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Embedded Audit Modules in ERP Systems Implementation and Functionality. Roger Debreceny Glen Gray Joeson Jun-Jin Ng Kevin Siow-Ping Lee Woon-Foong Yau. Presented at the Fifth Continuous Assurance Symposium Rutgers University, November 2002. In this Presentation.

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Embedded audit modules in erp systems implementation and functionality

Embedded Audit Modules in ERP SystemsImplementation and Functionality

Roger DebrecenyGlen GrayJoeson Jun-Jin NgKevin Siow-Ping LeeWoon-Foong Yau

Presented at the Fifth Continuous Assurance SymposiumRutgers University, November 2002


In this presentation

In this Presentation

  • Background and Research Questions

  • EAM scenarios

  • Testing environment

  • Results

  • Future research and limitations


Erp systems

ERP Systems

  • Enterprise Resource Planning Systems are the carrier battle group of the enterpriseinformation systems

  • Average ERP system costs $11.5mand takes 19 months to implement

  • Foundation on a single or federatedDBMS


Embedded audit modules

Embedded Audit Modules

  • “Modules placed at predetermined points to gather information about transactions or events within the system that auditors deem to be material.” Weber (1999)

  • Implemented in the DBMS environment as triggers or stored procedures

  • EAMs as compliance-testing or substantive testing tools

  • Very little evidence of actual usage


Research questions

Research Questions

  • What functionality is provided by pre-existing EAMs or other monitoring technology to support appositely designed triggers and stored procedures within ERP systems?

  • What coverage of transactions is readily provided within the ERP database environment

  • What are the barriers to adoption of EAMs in the ERP environment?


Methodology

Methodology

  • Develop EAM scenarios

    • Fraud prevention and detection

  • Develop sample of ERP providers

    • Medium  large size corporations

  • Provide scenarios to ERP providers

  • Code solution

  • Review in f2f interviews


Eam scenarios

EAM Scenarios

  • Nine-step EAM implementation process of Groomer and Murthy (1989) followed

  • Audit objectives relate to POB’s Forensic Fieldwork Phase

  • Five test alert scenarios were designed

    • Red flag

    • Simulated fraud scenario

    • Identify triggers or stored procedures

    • Develop pseudocodes

  • Pass to ERP supplier for implementation and review


Sampled erp suppliers

Sampled ERP Suppliers

  • Frontstep

  • Scala

  • Industrial & Financial Solutions-IFS

  • Intentia

  • Oracle

  • SAP


Results frontstep

Results-Frontstep

  • Use Frontstep’s field triggers scripted in PROGRESS

  • Data from field trigger written to a file

  • Data analyzed and distributed using SQL & ASP

  • Also use Cognos’ Decision Stream for data warehouse

  • Analysis

    • Limited support

    • Tough


Results scala

Results-Scala

  • Either script in MS VBA or MS Office

  • Analysis:

    • No support for EAM

    • Tough


Results industrial financial solutions ifs

ResultsIndustrial & Financial Solutions-IFS

  • IFS uses an object, component approach

  • EAM can be simulated using combination of Java and SQL

  • Analysis

    • Feasible with support for querying, timing and knowledge distribution

    • Tough


Results intentia

Results-Intentia

  • Intentia’s Movex ERP product has predefined alerts related to major business cycles

  • Support for new alerts in script manager

  • Analysis

    • Intentia has comprehensive alert system

    • >100 predefined user-defined alerts

    • Support for both triggers and stored procedures

    • Good script manager


Results oracle

Results-Oracle

  • Provides an Alert Manager

    • Complete an alert definition form

    • Alert can include OS command queue or SQL script

    • Can define actions on alert firing

  • Analysis

    • Alert Manager provides most of the required functionality of an EAM


Results sap

Results-SAP

  • Require writing of an Advanced Business Application Programming (ABAP) script

  • Subsequently embedding the script within the database.

  • Analysis

    • Require expert knowledge of

      • ABAP programming

      • Client’s database structure


Conclusions

Conclusions

  • Highly variable support for EAMs within surveyed ERP systems

  • Barriers to adoption

    • Extensive knowledge set required to program EAM

  • Barriers to deployment

    • Lack of demand

    • Difficulty in defining the conditions for firing EAMs


Future research agenda

Future Research Agenda

  • Relationship of EAMs to wider assurance objectives

  • More work required on conditions for EAMs

    • Were scenarios realistic?

  • Relationship between EAMs and Business Intelligence/Data Warehouse systems?

  • Demand for EAMs?


Embedded audit modules in erp systems implementation and functionality

Thank You!


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