Page 156 -

Chapter 5
than 200 lines, the probability of an error was almost 100 percent. As a result, decisions
based on these spreadsheets are likely to be flawed. In addition, financial spreadsheets
on laptops taken outside the company create a risk for loss of sensitive data.
Gomersall advocates that companies use “accounting intelligence” applications,
which use real-time processing rather than batch processing to pull data from ERP
systems and which include built-in reporting templates that can be used to gain insight
136 into the corporate earnings. However, these applications are not always available, or
fully utilized, and many companies are not aware of the extent of “rogue” spreadsheet
use. According to an analyst with Gartner Research, most companies’ IT organizations
do not provide technical support for Excel, and are often “unaware of the extent to
which sophisticated and complex spreadsheets are being used within the enterprise.
Unless explicitly directed by a compliance officer to exert more control over spreadsheet
usage, most IT managers avoid intruding too deeply into the area of user-developed
applications.”
Most CFOs (chief financial officers) are unaware of the extent to which spreadsheets
and manual data analysis are involved in closing a company’s books. In fact, the area of
closing the books and reconciliation are two tangible areas where Accounting can
improve its timing and accuracy by taking full advantage of the capabilities of a
company’s ERP system.
Question:
1. Make a list of the pros and cons of using spreadsheets for financial analysis
within a corporation. Alternatively, form two teams in the classroom and
debate the pros and cons.

MANAGEMENT REPORTING WITH ERP SYSTEMS
The integrated nature of an ERP system and the use of a common database and built-in
management reporting provide numerous benefits. Although the reporting of accounting
information is a common Accounting function, it is often very challenging for companies
to generate the right reports for the right situation. Without an ERP system, the job of
tracking all the data required for a financial report is a monumental undertaking. With an
ERP system, a vast amount of information is available for reporting purposes; however,
often it is years after an ERP implementation before a company figures out which reports
are the most critical for decision making. In this section, we will examine some
management-reporting and analysis tools available with ERP systems.

Data Flows in ERP Systems
As you have seen in earlier chapters, with an ERP system, all transactions in all functional
areas of a company are posted in a centralized database. It is worth reemphasizing that
the database is the company’s “books.” There is no separate set of books for Marketing
and Sales or Production or Purchasing.
Thus, even though it is common usage to refer to “data flows” in an ERP system, it is
actually a misnomer. Data do not flow from one ERP module to another because they are
all in one place—the database. Each area views the same records. It might be better to

Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.