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In this article we will, in the first place, talk about classification in accounting, give some reasons why accounting is classified, explain what activities are undertaken and in a relation to SAP, What features does MySAP ERP have to meet these requirements and discuss these and other features covered by this mini research project.
Secondly, we will talk about Sarbanes-Oxley Act, give some explanations and the reason for the Act and mention some of the implications of the Act, and also describe how MySAP ERP meets these implications.
Thirdly we will mention some Success and Failure examples of SAP ERP implementations in well known companies.
General description of an accounting information system is that this is a system which is used to record the all business transactions and after processing them provides information to business stakeholders no matter if they are internal or external. During the time many small businesses grow to middle-sized companies, expanded nationally and even become larger and start to trade internationally. As a result of this development, many of these companies decided to use Enterprise Resource Planning (ERP) software to integrate their many business activities such are production planning, sales and distribution, asset and material management, and other processes related to human resources, production, sales and so on.
There are many companies that have successfully resolved many of their problems by using ERP software, but there are also few whose implementation of the ERP has failed. After bankruptcy of several large companies such as World-Com and Global Crossing and as biggest, Enron collapse, in the US, as a result, the Sarbanes-Oxley Act was passed. This Act had big implications on disclosure on reports, top management accountability, auditor independence etc. The Act also had huge implications to ERP software developers and providers.
Classification of Accounting
In general, there are two points of view to Accounting. The first point is Managerial Accounting focused on "Numbers and Figures" for Internal Decision Making and Control and the second point of view is Financial Accounting which is focused on "Numbers and Figures" for Stakeholders which are potential future Investors, Lenders, Bankers, Accounting Standards Regulation Boards, and some other External Users.
"Managerial Accounting is a process of preparing management accounts that provide accurate and timely key financial and statistical information required by managers to make day-to-day and short-term decisions. Management Accounting generates monthly or weekly reports for the firm's internal audiences such as department managers and the chief executive officer. These reports typically show the amount of available cash, sales revenue generated, amount of orders in hand, state of accounts payable and accounts receivable, outstanding debts, raw material and in-process inventory, and may also include trend charts, variance analysis, and other statistics". 
"Financial accounting produces annual reports mainly for external stakeholders such as creditors, investors, and lenders. While Managerial Accounting reports are prepared in accordance of internal needs and are not regulated in any sense, Financial Accounting is a collection of basic (raw) data, the same that are used in management accounting, treated in a prescribed and statute enforced format which emphasises the historic, custodial and stewardship aspects of the business"  .
MySAP ERP is organised in software modules. Each of the modules covers different areas of business. The first module is FI (Financial Accounting) module that is mostly used to satisfy all the reporting requirements. This module integrates with other SAP software modules. Those modules are part of Logistics and HR mostly useful for managerial accounting - MM module for Materials Management, PP module for Production Planning, SD module for Sales and Distribution, PM module for Plant Maintenance, PS - Project Systems as well as HR module for Human Resources.
SAP FI Module
SAP FI is a name for Financial Accounting Module. With this module we can keep track of data required by regulatory or statutory boards. With The SAP FI Module company will cover all the accounting and financial requirements. Some of outputs of this module are financial statements such as financial position, balance sheet, cash flow etc.
SAP FI Module components are General ledger, Book close, Tax, Accounts receivable, Accounts payable, Asset Management, Consolidation, Special ledgers, etc.
SAP SD Module
SAP SD is a module for Sales and Distribution. In this module we can manage activities related to customers - selling activities from start to the end from the moment we received request for sale to the moment when goods are delivered. This include processing documents such as Request for quotation, Sales order, Pricing, Picking, Packing, Shipping.
SAP CO Module
SAP CO is a name for Controlling Module. This Module is used to cover all the management accounting activities. Information generated by the SAP CO Module is used by Management to plan, report, and monitor the operations performed during the business process. Also, information provided by this module will be used in decision-making process. Internal components of the CO Module are Profit and Cost Center Accounting, Cost Element Accounting, Internal Orders, Product Cost Controlling, Activity-Based Costing, Profitability Analysis etc.
SAP HR Module
SAP HR Module covers company's Human Resources processes in a manner that allows keeping track of employed people, their development, training, payroll, providing important data in making decisions what people should be kept as a right person for the right position.
SAP MM Module
SAP MM Module covers Materials Management as a part of a larger SAP section that covers Logistics. Whit this module we can procure that all logistics business processes, from requisition request to payment, including documents such as Requisitions, Purchase orders, Goods receipts, Accounts payable, Inventory management, Master raw materials, finished goods etc.
SAP ABAP Module
SAP ABAP is not really a module as above discussed module. The name is derived from Advanced Business Application Programming. It is more like modularly structured programming language specially built for custom development including reports.
After bankruptcy of several large and well known companies such as World-Com and Global Crossing and as biggest, Enron collapse with its famous special purpose entities, in the US, as a result, the Sarbanes-Oxley Act was passed. The Sarbanes-Oxley Act was brought with intention to protect investors from corporate accounting fraudulent behaviour. The real name of the Act is the Public Company Accounting Reform and Investor Protection Act of 2002. It is the biggest completely change in the system making it more effective of U.S. securities regulations since the New Deal.
