ASAP M Tute02 Answers Guide

University of Adelaide Business School
ACCOUNTING SYSTEMS and PROCESSES (M)

TUTORIAL 2 – Answers Guide
BEFORE TUTORIAL 2
Read the material indicated below and attempt answers to the questions that follow.
Material to read:
MyUni>Data Analytics – Microsoft Power BI Material>Topic 1 –
Introduction to Power BI.pdf
Key aim of Topic 1 is to familiarise students with Power BI, key parts
and differences, major building blocks, and concepts of data modelling
and visualisations. Topics that follow include hands-on, practical work
using Power BI Service and Power BI Desktop.
Questions to attempt:
- What is Power BI and what are the key parts of Power BI
environment?
- What are the key, major building blocks of Power BI?
- What are the key differences between Power BI Service and Power
BI Desktop?
- What is data modelling and visualisation?
Prepare the answers to the following questions:
Question 1
Give three examples each of advantages and disadvantages of an ERP system
with a centralized database. How can you increase the change of a successful
ERP implementation?
An ERP system, with its centralized database, provides significant advantages:

• An ERP provides an integrated, enterprise-wide, single view of the
organization’s data and financial situation. Storing all corporate information
in a single database breaks down barriers between departments and
streamlines the flow of information.
• Data input is captured or keyed once, rather than multiple times, as it is
entered into different systems. Downloading data from one system to
another is no longer needed.
• Management gains greater visibility into every area of the enterprise and
greater monitoring capabilities. Employees are more productive and efficient
because they can quickly gather data from both inside and outside their own
department.
ERP systems also have significant disadvantages:

● Cost. ERP hardware, software, and consulting costs range from $50 to $500
million for a Fortune 500 company and upgrades can cost $50 million to $100
million. Midsized companies spend between $10 and $20 million.
● Amount of time required. It can take years to select and fully implement an
ERP system, depending on business size, number of modules to be
implemented, degree of customization, the scope of the change, and how well
the customer takes ownership of the project. As a result, ERP implementations
have a very high risk of project failure.
● Changes to business processes. Unless a company wants to spend time and
money customizing modules, they must adapt to standardized business processes
as opposed to adapting the ERP package to existing company processes. The
failure to map current business processes to existing ERP software is a main
cause of ERP project failures.
Reaping the potential benefits of ERP systems and mitigating their

disadvantages requires
conscious effort and involvement by top management. Top management’s
commitment to and support for the necessary changes greatly increase the
chances of success. Because ERP systems are complex and expensive, choosing
one is not an easy task. In doing so, you must take great care to ensure that the
ERP system has a module for every critical company process and that you are
not paying for software modules that you do not need. One way to choose a
suitable system is to select a package designed for your industry. Although cost
is a huge concern, buying too cheaply can cost more in the long run if the
system does not meet your needs, because modification costs can be quite high.
You can minimize the
risk of buying the wrong package by researching the best ERP vendors. There
are many ERP vendors, the two largest being SAP and Oracle. Other leading
vendors are The Sage Group, Microsoft, and Infor.
Because it is too difficult for most companies to implement ERP software by
themselves, they often hire an ERP vendor or a consulting company to do it for
them. These firms usually provide three types of services: consulting,
customization, and support. For most midsized companies, implementation costs
range from the list price of the ERP user licenses to twice that amount. Large
companies with multiple sites often spend three to five times the cost of the user
license.
Because many processes automatically trigger additional actions in other
modules, proper configuration is essential. This requires a sound understanding
of all major business processes and their interactions so they can be defined.
Examples include setting up cost/profit centers, credit approval policies, and
purchase approval rules. In the configuration process, companies balance the
way they want the system to operate with the way it lets them operate. If the
way an ERP module operates is unacceptable, the company can modify the
module. Alternatively, it can use an existing system and build interfaces
between it and the ERP system. Both options are time consuming, costly, and
result in fewer system integration benefits. In addition, the more customized a
system becomes, the more difficult it is to communicate with suppliers and
customers. To make configuration easier, ERP vendors are developing built-in
“configuration” tools to address most customers’ needs for system changes.
The importance of sound internal controls in an ERP cannot be overstated.
The integrated nature of ERP systems means that unless every data item is
validated and checked for accuracy at the time of initial entry, errors will
automatically propagate throughout the system.
Thus, data entry controls and access controls are essential. Most managers
and employees see and have access to only a small portion of the system. This
segregation of duties provides sound internal control. It is important to separate
responsibility for custody of assets, authorization of activities that affect those
assets, and recording information about activities and the status of
organizational assets.
Question 2
Some individuals argue that accountants should focus on producing financial
statements and leave the design and production of managerial reports to
information systems specialists. What are the advantages and disadvantages of
following this advice? To what extent should accountants be involved in
producing reports that include more than just financial measures of
performance? Why?
There are no advantages to accountants focusing only on financial information.

