The Impact of Enterprise Resource Planning (ERP) Systems on the Effectiveness of Internal Controls over Financial Reporting

Authors

Abstract

Today there is a rapidly changing business world. Therefore most of the growing Enterprises are moving towards Enterprise Resource Planning (ERP) systems in order to integrate their business units. Implementing this systems have a great impact on the performance of that Enterprises.The objective of this paper is investigating the impact of Enterprise Resource Planning (ERP) Systems on the effectiveness of internal controls over financial reporting. The sample include 120 Firm-yaer observations during 2008 to 2012. The hyposis tested using probit regression model. The result suggest that ERP - implementing firms are less likely to report internal control weaknesses (ICW) than a matched control sample of non – implementing firm. Furthermore firms with M&A activity, losses, lower market value, lower ERP age are less likely to relate to lower level of internal control weaknesses.

Keywords

References

فرقاندوست حقیقی کامبیز، درخشانفر سهیلا. (1387). مشکلات پیاده سازی سیستم برنامه‌ریزی منابع سازمان (ERP) در شرکت‌های صنعتی منتخب از دیدگاه مالی. حسابرس، 41، 54-61.
ملانظری مهناز، زراعتی فرد لیلا. (1391). بررسی نقش وجود عوامل نوآوری در پیاده سازی موفق برنامه‌ریزی منابع سازمان (ERP). پژوهش‌ها‌ی تجربی حسابداری، 6، 95-109.
مومنی منصور، فعال قیومی علی. (1378). تحلیل‌ها‌ی آماری با استفاده از SPSS، تهران..فرشیوه.
سازمان بورس و اوراق بهادار(1391)، دستورالعمل کنترل‌های داخلی، www.seo.ir
Edward I. Altman (1968). Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy. The Journal of Finance, Vol. 23, No. 4., pp. 589-609.
 
Ashbaugh-Skaife, H., D. Collins, and W. Kinney. ( 2007). The discovery and reporting of internal control deficiencies prior to SOX-mandated audits. Journal of Accounting and Economics 44 (1–2),166–192.
Bagranoff, N. A., and V. P. Vendrzk. (2000). The changing role of  IS audit among the big five US-based accounting firms. Information Systems and Control Journal. 5, 33-37.
Barber,B.M., and J. D. Lyon. (1997). Detecting long-run abnormal stock returns: The empirical power and specification of test statistic. Journal of Financial Economics. 43, 341-372.
 
Brazel, J., and C. P. Agoglia. (2007). An examination of auditor planning judgments in complex accounting information system environment. Contemporary Accounting research, 24(winter), 1059-1083.
Brazel, J., and L. Dang. (2008). The effect of  ERP system implementations on the management of earnings and earnings release dates. Journal of information Systems. 22(2), 1-21.
Brennan,N.M., and J. Soloman. (2008). Coporate governance, accountability and mechanisms of  accountability: An overview. Accounting, Auditing & Accountability Journal, 21(7), 885-906.
Dorantes, C. A., C. Li, G. F. Peters, and V. J. Richardson. (2009). The effect of enterprise systems implementations on the firm information environment”. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1526521
Doyle, J., W. Ge, and S. McVay.(2007). Accruals quality and internal control over financial reporting. TheAccounting Review 82 )5(, 1141–1170.
Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of Management Review. 14(1), 57-74.
Ge,W., and S. McVay. (2005). The disclosure of material weaknesses in internal control after the Sarbanes-oxley Act. Accounting Horizons. 19(3), 137-158.
Hunton, J. E., A. M. Wright, and S. Wright. (2004). Are financial auditors overconfident in their ability to assess risks associated with enterprise resource planning systems? Journal of Information systems, 18(2). 7-28.
Janvrin, J. D., J. Bierstaker, and D. J. Lowe. (2004). The impact of client information technology on audit procedures. Working paper, Iowa State University.
Morris, j. j. (2009). Measuring the impact of enterprise resource planning (ERP) systems  through the prism of accounting theory. Dissertation, Kent State University.
Morris, j. j. (2011). The impact of Enterprise Resource Planning (ERP) Systems on the Effectiveness of Internal Control over Financial Reporting. Journal of Information systems. 25(1), 129-157.
Nicolaou,A. I. (2004). Firm performance effects in relation to the implementation and use of enterprise resource planning systems. Journal of Information systems. 18(2),.79-105.
Ogneva, M., K. R. Subramanyam, and K. Raghunandan.( 2007). “Internal control weaknesses and cost of equity: Evidence from SOX Section 404 disclosures. The Accounting Review, 82 (5), 1255–1297.
Empirical Research in Accounting
Volume 3, Issue 4 - Serial Number 10
December 2013
Pages 17-38

Files

History

  • Receive Date: 16 March 2013
  • Revise Date: 30 January 2021
  • Accept Date: 04 November 2013

Share

How to cite

Statistics