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Advantages of SAP

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Advantages of using SAP (Ente rprise System Application Software) in producing the

legally required financial statements

Enterprise systems (ES) are referred to as business usage application software packages

that help various business processes, information flows, analyzing the data collected and also

reports on the analysis made. Enterprise system application software of financial module are

available both in readymade and customized form. SAP is the typical form of ES application

software that can be used in solving various business needs. The financial accounting module of

SAP in made in such a way that it shows the enterprise business transaction in such a manner

that complies with the external reporting requirement (SAP Service and Support Expert in the

Center of Expertise, Active Global Support, 2010). This module of Sap has capability to track

and report on multiples enterprises across many countries and it also supports multiple languages

and currencies to make the work easy. The financial module in SAP also has the facility to

integrate with the sale and distribution, purchasing and management of raw materials, which

helps the user to locate the original transaction in easier manner whether it is sales order or

purchase order. It has been said that SAP FI (Financial Module) is the central point of the

integrated SAP system as there is financial impact on all other business process that results to

some flow of information to the financial module (OBrien, 2011). The biggest advantage of

using the SAP financial module is its system integration with other application modules of

business information system. Using SAP, one can easily read, appraise, and respond to the

changing business situations and helps to prepare legally required financial statements.

In addition to the above benefits SAP also allows better transparency while preparing the

financial statements that increase the corporate governance. The main advantage is that SAP

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financial module comes with preloaded accounting standards, fed eral regulations that help in

improving the administration of internal controls. The SAP FI has the unique ability to manage

the cash across the countries, location and companies (Khoshnevis, 2009). The benefit of using

the SAP is endless. SAP Fi deals with the wide range of governance practices and also the

supported compliance issues like compliance to the Sarbanes-Oxley, segregation of duties, IFRS,

countries GAAP and other legal regulations of respective countries. On analyzing the benefit of

using the SAP FI (ES application software) it can be said that it can help in producing the legally

required financial statements.

Issues faced by the global firms while using an ES for the production of group and/or entity

financial statements

There are many problems that have to be faced while using the SAP for the recording,

analyzing and recording of the financial transaction in order to produce the financial statement of

the entity or company. As it is the main requirement that financial statement of the company or

entity must be according to the domestic GAAP that have compliance with the IFRS

(International accepted accounting standards). There is individual GAAP for the respective

countries and it is very hard to make adherence with these separate GAAP while making the SAP

software. Therefore module makes let the provision for the user to make required changes as

their requirement (BEng, 2004). The main challenge is the SAP installation in the organization.

There are some basic requirements in the SAP installation, if not fulfilled leads to complete

failure of the enterprise resource planning. There is inflexibility of using the SAP module in the

company as the vendor software packages may or may not fit companys business module and it

is true that customized software leads to high expenditure. It is true that SAP comes with very

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total cost of ownership that includes the acquisition cost, deployment cost and other maintenance

cost. While integrating SAP financial module with other modules of the enterprise it may lead to

error as it cannot be possible for readymade software to be easily integrate with the available

resources of the company. Legally correct financial statements required full compliance with the

domestic GAAP and IFRS but the truth is that it is not possible through using ant ES application

software. Entity has to bear regular updating cost of the SAP application software that leads to

increase in the overall cost (ERP Workshops, 2011). There is also risk of steal of data as all the

information has made available online that can be accessed from anywhere connected to the

server of the company. To made data under protection compa ny has to bear addition cost of

implementing various internal and external control measures to avoid the risk of data steal.

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References

2011 ERP Workshops. [Online]. Available at:

http://big.computing.dcu.ie/information/sap_workshopmay2011.pdf [Accessed on: 1

December 2014].

BEng, A.M. 2004. A Framework for Adaptive Monitoring and Performance Management of

Component-Based Enterprise Applications. [Online]. Available at:

http://doras.dcu.ie/18093/1/Adrian_Mos_20130116123408.pdf [Accessed on: 1

December 2014].

Khoshnevis, S. et.al. 2009. Model Driven Approach to Service Oriented Enterprise Architecture.

[Online]. Available at: http://www.computing.dcu.ie/~pjamshidi/PDF/APSCC2009-1.pdf

[Accessed on: 1 December 2014].

OBrien, T. 2011. Creating and Sustaining Data Quality within diverse Enterprise Resource

Planning and Information Systems. [Online]. Available at:

http://dataquality.computing.dcu.ie/thesis/OBrien_Tony_2011.pdf [Accessed on: 1

December 2014].

SAP Service and Support Expert in the Center of Expertise, Active Global Support. 2010.

[Online]. Available at: http://www.dcu.ie/alumni/job_spec/vacancy_sap1.pdf [Accessed

on: 1 December 2014].

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