Both the accountant and the organization would suffer if this occurred.
Accounting Systems and Processes (M) Tutorial 2 Page 2
Moreover, it would be very costly to have two systems rather than one that
captures and processes operational facts at the same time as it captures and
reports financial facts.
The main disadvantage of this is that accountants would ignore much relevant
information about the organization’s activities. To the extent that such
nonfinancial information (e.g., market share, customer satisfaction, measures of
quality, etc.) is important to management, the value of the accounting function
would decline. Moreover, accountants have been trained in how to design
systems to maximize the reliability of the information produced. If relevant
information is not produced by the AIS, there is danger that the information may
be unreliable because the people responsible for its production have not been
trained in, or adequately aware of, the potential threats to reliability and the best
measures for dealing with those threats.

Question 3
What is the relationship between business processes and ERP systems?
Business processes are defined in the text as a series of interlocking activities that
work together, across the organisation, to achieve an organisational goal. The design
of the business process will be influenced strongly by the use of an ERP system. ERP
systems represent a business process perspective that has been captured in
organisational software, with the design philosophy of the ERP system being the
support of business processes rather than a functional perspective. At best, ERP
systems can drive the design of a business’s processes by virtue of the fact that the
processes incorporated into the ERP system represent ‘best practice’. For
organisations adopting ERP systems, it is usually recommended that they change the
existing processes to match those encapsulated in the ERP system. Thus ERP systems
can have a strong influence on the design of business processes.
Question 4
James McFarlane is the manager of a medium-sized manufacturing company.
His company is looking at improving the design of its sales and manufacturing
processes and one employee has suggested that it considers adopting an ERP
system. The employee said something about the benefit of best practice in ERP
systems. James is not sure which way to go. He believes that the organisation’s
current practices are basically sound, unique in the industry and that, with a
little modification, they could be even more of a distinguishing factor for the
business. He has reservations about ERP systems. Advise James on the risks and
benefits an organisation faces in adopting the processes in an ERP system.
Should his company go ahead with the ERP system? Explain your reasoning.
When considering an ERP system’s suitability for an organisation several factors

should be considered. The predominant theme in ERP adoption is that the
organisation should adjust its business processes to meet the best practice that is
programmed into the ERP system. From an organisation’s perspective this can have
both advantages and disadvantages. The risk in this ‘vanilla’ adoption is that the
organisation, in changing its business processes to correspond with the ERP system,
loses its uniqueness and competitive advantage. Therefore, James needs to be clear
on what it is that makes his company unique. If they do have truly unique processes
that offer them a source of competitive advantage in the marketplace then he is
probably not wise to throw these out for the generic best practice that is captured in
the ERP system. If he wants to keep the existing practices and still go ahead with the
ERP system then the alternative is to customise the ERP system. While this is
possible, it does increase greatly the cost and risk of ERP adoption – something his
medium sized firm may not be willing to take on.
Question 5
What kinds of documents are most likely to be turnaround documents? Do an
Internet search to find the answer and to find example turnaround documents.
Documents that are commonly used as turnaround documents include the

following:
• Utility bills
• Meter cards for collecting readings from gas meters, photocopiers, water
meters etc
• Subscription renewal notices
• Inventory stock cards
• Invoices
• Checks (banks encode account info on the bottom of checks)
• Annual emissions inventory forms
(http://www.deq.state.ok.us/aqdnew/Emissions/TurnAroundDocs.htm)
Students will find many other turnaround documents.

Here are some URLs for turnaround document definitions and examples:
http://en.wikipedia.org/wiki/Turnaround_document
Here are some turnaround document images (1 long URL):

http://images.google.com/images?q=turnaround+document&oe=utf-
8&rls=org.mozilla:en-US:official&client=firefox-a&um=1&ie=UTF-
8&ei=N7yBSpbAF4KiswO39JnwCA&sa=X&oi=image_result_group&ct=title
&resnum=4
DURING TUTORIAL 2
• Contribute to the class discussion of the above questions.
Please remember that you’ll enhance your learning by ACTIVELY

PARTICIPATING in the discussions.

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University of Adelaide Business School

ACCOUNTING SYSTEMS and PROCESSES (M)

Prepare the answers to the following questions:

An ERP system, with its centralized database, provides significant advantages:

ERP systems also have significant disadvantages:

Reaping the potential benefits of ERP systems and mitigating their

There are no advantages to accountants focusing only on financial information.

Accounting Systems and Processes (M) Tutorial 2 Page 3

When considering an ERP system’s suitability for an organisation several factors

Documents that are commonly used as turnaround documents include the

Students will find many other turnaround documents.

Here are some turnaround document images (1 long URL):

• Contribute to the class discussion of the above questions.

Please remember that you’ll enhance your learning by ACTIVELY

Accounting Systems and Processes (M) Tutorial 2 Page 5

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