Introduction
This paper seeks to draw a comparison between the uses of data in for auditing purposes to the use of data in large scale applications like enterprise resource planning. The gist of the comparison will be to establish whether data is used for the same purposes. The paper will be looking for similarities in data use by the two applications in order to answer the question as to whether the two applications are used for the same purposes. The paper will employ two topics; Business process reengineering and enterprise resource planning. These two topics represent the use of data for auditing purposes and the use of data for large scale applications respectively.
Definition of concepts
Auditing: In general terms, auditing is the process of evaluating a process or an organization in order to establish the status. Various aspects of the process or organization are put into perspective and scrutinized against standards in order to establish the state of affairs. Auditing is a household name in various fields including, but not limited to project management, financial control, energy conservation, water management and many other fields. The concepts in these fields vary considerably, but the general idea is the same (Bocij, Greasley, & Hickie, 2008, p.13).
Enterprise Resource Planning: This refers to the use of information systems to facilitate a good flow of information between all the business functions within the boundaries of an organization and also manage any connections to outside stakeholders. Enterprise Resource Planning integrates external and internal management of information across the entire organization. These information systems encompass manufacturing, finance or accounting, customer relationship management sales and service. This is done in an automated manner through the use of an integrated software application (Ruz-Cunha, 2010, p.12).
Business Process Reengineering: This refers to the redesigning of the workflow around and between enterprises. This is a radical move in the attempt to redesign and reorganize an enterprise. The main aim of Business Process Reengineering is to redesign and reorganize the organization or an enterprise in order to increase the quality of services offered and to also lower the costs of operations. Information technology is particularly important to the process of Business Process Reengineering.
The use of data in Enterprise Resource Planning
In Enterprise Resource Planning systems, data is used in a variety of ways. Enterprise Resource Planning systems have three tools that use data to perform a number of functions aimed at maximizing the usage of resources by an enterprise or an organization. These tools include finance, manufacturing and human resources tools. These tools manipulate the data input into the system to generate working reports that are used during decision making.
The finance tool helps an organization to preserve their financial data. This data includes information on assets the organization owns, budgets, accounts and cash. This data can be retrieved using the various interfaces of the Enterprise Resource Planning systems. The data can also be manipulated through a series of commands to produce reports that show the financial situation of the enterprise.
Through the use of data input into the systems, Enterprise Resource Planning systems are able to get rid of time consuming activities. This is because the software application is able to organize the data into working reports. If done manually or otherwise, these reports would require a lot of effort and time to compute and prepare. By using this information system, the enterprise saves on time and paperwork. This increases efficiency and by extension productivity of the enterprise.
Synergy is a very important aspect of Enterprise Resource Planning solutions. The software application uses data to combine multiple processes thereby allowing the enterprise a single forum for data. Through the Enterprise Resource Planning systems, an enterprise is able to study its operational processes, performance and earning by merging their financial information with their operational information. This gives the enterprise a correlation coefficient of their operations to their finances. Using these coefficients, they are able to establish correlation and come up with competitive strategies (ICBIS & Abramowicz, 2009, p.25).
Apart from finance and business processes, Enterprise Resource Planning systems are very valuable in materials maintenance. Using its real time provisions, the system records all details of incoming and outgoing materials for storage. Through this data, the enterprise is able to automate the process of purchasing and maintaining materials. Through specialized modules, the system is able to keep track of purchased materials. The system can also make calculations in order to determine how the material is best distributed.
Through the data stored in the system, an enterprise can forecast the market demand based on economic statistics, history and data from employees. The enterprise is also able to determine when a certain product should be produced depending on the raw material that is available. Through this kind of forecasting and planning, an enterprise or an organization is able to benefit from market forces. The company is also able to procure materials to coincide with increased demand for products in the market (ICBIS & Abramowicz, 2009, p.32).
Use of data for Auditing Purposes
As espoused earlier, auditing is the scrutiny of an organization or an enterprise in order to establish the status. Auditing is either done using the traditional techniques or using computer assisted audit tools and techniques. This automates the auditing process making it less cumbersome and time consuming. During auditing, statistical analysis using business intelligence tools to manipulate data in order to get the desired outputs.
For auditing purposes, data is used to prepare queries using computer packages and applications. When data is stored in databases, one might want to retrieve certain aspects of the data from the database. Using structured query language, tables can be formulated to retrieve data from the databases for scrutiny by auditors. During the process, data might also be stratified according to various parameters. This way, the data is organized into cohorts based on similarity of characteristics. It is easier to execute commands to acquire working outputs.