The major changes put in place by the act are:
Securities violations will be considered as criminal and civil penalties will apply.
Executives who intentionally change or misstate financial statements will face longer jail sentences and larger fines.
Company financial reports are now CEO and CFO responsibility.
Company loans cannot be granted to its executives and directors nor may they not solicit or accept such loans.
It is mandatory for executives to disclose compensation and profits.
Insider trades must be reported quickly and are prohibited during pension-fund blackout periods.
Internal financial controls audited annually must be established within publicly listed companies.
Internal audits and reviews must be certified by external auditors.
Actuarial, legal, or consulting services to audited firms may no longer be provided by the same audit firms.
The section 802 of Sarbanes-Oxley contains three most important rules that apply to the management of ERP. The first rule is about destruction, alteration, or falsification of data records.
Sec. 802(a) "Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both."
The second rule describes how long the period that records must be kept. It is a practice among public accountants that corporations securely store all business records as set in Sec. 802(a)(1).
Sec. 802(a)(1) "Any accountant who conducts an audit of an issuer of securities to which section 10A(a) of the Securities Exchange Act of 1934 (15 U.S.C 78j-1(a)) applies, shall maintain all audit or review workpapers for a period of 5 years from the end of the fiscal period in which the audit or review was concluded."
Finally the third rule defines the type of business records that must be kept, which includes all business transactions, with electronic communications included too.
Sec. 802(a)(2) "The Securities and Exchange Commission shall promulgate, within 180 days, such rules and regulations, as are reasonably necessary, relating to the retention of relevant records such as workpapers, documents that form the basis of an audit or review, memoranda, correspondence, communications, other documents, and records (including electronic records) which are created, sent, or received in connection with an audit or review and contain conclusions, opinions, analyses, or financial data relating to such an audit or review."
"The key to complying with regulatory regulations such as Sarbanes-Oxley requires comprehensive, internal controls and other processes for maintaining auditable business transactions, financial transparency, and operational controls. Executive management must have complete confidence in internal controls and in the accuracy of related reports. That comprehensive approach begins with the SAP ERP Financial solution.
SAP ERP Financials provides extensive functionalities that ensure continuous compliance with regulatory mandates - with built-in, compliance processes, while helping to reduce IT and audit costs. SAP ERP Financials also helps you manage the complex documenting, testing, process control, and sign-off requirements mandated by Sarbanes-Oxley sections 302, 404, and 409, as well as fast close and section 301 whistle-blower requirements." 
Success and Failure of SAP ERP implementations
Implement an SAP ERP system or not is very important question when we are making such decision and of course, many factors need to be considered. It is not the just about computers, networks and software implementation. ERP is not suitable for every business. Before we make any decision we must have understanding of ERP, analyse what benefit company can expect to achieve. The analysis, beside obvious cost-benefits, must take into account nonfinancial benefits as well. Nonfinancial benefits can be standardization, cost reductions, Information visibility etc. "The personnel (or the human resources) cost is by far the largest and most expensive, but at the same time has been the area given the least amount of consideration. The software and hardware costs are often easily quantifiable; however, the "human" cost is not". 
Some studied analysis showed that SAP implementation was successful in around 66 per cent of the companies, and failures 33 per cent. Potential financial consequences and embarrassment make harder to find companies that failed their SAP implementation. 
As an example of unsuccessful implementation we will mention Hershey, a leading US manufacturer of chocolates which had chosen to implement SAP ERP during the peak periods when business was expected to do its best. Choosing the Wrong time for implementation with too much of workload they experienced a heavy loss in profits and sales. Even the technical team for more than three years was hard working to implement ERP solutions and really was nothing to complain neither from point of view the SAP AG nor from the technical point of view, the project failed.
Tata Iron and steel company Limited - TISCO is an example of successful implementation of SAP ERP.
Before the company has decided to implement their preferred SAP ERP 3, they carefully considered what best solutions for their requirements are. They also did all the forecasting on what could happen with their business operations in the immediate future caused by the implementation .The prediction they made helped them to chose the correct solution at the proper period of time. The implementation was a long process and took over a year to perform required operations and the major steps of preparation.
SAP ERP system is one of the best world business software solutions designed mostly for large companies often international companies with subsidiaries operating in different circumstances and variety trading environment. SAP covers all the business activities and aspects with different modules for each of the activities. SAP meets all the requirements prescribed for contemporary trends in modern global business with real time access to current data from any location in the world thanks to the Internet and newest technology. SAP also meets latest measures put in place to protect investors of potential fraudulent behaviour or trading, and also provides auditors with full protection of the documents once processed and forwarded into a system database.
The most important part in making SAP fully functional is the ability to define implementation process which offers minimum resistance. Many organizations fail to specify their organizational objectives during that process.
"Implementing an ERP system is one of the most challenging projects any company, regardless of size, can undertake. Success does not come easily, and those who implement only for an immediate return on investment are in for a rude and expensive awakening. It is clear that most companies implement ERP systems just to stay competitive. The process has to be part of the business objective, and it has to be clear that a successful "go-live" is not the brass ring. This fateful date, set early on in project planning, cannot be viewed as the end goal or even the end of the project, but rather only a milestone along road to the true goal - realizing the benefits".