Internal Controls Overview

ORGANIZATIONS WITH ERP SYSTEMS CAN USE INTERNAL REPORTS TO CONTINUOUSLY MONITOR AND IMPROVE THEIR INTERNAL CONTROLS THROUGH PERIODICON-DEMAND OR SPECIALIZED REPORTS. USING THESE REPORTS TO MONITOR AND IMPROVE USER ACCESS CONTROLS AND SEGREGATION OF DUTIES CAN REDUCE COSTS AND THE LIKELIHOOD OF UNNECESSARY EXPOSURE WHILE IMPROVING EFFICIENCY, RESPONSIVENESS AND COMPLIANCE PROCEDURE.

The extensive use of enterprise resource planning (ERP) systems provides opportunities for continuous monitoring and improvement of internal control systems. This continual Monitoring and improvement of internal controls, in turn, assures that management can comply with relevant sections of the Sarbanes-Oxley Act of 2002 (SOX).

The critical processes and systems that is necessary to monitor internal control compliance and the implications for SOX compliance.
Internal controls have been integrated into accounting software systems for many years, and ERP systems have enabled monitoring of internal controls that was not possible with legacy systems. For example, ERP systems can provide control reports that highlight inappropriate segregation of duties from an enterprise wide perspective.

The monitoring internal control compliance—specifically, the use of control reports to monitor and improve user access controls and segregation of duties. Control reports can be defined in many ways.

The standard or specialized reports available in ERP systems to report authorization or user access violations. ome reports may have an enterprise-wide focus, while others may be within specific business processes, such as purchasing. For example, a report of conflicting capabilities can show users with conflicts across various business processes.
These reports are used for several purposes. The appropriate manager or internal auditor can review such reports for internal control self-assessment and control improvement.

Monitoring internal control compliance is important Use ERP Internal Control Exception Reports to Monitor and Improve Controls ORGANIZATIONS WITH ERP SYSTEMS CAN USE INTERNAL REPORTS TO CONTINUOUSLY MONITOR AND IMPROVE THEIR INTERNAL CONTROLS THROUGH PERIODIC ON-DEMAND OR SPECIALIZED REPORTS.

USING THESE REPORTS TO MONITOR AND IMPROVE USER ACCESS CONTROLS AND SEGREGATION OF DUTIES CAN REDUCE COSTS AND THE LIKELIHOOD OF UNNECESSARY EXPOSURE WHILE IMPROVING EFFICIENCY, RESPONSIVENESS, AND COMPLIANCE PROCEDURES.
In ERP systems because core business processes such as purchasing, accounts payable, cost accounting, banking/ treasury functions, and human resource systems are integrated into an enterprise-wide system. The ERP platforms allow companies to reduce costs, become more efficient, and respond faster to changes in the marketplace.

This increased functionality, however, creates different risk profiles that, if not monitored properly, can result in control breakdowns and potentially significant losses for a company.
ERP systems also push initiation authorization of transactions to lower levels of the organization, thereby causing increased control problems. These control risks and problems must be counterbalanced by effective internal controls that should be monitored constantly to ensure organizational effectiveness, efficiency, and safeguarding of processes