Starting from the premise that the whole is more than the sum parties, an ERP (Enterprise [606696]

CHAPTER 1.
INTRODUCTION

Starting from the premise that the whole is more than the sum parties, an ERP (Enterprise
Resource Planning) performs the integration and synchronization of enterprise functions. It is an
excellent means of integrating and ordering information, streamlining the exchange of data
between departments. Increasing changes in the business environment and growth in the
complexity of the activities within a company requires a permanent adaptation, at a fast pace,
which often puts at test the effort and analysis capabilities of the human factor.
ERP systems have been created as a solution to these challenges, being able to process a
very large volume of data and aggregated information for optimization and efficiency pr ocesses.
The purpose of ERP is to ensure the transparency of data within an organization and to facilitate
access to any type of useful information in carrying out the activity.
ERP acts in an organization as a tool to ensure the optimization of productivi ty and to
minimize the procedures for performing the services of an organization in a unified system. The
introduction of an ERP system to replace two or more independent applications eliminates the
need for external interfaces to ensure good application r elationship. Along with this fundamental
benefit, ERP systems offer a number of additional benefits such as low maintenance costs and
increased and efficient reporting capacity. ERP systems also contain computer security solutions,
thus being protected fro m external attacks.
An ERP system is a software solution from the series of economical, multi -modular
applications, which integrates all the economic processes of the enterprise in order to optimize and
increase its efficiency. An ERP contributes decisivel y to business management, helps in
structuring management decisions by providing reports with a very high degree of accuracy,
ensures an extremely short response time and a relational way of organizing data.
The fierce competition on the market implies the need for a fast and efficient management
in the conditions in which the volumes of data we work with are huge and the classic systems seem

to be surpassed, therefore there is a need for solutions to quickly extract the necessary knowledge
in the process. intelligent substantiation of decisions.
An ERP system is a management information system, a software tool that facilitates the
integration of all information in an organization into a single platform. The purpose of ERP is to
ensure the transparency of da ta within an organization and to facilitate access to any type of
information useful in carrying out the activity.
Enterprise resource planning programs are designed to be the core of an enterprise, tending
to integrate all departments and functions of a c ompany into a single IT system that can serve all
the particular needs of any department. Designing a single IT product to meet the needs of both
staff in the finance department and human resources or production is not easy, because each
department has its own specialized IT systems and optimized for their particular needs. But ERP
combines all this into a single computer program connected to a common database, so that
interdepartmental communication is much easier.
In recent years, ERP systems have become the standard in all fields of activity. The
proliferation of personal computers in the 80s and 90s of the last century opened up wide
opportunities for automation for companies. Software solutions have replaced manual work and
paper in accounting tasks, w arehouse accounting, document management and monitoring the
functioning of technological equipment. ERP systems help with monitoring and planning
activities. In addition, they accelerate the work of each department and certain employees. The
important feat ures of the new approach are not only the translation of data into a 'digital', new
opportunities for the transmission and analysis of information, but also the integration of other
data flows. Now top managers and line managers can obtain a complete pictu re of the company,
the ability to analyze the production load, stocks and financial flows. On the basis of this data,
more informed decisions have been taken and efficient resource planning has become possible.
In the early stages of the company's existenc e, there are no special automation needs: all
documents are developed using regular office programs, and to receive this information or this
information, it is enough for the manager to turn to an employee. Gradually, the number of
documents, the number of employees, the volume of operations is increasing and it is necessary to
create deposits and organize data.

In accounting, human resources, procurement and other departments appear their own
databases, the flow of documents between which is difficult. Thi s directly affects the efficiency of
work: to find out this information or this information in the staff department, the accountant must
conduct an inquiry by e -mail or turn to the personnel officer.
According to Olson (2003) Enterprise Resource Planning ( ERP) systems are defined as
software packages that employ interactive database technology to assimilate different units of
information system within an organization. ERP systems provide numerous distinct but
assimilated modules that can be set up as packag e for any entity (Olson, 2003). Esteves and Pastor
(2001) indicated that an ERP system assimilates these separate information systems and gives rise
to enhanced data reliability and efficiency in business processes. ERP systems rapidly became
prevalent wit h major companies that necessitated a unified integration of their business. According
to Esteves and Pastor (2001). The remarkable capability of ERP systems to simplify and streamline
the efficient processing of business transactions, eradicate work that fails to add any business value
and at the same time enhance customer service are the fundamental reasons for the exceptional
success and admiration of these systems (Esteves and Pastor, 2001).

Usage of ERPS in financial accounting
ERP systems have been espoused and implemented in different organizations with varying
magnitudes of penetration and accomplishment. There are clear indications that particular
technological advancements, which are overlooked, for instance ERP systems, have and will
contin ue to transform the accounting processes within an organization. However, very minimal
information is known regarding such changes. In spite of the fact that it is extensively recognized
that information technology (IT) plays a progressively more significa nt role in accounting
(Hyvonen, 2003).
The finance and accounting department within every organization is vital. The manner in
which these two different departments operate is distinctive and dissimilar, but the goal is just
about the same in every instanc e. Within any organization, the financial manager purposes to
maximize stakeholders’ wealth and increase the profit margin, diminish expenses, promote the
savings of the organization, guarantee safety on the investments made and most of all increase the

value of the firm. There are numerous things to manage in finance and accounting. ERP systems
make it possible for the finance and accounting managers to amalgamate the data and information
and bring it all together in one place.

