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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?
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