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Internal auditors role in the ERP environment

Posted by | August 7, 2018 | Latest Audit Information & News

Internal auditors role in the ERP environment

An ERP solution drives the organization strategically and presents changes to the audit environment. It replaces the huge number of databases in a company with one powerful system capable of integrating, analyzing, and reporting on information from all of the company’s business functions. An ERP solution brings about changes in the business processes, changes in hardware engineering, and changes in the ERP software version, which affect the internal audit function.

This article addresses the changes facing the internal audit function and develops a framework for the new role of internal auditors in ERP solutions. The internal auditor needs to assess the risks associated with ERP implementation and its built-in controls because traditional controls may not be effective and efficient in the ERP environment. The internal audit function also needs to be re-engineered in terms of objectives and approaches without impairing its independence. In this framework, the internal auditor interfaces with the following:

  1. Users: Internal auditors needs to develop an understanding of the business process re-engineering with users and facilitates the consultants’ work.
  2. Information technology (IT) and Information systems (IS) managers: Internal auditor with the help of IT & IS Manager evaluates the control features of an ERP solution and assesses current and future risk exposure. Highlights the importance of soft controls and delegates the accountability of control. IT Manager also updates and unifies terminology to take advantage of the integrated nature of the ERP solution. Shares expertise, knowledge, and ideas with IS/IT management
  3. Communicators: maintains relationships throughout the organization and facilitates the adoption of audit controls with users, as well as with consultants from outside the company Software vendors: and

An ERP solution drives the organization strategically and presents changes to the audit environment. These are changes in the business processes, changes in information technology, and changes in the ERP software version. Ultimately, these changes affect the internal audit function. Internal auditors need to identify internal and external sources of risk and their effects on controls, to evaluate the adequacy of resources, and to assess the effects of control procedures. These changes also require internal auditors to develop new expertise. The internal audit functions need to include the following:

  1. Understand control processes and perhaps seek a consultant’s advice in the case of continuous process re-engineering. Review Business Workflow and continuous process monitoring. Ensure historical data warehousing is accurate, consistent, and complete for future intelligent decisions.
  2. Share knowledge and expertise with and provide services to both IS/IT managers and users.

Maintaining and controlling: maintain close contact with the vendor to ensure the adequacy of configuration change control of the ERP solution.

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