Using different business intelligence tools, numerous calculations are done on the data so as to get actual reports. For instance, when the auditor needs to verify the financial status of an enterprise, he will look into the vote heads of balance sheets and other financial documents. Through calculations, he can come up with reports that collaborate or refute the aforesaid status. The calculations are executed through pre-programmed formulas that are embedded on the application software used for auditing.
During auditing, data is also used for statistical analysis. Statistical analysis is employed in auditing in order to establish relationships and correlations between different parameters in the data. For instance, an auditor might want to know the relationship between the cost of production and profit margins in a certain enterprise. Through the manipulation of data using techniques in statistical analysis, he can get the correlation coefficients that define the relationship between the two (Curtis, & Cobham, 2008, p.53).
During auditing, data is used in the making of electronic work papers. This involves storage of electronic work papers in a central audit file to enable ease when navigating through archived and current working papers. Through this use of data, the auditor is able to coordinate the existing audits and also compare to previous and related projects. In addition, the auditor is able to standardize the audit formats and forms electronically. This goes a long way to improve the efficiency, consistency and the quality of the audit papers.
Data is also used for fraud detection purposes. Using tools embedded in the business intelligence tools used in auditing, unexpected and unexplained trends in data can be established. By performing analytical tests, the auditor can perform evaluations on financial information. This is a study of the plausible relationships on both financial related and non-financial related data in order to assess whether accounts balances are within a reasonable range.
During auditing, data is also used in the continuous monitoring process. This is an ongoing process through which business data is acquired, analyzed and reported. The reason for this, is to facilitate the identification and timely response to operational business risks. In order to ensure an all-inclusive approach in the acquisition, analysis and reporting of business data, auditors have to make sure that every computer system is being continuously monitored by the enterprise. This implies that data from all business processes, transactions and applications has to be stored (Curtis, & Cobham, 2008, p.47).
Data use in Business Process Reengineering
Business Process Reengineering as explained earlier refers to the process of redesigning the workflow in an enterprise. The rationale for the system was the feeling that workflow in large organizations was based on assumptions about people, technology and organizational goals that might now be valid anymore. Using the seven principles of business process reengineering, the enterprise achieves considerable levels of improvement in cost, quality and time management.
The use of data in business process reengineering is for varied reasons. Firstly, the data input into the information systems is used to create a benchmark on the operations of the enterprise so as to create a lower threshold for the enterprise resource planning. The implementation of the enterprise resource planning software is dependent on the results of business process reengineering. With the implementation of the enterprise resource planning, the operators of the enterprise attempt to reach the growth in business envisioned in the business process reengineering results (Curtis, & Cobham, 2008, p.6).
Secondly, data is used in business process reengineering in order to determine the changes that ought to be made in the operations of the business so as to improve certain aspects. Mainly, the focus of business process reengineering is in customer service, advertising, costs and marketing. Data input into the system is analyzed by business process reengineering systems in order to determine whether the enterprise is meeting the goals and objectives as stipulated on its mission statement.
Comparison and purpose
There is significance interlocking in the data use for auditing and data use for large scale applications like the enterprise resource planning and business process reengineering as far as the purpose is concerned. Both uses of data are aimed at establishing the state of affairs on order to suggest improvements in the business process. Even though they are all not geared towards this common purpose, the general idea is the same. The two process use data to pinpoint flaws in the business process although by using different perspectives (Abramowicz & Mayr, 2007, p.78).
However, it cannot be unequivocally said that data use in auditing, and large scale applications is used for the same purposes. Whereas auditing is done periodically, large scale applications of data in the business environment use data to give outcomes that are required on a daily basis. For instance, the enterprise resource planning systems harmonizes data from all departments in an enterprise to give it a common view. This data can be viewed by employees in the various departments as opposed to audit reports that may not be readily available.
Conclusion
Information technology is very vital in business management in the competitive world of business. In order to thrive, business ought to invest in effective and efficient information systems in order to align their operations with the corporate strategy. Information systems are designed to help in the analysis and facilitation of strategic operations in an organization. Good information systems will augment the businesses long-term plans by providing reports based on performance analysis in aspects that are critical to the plans. These systems also give feedback loops with which embellishment can be done on all aspects of the enterprise including, but not limited to training regimens and recruitments (Abramowicz & Mayr, 2007, p.45). Information systems indicate the status of the enterprise and also where there are bottlenecks on the performance of the enterprise. Therefore, it is important that enterprises invest in these information systems in order to get a competitive edge in the crowded market.
References
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Ruz-Cunha, M. M., 2010. Enterprise information systems for business integration in SMEs: technological, organizational, and social dimensions. Hershey, PA, Business Science Reference.
