Introduction
of the Company Engro Fertilizer’s Limited ,which is a subsidiary of Engro Corporation
produces leading fertilizer brands optimized for local cultivation needs. It is
a renowned name in Pakistan Fertilizer Industry. Engro holds
a vast, nationwide production and marketing infrastructure. It is also a
leading seller , and importer of Phosphate products.
These products are marketed extensively across Pakistan as
phospatic fertilizers. The Vision of
Engro Fertilizer is to improve productivity and lifestyle for thousands of
farmers across Pakistan. Objective The objective of this research is to
study the implementation, automation and challenges behind ERP processes. The intention
backed for this research is to study how the Accounting and Finance department in companies are using ERP to
software to integrate system and what they are achieving with the
implementation of the software.
Methodology The team member
underwent detailed interview with the Finance
head in Engro Fertilizer so as to get insight of the running SAP processes,
what challenges they face and how they are integrating their processes using
SAP ERP solutions.
Literature
Review
(Keller
2004) stated that ERP – Enterprise
Resources Planning is a concept broadly diffused to people and organizations
since when it was coined by Gartner Group in early 1990 as the next-generation
of MRP II . According to Burns et ali (1999 ), the growing use of ERPs such as
SAP and the progresses in the information technology have great implications
for the accountant. The information is now thoroughly dispersed in the
organization As a result, managers have direct access, in real time, instead of
depending on the accountants to get them. Enterprise resource planning system
which is a kind of integrated information transformation system is widely used
in various enterprises. The enterprises
resources planning system SAP R/3 benefits the structures of many
organizations. It works as an IT tool to consolidate data flows and record
business transactions in the organization (Granlund 1998) .According to (Hayen
2007) the key technological skill of this software is in the computer
controller of all the main processes of a business: from sales order entry to
manufacturing to invoicing to collection More than 80% of international
companies are organized under this information system. (Eresurce 2013). According to the study “Effects of Implementation of Sap on Management Accounting” an ERP
system offers technological, process efficient, financial, strategic and organizational
benefits over diverse computing systems .This study focuses on how enterprise resource planning system
changes management accounting in an organization .Before the implementation of
Erp software , managers had the responsibility for monitoring budgets, producing
forecasts and explaining variances .The
work previously done by a management accountant, are now undertaken by SAP
software. Most organizations do not have the tools and information process to make responsive decisions. The proper implementation
of information system in enterprise facilitates the roles transition, removal
of many tasks, enough time left for managers to make decisions. The most important benefit of this information system is the management
and organization structure optimization.
Benefits
that the
Accounting and Finance Department gets with the implementation of ERP
System
.
Financial
Accounting (FI) is the core module which manages all financial transactions,
for internal as well as external auditing purposes in Engro Fertilizer Limited. With the help
of this module, Engro Fertilizer was able to track financial accounting data
within a framework of multiple languages
and currencies. Financial
accounting Module helped to gather
financial data from various functional departments of Engro, and it generates valuable financial reports such as
general ledger, trail balance, balance
sheet and quarterly financial statements .Financial accounting module of an ERP
helps to provides company wide control ,and integration of financial information. Before the implementation of this
module at Engro,business and financial accounting processes used to consume a lot of time and resources
in preparing statements, reports, forecasts, charts and other important data on
a day-to-day basis. The SAP ERP software has redefined the way businesses are
conducted at Engro, making them highly efficient and profitable. This SAP FI Module is integrated with many parallel
modules such as Material Management (MM), Sales & Distribution (SD), Human Resources (HR), Production Planning (PP),
Controlling (CO), that enabled Engro to
unify processes that may have needed the utilization of many software packages.
Financial
Accounting module Of Sap mainly deals
with the following financial components
• Fixed asset
• Accrual
• Cash journal
• Accounts receivable and payable
• Inventory
• Tax accounting
• General ledger
• Fast close functions
• Financial statements
• Parallel valuations
• Master data governance Sap Fi Module comprises of
the folllowing submodules
·
General Ledger
·
Accounts Payable
·
Accounts
Receivable
·
Bank Accounting
·
Asset Accounting
·
Funds Management
·
Travel Management SAP General Ledger: The major aim of general ledger accounting is to provide a
system for managing all external accounts of Engro Fertilizer limited. It
records all the business transactions along with various other operation areas
and It also provides real-time assessment of cost accounting areas.
SAP Accounts Payable and Receivable: SAP accounts payable helps
to records all the components and data for vendors .SAP account receivable
records all the components and data for customers. Balance sheets and account
statements are created using these modules.
SAP
Bank Accounting: This
module handles all bank accounting transactions. From managing bank master
data, cash balance management to processing incoming and outgoing payments;
everything is managed using this module Asset Accounting: This module is
designed to manage and supervise fixed assets along with providing detailed
information and reporting data.
SAP Funds Management: This SAP
accounting module supports all the related tasks in creating and managing
budgets.
SAP Travel Management: This SAP module
accounts all the transactions related to corporate trips organized by Engro.Approvals,
bookings, settlement and diverse travel expenditures are recorded and managed with
the help of this module
The Implementation
of Financial accounting Module at Engro Fertilzer simplified processes such as scheduling,
financial consolidation, reporting and allowed better management of cash-flow,
receivables and payables, credit management, collections, finance and treasury
functions etc. FI module store large amounts of
financial data to generate helpful reports and maintain a highly reliable financial
system at Engro Fertilizer Limited
The inclusion of ERP in the
Financial Area gives support to decision making since it guarantees reliability
and total security on the accounting information
Another advantage provided by ERP
is the great operational flexibility it is a very useful tool for multinational
companies and corporate bodies like Engro Fertilizer since it permits them to
execute the fiscal closing.
ERP also offers better access and
more safety. All the components of the financial department are able to access
the chain of flow management
Evaluation RubricReferences Wang,Y.(2013). Effects of
implementation of SAP on management accounting .Business Economics and Tourism Journal ,82-110.
