Auditing Controls in ERP Systems

ERP Systems

Edward N Beaver

Exam 1: Take October 7 – 9

by

The first exam of the semester will be conducted by Blackboard (you should see the link when you logon to Blackboard).  The exam is available to take from Friday October 7 through Sunday October 9 (midnight).

Some specifics:

  • Questions relate to course content (on-line and from class) through Week 5 (October 3)
  • Maximum amount of time to complete the exam is 40 minutes
  • Exam is 21 questions (variety of formats i.e. Fill in blank, multiple choice
  • Some of the questions relate to this real-world like small business case.  You are invited to pre-read, print, etc. prior to the exam.

Student: Control Failure Presentation

by 3 Comments

Each week as part of our learning, I’ve included at least one Real World control failure example.  Starting in Week 7 (October 17) it will be your turn to continue this learning by contributing your own video presentation of a Real World Control Failure.

You are responsible to:

  • Send me (by e-mail) proposed 2+ alternate weeks when you would like to post your presentation (by October 11).  I’ll prepare a final schedule and publish in the blog’s roster section.
  • Find a real world example of a business process control failure (vs. just a hacking control failure example).
  • Prepare a brief review of the failure.  This PowerPoint (PPT) template contains all the content components / points required in the presentation.
  • In video format, create a presentation of your review / story.  Post that video as a comment to this blog post prior to class time of your week (based on an agreed sign-up schedule).

Note: 5% of the course grade is earned by this project.  Evaluation is based on:

  1. Including the required content components
  2. Clear, concise presentation of the control failure ‘story’ and lessons learned
  3. Originality in presentation of the control failure ‘story’

 

Week 6 Questions

by 126 Comments

  1. Assume you’re an outside organization with goal to cause negative things to happen to an organization’s Order to Cash (OTC) process.  Where would you attack it?  Explain Why and How
  2. Who in an organization should care more about the collections process – Finance or Sales?  Explain 
  3. Controls are important in all the OTC processes including invoicing and collections.  What would be different in the controls of a purely domestic US company vs. an international company?  Give 1 – 2 specific examples.
  4. You’ve now seen the entire Order to Cash (OTC) Process.  If you were responsible for the controls of this process – what would keep you up at night (e.g. be your area of most concern)?  Explain 

Exam 1: Coming up October 7 – 9

by

A reminder that the first exam of the semester will be conducted by Blackboard and must be completed between Friday October 7 and Sunday October 9 (midnight).

Some specifics:

  • Will include course content (on-line and from class) through Week 5 (October 3)
  • Test will be conducted via Blackboard – you must complete between Friday October 7 and Sunday October 9 (midnight).
  • Maximum amount of time to complete the exam is 40 minutes
  • Exam will be approximately 21 questions (variety of formats i.e. Fill in blank, multiple choice
  • Some of the questions relate to a real-world like small business case.  I’ll publish case which you can pre-read, print, etc. Tuesday prior to the exam.

Week 4 Wrap-up: OTC Process, Types of Controls

by

I apologize for the incomplete post earlier – it’s been quite a week personally.  Good comments and discussion last week. You raised the key points but let me share my thoughts.

Q1: Who has a ‘great’ OTC process – as expected you shared several company’s excellent OTC process that you’ve experienced.  However, most were in the consumer market.  There are many companies in Business to Business (B2B) markets as well who have excellent OTC process.

Q2: Which portions of OTC process are most vulnerable – You shared some good examples and reasons.  There are vulnerabilities in every portion of the OTC process.  I believe however that the highest risks exist where the highest values are involved.  That may be the shipping portions of the process for example if you’re shipping high value materials (e.g. precious metals).  More frequently these risks exist in the portions of the process dealing with pricing, invoicing and cash collections.  It’s always important to understand the business and the details of the business process when analyzing risks.

Q3: Who should ‘own’ OTC Process controls – I firmly believe that an executive or senior level manager should be the ‘owner’ (person ultimately responsible) for the process.  That person may not know the details of the process, risks and controls.  However, they need to manage the people who do understand the details and have enough experience or knowledge to truly be responsible for the control structure and culture.  The CIO or CFO aren’t in my view aren’t best owners for the OTC process (see next comment).  Ask me sometime to share with you my experience of being this ‘owner’ for a fairly large company without the position and clout of being an executive or senior manager.

Q4: Competencies of OTC Process Owner – You mentioned some good examples in your answers.  In my opinion the key competencies are:

  • Focus on the Customer – the customer needs to be the key focus of the process. The process must exist to help / support create value for the customer which in turn brings value to the organization.
  • Basic understanding of the process, it’s key risks and controls. In my opinion it’s difficult to manage something you have no basic knowledge of.
  • Ability to lead and desire to recognize and make critical decisions (often with limited or conflicting information).

Extra Post: Well’s Fargo Fraud – I agree with the sense of frustration and outrage many of you shared.  If I were on the board, I’d be calling for the CEO’s resignation.  However, I had an interesting conversation with a person who worked in the banking industry this week who shared how the extent of the fraud could have remained under the radar of senior management.  If you’re interested, ask me in class to share what I learned.

Week 5 Questions

by 145 Comments

  1. Using the Fraud Triangle analyze the ‘One Piece at a Time’ video scenario and explain how the environment was favorable to Fraud.
  2. Assume the ‘One Piece at a Time’ video scenario could happen.    If you are the operations manager responsible for the assembly line, what 1-2 key controls would you implement?  Explain how the control addresses the risk.
  3. Controls are important in all the OTC processes including shipping.  What would be different in the controls of a purely domestic company vs. an international company?  Give 1 – 2 specific examples.
  4. As consumers we encounter (knowingly and unknowingly) inventory controls all the time (e.g. locked jewelry cases).  What are 1-2 less obvious inventory control measures used.  Are these measures effective?

Week 4 Questions

by 135 Comments

  1. As customers we experience various company’s order to cash process (OTC) whenever we buy something.  Which company do you believe has a ‘great’ OTC process?   Why? 
  2. Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
  3. Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process?  Why?
  4. What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have?  Why?