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The Impact of Enterprise Resource

In: Business and Management

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The Impact of Enterprise Resource Planning in the Company Environment

Introduction
Since the Sarbanes-Oxley Act of 2002, companies are required to report effectiveness of their internal controls on purpose to reduce fraud. Enterprise Resource Planning (ERP) systems have taken advantage of this new focus on internal control because it offers an integration of an organization’s main business functions. Even though the value of ERP has been debated in trade periodicals, there is no large evidence of whether the benefits of ERP implementation exceed the costs and risks. This paper is designed to evaluate the impact of enterprise systems on a firm's environment, and how it reflects in the production and management of earnings.

“The Impact of Enterprise Resource Planning (ERP) Systems on the Effectiveness of Internal Controls over Financial Reporting” by John J. Morris
The study to produce the article was motivated by an empirical research question about the impact of ERP systems on internal control. Specifically, the study examined if firms that implemented ERP systems are more or less likely to report internal control weaknesses in their annual reports than firms that did not. This study used a sample of 108 firms that confirmed the execution of ERP systems between 1994 and 2003, and also an equal number of control firms, accorded by industry and size. The results show that firms that implemented ERP are less likely to report internal control weaknesses than the firms which did not implement ERP. In addition, it found evidence that the advantage for ERP firms fortified over time, which suggests that companies will be applying controls provided by ERP as they increase knowledge about the system.

“Investment in Enterprise Resource Planning: Business Impact and Productivity Measures” by Lorin M. Hitt, D.J. Wu, and Xiaoge Zhou,
The authors desired to explain the…...

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