitability analysis
Product Cost analysis in ERP
o Activity – Based costing (overhead cost
analysis)
Accountants identify activities associated
with overhead cost generation, and they keep
records on the costs and on the activities.
Activity-based costing is often used when
competition is stiff, overhead costs are high,
and products are diverse

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Product profitability analysis
Review three main reason for inaccurate or
incomplete data of product profitability analysis:
o Inconsistent record keeping
o Inaccurate inventory costing systems
o Problem consolidating data from subsidiaries
 Other two reason:
o Currency Translation
o Intercompany Transactions

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Review

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