Introductionof the Company Engro Fertilizer’s Limited ,which is a subsidiary of Engro Corporation produces leading fertilizer brands optimized for local cultivation needs. It isa renowned name in Pakistan Fertilizer Industry.
Engro holdsa vast, nationwide production and marketing infrastructure. It is also aleading seller , and importer of Phosphate products.These products are marketed extensively across Pakistan asphospatic fertilizers.
The Vision ofEngro Fertilizer is to improve productivity and lifestyle for thousands offarmers across Pakistan. Objective The objective of this research is tostudy the implementation, automation and challenges behind ERP processes. The intentionbacked for this research is to study how the Accounting and Finance department in companies are using ERP tosoftware to integrate system and what they are achieving with theimplementation of the software. Methodology The team memberunderwent detailed interview with the Financehead in Engro Fertilizer so as to get insight of the running SAP processes,what challenges they face and how they are integrating their processes usingSAP ERP solutions.
LiteratureReview (Keller2004) stated that ERP – EnterpriseResources Planning is a concept broadly diffused to people and organizationssince when it was coined by Gartner Group in early 1990 as the next-generationof MRP II . According to Burns et ali (1999 ), the growing use of ERPs such asSAP and the progresses in the information technology have great implicationsfor the accountant. The information is now thoroughly dispersed in theorganization As a result, managers have direct access, in real time, instead ofdepending on the accountants to get them. Enterprise resource planning systemwhich is a kind of integrated information transformation system is widely usedin various enterprises. The enterprisesresources planning system SAP R/3 benefits the structures of manyorganizations. It works as an IT tool to consolidate data flows and recordbusiness transactions in the organization (Granlund 1998) .According to (Hayen2007) the key technological skill of this software is in the computercontroller of all the main processes of a business: from sales order entry tomanufacturing to invoicing to collection More than 80% of internationalcompanies are organized under this information system. (Eresurce 2013).
According to the study “Effects of Implementation of Sap on Management Accounting” an ERPsystem offers technological, process efficient, financial, strategic and organizationalbenefits over diverse computing systems .This study focuses on how enterprise resource planning systemchanges management accounting in an organization .Before the implementation ofErp software , managers had the responsibility for monitoring budgets, producingforecasts and explaining variances .Thework previously done by a management accountant, are now undertaken by SAPsoftware. Most organizations do not have the tools and information process to make responsive decisions. The proper implementationof information system in enterprise facilitates the roles transition, removalof many tasks, enough time left for managers to make decisions. The most important benefit of this information system is the managementand organization structure optimization. Benefits that the Accounting and Finance Department gets with the implementation of ERPSystem .
FinancialAccounting (FI) is the core module which manages all financial transactions,for internal as well as external auditing purposes in Engro Fertilizer Limited. With the helpof this module, Engro Fertilizer was able to track financial accounting datawithin a framework of multiple languagesand currencies. Financialaccounting Module helped to gatherfinancial data from various functional departments of Engro, and it generates valuable financial reports such asgeneral ledger, trail balance, balancesheet and quarterly financial statements .Financial accounting module of an ERPhelps to provides company wide control ,and integration of financial information. Before the implementation of thismodule at Engro,business and financial accounting processes used to consume a lot of time and resourcesin preparing statements, reports, forecasts, charts and other important data ona day-to-day basis. The SAP ERP software has redefined the way businesses areconducted at Engro, making them highly efficient and profitable.
This SAP FI Module is integrated with many parallelmodules such as Material Management (MM), Sales & Distribution (SD), Human Resources (HR), Production Planning (PP),Controlling (CO), that enabled Engro tounify processes that may have needed the utilization of many software packages. FinancialAccounting module Of Sap mainly dealswith 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 ofthe folllowing submodules · General Ledger· Accounts Payable· AccountsReceivable· Bank Accounting· Asset Accounting· Funds Management· Travel Management SAP General Ledger: The major aim of general ledger accounting is to provide asystem for managing all external accounts of Engro Fertilizer limited. Itrecords all the business transactions along with various other operation areasand It also provides real-time assessment of cost accounting areas.
SAP Accounts Payable and Receivable: SAP accounts payable helpsto records all the components and data for vendors .SAP account receivablerecords all the components and data for customers. Balance sheets and accountstatements are created using these modules. SAPBank Accounting: Thismodule handles all bank accounting transactions.
From managing bank masterdata, cash balance management to processing incoming and outgoing payments;everything is managed using this module Asset Accounting: This module isdesigned to manage and supervise fixed assets along with providing detailedinformation and reporting data. SAP Funds Management: This SAPaccounting module supports all the related tasks in creating and managingbudgets.SAP Travel Management: This SAP moduleaccounts all the transactions related to corporate trips organized by Engro.Approvals,bookings, settlement and diverse travel expenditures are recorded and managed withthe help of this module The Implementationof 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 treasuryfunctions etc. FI module store large amounts offinancial data to generate helpful reports and maintain a highly reliable financialsystem at Engro Fertilizer LimitedThe inclusion of ERP in theFinancial Area gives support to decision making since it guarantees reliabilityand total security on the accounting informationAnother advantage provided by ERPis the great operational flexibility it is a very useful tool for multinationalcompanies and corporate bodies like Engro Fertilizer since it permits them toexecute the fiscal closing. ERP also offers better access andmore safety. All the components of the financial department are able to accessthe chain of flow management Evaluation RubricReferences Wang,Y.
(2013). Effects ofimplementation of SAP on management accounting .Business Economics and Tourism Journal ,82-110.