1.1.Research Problem
In recent times, ERP systems have emanated as the most progressive administrative IT
solution for corporations. The business world has experienced a rise in the application of these
integrated software packages. The adoption and implementation of ERP systems has made it
possible for firms to integrate business processes and applications and have prompt reaction to real
time information. Specifically, ERP systems have substantially transformed the manner in which
data is gathered, stored, distributed and utiliz ed. This change in information processing direction
has influenced the accounting practices. In spite of the fact that IT plays a pivotal role in the
accounting field, there are limited studies that delve into the correlation between IT and
accounting, mor e so with regard to financial accounting.
At the same time, with a progressively greater adoption and implementation of ERPS in the
MENA region, it is increasingly significant to understand the effect of ERP systems on financial
accounting. To begin with, these ERP systems seems to have the huge potential of facilitating the
accountants’ endeavors to advance financial accounting practices so as to augment control and
planning within their organizations. Therefore, accountants need to ascertain whether and h ow
these ERP systems can meet their expectations. In addition, these ERP systems instigate significant
changes in the undertaking of accounting procedures.
Numerous studies have been done on ERP implementation in different industries in MENA.
Whereas these studies have been dedicated to the conception of ERP system implementations,
there is a significant gap with relation to financial accounting. Therefore, this study aimed filling
this gap setting out to ascertain the usage of ERP systems on financial acco unting.

1.1.2. Aim and Objectives of Research
This paper aims to investigate the concept of ERPS in auditing and financial management.
The study will be guided by the following specific research objectives:
1. To determine the efficiency of ERP systems in fulfilling the needs of financial accounting
2. To determine the motives for implementing ERP systems within organizations
3. To determine the obstacles and the barriers in the adoption of ERPS
4. To determine the reasons for failure of implementing ERPS
5. To determi ne the alternatives and recommendations for avoiding ERPS failure

1.2.Contribution to the field
Through this research the usage of ERP systems will be investigated. The study will
encompass not only an examination of the usage of ERP systems but also the barriers faced in the
implementation of ERPs and also the areas of failure. The academic pertinence of the study is to
provide a better and clearer overview of the subject. On the other hand, from a practical managerial
standpoint, this academic report wil l provide a clear perspective on the effects that usage of ERP
systems in financial accounting can have on both the competitiveness and reputation of the
company. One of the fundamental responsibilities for managers is to generate competitive
advantage and this report will provide some insight on how to do so.

1.3.Research Methodology
This research study will take up the mixed methods research design. This will include both
qualitative and quantitative research methods. Both qualitative and quantitative researches will be
applied to fulfill the requirements of the research. The quantitative research was applied using 2
main questionnaires while the qualitative research was made through interview questions.
Questionnaire was analyzed via SPSS while interviews were analyzed by identifying implications
of the respondents and comparing their answers . Accordingly, the findings of both methodologies
addressed the objectives of the study.

1.4.Research Limitations and delimitations
The study is limited to the selected financial and accounting institutions in Lebanon. From
each institution, financial managers and accounting managers handling financial and accounting
practices within the organizations were randomly selected to fill ou t the questionnaires. All of the
managers had at least a year of experience in the accounting department.

1.5.Thesis Structure
Chapter 1: Introduction
This chapter will introduce the background of the topic and the usage of ERP systems in financial
accountin g and the research objectives
Chapter 2: Literature Review
This chapter will delineate the theoretical framework linked to the topic at hand, the theoretical
concepts associated and literature previously conducted by authors regarding ERP systems, the
adva ntages and disadvantages, the barriers and obstacles faced, in addition to the practical
implementation of ERP systems in financial accounting in the MENA region .
Chapter 3: Research Methodology
This chapter will present the research design, approach and m ethods that will be used in the study
and delineate why.
Chapter 4: Findings and Analysis
This chapter will analyze the data collected on the basis of the open -ended and close -ended
questionnaires with an endeavor of providing some beneficial recommendatio ns for the usage of
ERP systems in financial accounting .
Chapter 5: Conclusion
This chapter will link the outcomes attained in chapter four to the literature and theories discussed
taking into consideration the research objectives in order to fulfill the requirements of the research
study.

References
Hyvönen, T. (2003). Management accounting and information systems: ERP versus
BoB. European Accounting Review , 12(1), 155 -173.
Mutara, M. D . (2013). The Effect Of Enterprise Resource Planning Systems On Management
Accounting Practices In Non Governmental Organisations Operating In Kenya. University
of Nairobi.
Esteves, J., & Pastor, J. (2001). Enterprise resource planning systems research: an annotated
bibliograph y. Communications of the Association for Information Systems , 7(1), 8.
Olson, D. L. (2003). Managerial issues of enterprise resource planning systems . McGraw -Hill,
Inc..
Mabert, V. A., Soni, A., & Venkataramanan, M. A. (2003). The impact of organization size on
enterprise resource planning (ERP) implementations in the US manufacturing
sector. Omega , 31(3), 235 -246.