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FNSACC606 Conduct Internal Audit, ALTEC College, Australia


Question: Task has three parts; 1) Written project plan; 2) System installation; and 3) Presentation.

Part A: Your team project plan will include (but not limited to;

i. Executive summary

Answer: Enterprise resource planning (ERP) is a software solution for managing different business areas in an organization such as sales, accounting, purchasing, customer support, human resources, and inventory. It is basically an integrated system that is designed particularly for business purposes. The present report is a continuation of Assessment Task 2, which is based on outlining the ERP project plan for Cockatoo Ridge Wines company. The report has illustrated the project goal, key stakeholders, reporting features, compliance features, implementation strategies, implementation schedule, ERP impact, data migration process, and required training.

ii. Background (Case study)

Answer: With reference to the case study in assessment 2, Cockatoo Ridge Wines is one of the most recognized wine labels in Australia. It has been listed on the Australia stock exchange in the year 2002. Apart from the Australia and United States, it has also started exporting products to Britain (Sun, Ni, and Lam 2015). According to the business requirement, it has to provide the financial and data analysis reports to its associated stakeholders on a monthly, quarterly and yearly basis. This data analysis was conducted through a manual process that is time-consuming and there exists a high chance of error occurrence. Thus, it requires specific software functionality that can be customized according to the industry requirement. The software should be able to work on sales and distribution simultaneously. The Software System should be faster enough to conduct the reporting before the collection of next month data. Hence, a market-friendly software solution that addresses the financial area, sales area, and forecast budget is needed by the company to achieve leadership in the wine industry.

iii. Project goals and objectives

Answer: The objective of this ERP project plan is to install a specific software functionality that can handle the financial data analysis for the company. Its goal is to get the full benefit from the ERP initiative with the complete involvement of stakeholders, and users and employees. Its objective is to design a clear ERP implementation project plan which can articulate the company's system requirements and metrics. The project plan aims to ensure organizational commitment by investing in employee training.

iv. Key stakeholders and consultation process

Answer: The key stakeholders involved in the ERP project plan system developers, top managers, division and functional managers, external consultants, project team members, vendor analysts, and vendor consultants (Elbardan, Ali, and Ghoneim 2015). Stakeholders are considered important in the project because they are associated with their benefit, changes, funding, and maintenance. Thus, the support of this group of stakeholders is necessary prior to ERP installation. The ERP project plan should be consulted with the above-mentioned stakeholders for an in-depth analysis. In this consultation process, a detailed report comprising of system type, costing, and timeline should be outlined.

v. The solution (including input and output of data and reporting features)

Answer: In the given case study, ERP is a specific software tool which can be customized according to the need of Cockatoo Ridge Wines. The solution provides services related to payroll, time tracking, reporting, general ledger, and accounts payable. It assists in data analysis, recording customer data, purchase order, sales order, and sales forecasting (Rubino, Vitolla, and Garzoni 2017).

vi. Compliance Features (how it meets transaction, record and reporting requirements)

Answer: The ERP system holds compliance features to meet the requirements related to transaction, record and reporting. The first compliance feature is the deep auditing of the operational data. This feature avoids the additional cost to be invested in data maintenance. The second compliance feature includes improved security processes. This feature is highly necessary for this private wine company, which is highly prone to security breaches. The updated ERP platform has features like preventing the cyber-attack and internal awareness to achieve end-to-end security compliance (Jayaram, and Singal, 2017). The final compliance feature includes comprehensive regulatory management capabilities. The ERP system to be installed has robust regulation based management capabilities that apply regulatory information in a fixed interval.

vii. Key implementation strategies (including change management)

Answer: There are basically four ERP implementation strategies, viz., Big bang, phased rollout, parallel adoption, and hybrid approach.
Big bang - In this strategy, the users can move to the new system on a single point of time, especially on weekends. It helps to give a quick return on investment, since it is cheaper and faster as compared to other options. As it is a one-time data transfer job, testing prior to implementation is required to avoid the occurrence of error.

Phased rollout - With this strategy, the user can move from the old system to the new system progressively through different modules. It is highly flexible and less risky as compared to the big bang theory. The darkside associated with it is the interfaces are temporarily designed which is slightly costly and takes a longer period for execution.

Parallel adoption - Here, the old legacy system is maintained in parallel with the new ERP system for a certain period of time. The strategy is appropriate for the mission-critical situation projects (Ofoegbu, 2016). It has also the facility to revert back to the old system in the event of system failure.

Hybrid approach - This strategy helps to assimilate the above-defined strategies according to the user's requirement. For instance, a big bang approach can be used on important modules and other approaches on the remaining modules.

viii. Implementation schedule

Answer: It is always better to prepare a schedule before the ERP installation, as a pre-installation activity. For the present case scenario, the planned implementation schedule is as follows (Mitra, and Mishra 2016):

• Defining the business value

• Analyzing system requirements

• Budget planning at multi-level

• Selecting ERP partner and validation evolution

• Select the project management team

• Determining the associated benefits with ERP.

• Validation from senior management

• Planning for executing an Enterprise training assessment.

• Planning for training material customization

• Training for end-user and core team.


ix. Internal control processes and likely impact of ERP

Answer: In an ERP system environment, the internal control system is likely to be affected. The critical factors which affect the internal control process include various variables, such as service quality, information and system quality, and internal control quality. It is evident that the implementation of an internal control equipped with an ERP system having an internal control mechanism enhances the benefits of the internal control process of the wine company. According to Nagpal, Khatri, and Kumar (2015), there is an overall positive impact of ERP on auditing system, by making efficient, effective and faster. However, with the nature and complexity of the ERP system, there is an increased system risk. Thus, it can be concluded that the use of the ERP system has enhanced the quality of the internal control and auditing system, but also creates system risk.

x. Data migration process

Answer: Data migration is the method of transferring the required volume of information from the current system to the new system. It includes all the necessary steps such as cleansing, modifying and transferring data into the new system (Mitra et al 2016). The data migration process should be conducted without the risk of data manipulation and disruption. It lowers operational expenses and improve data quality by ensuring perfect data integrity after migration. According to the user's perspective, the data migration approach ensures the ERP system will provide maximum quality and flexibility.

xi. Cost-benefit analysis

Answer: It is crucial to make a cost-benefit analysis prior to ERP system implementation. The analysis will help the Wine company to earn more money by acquiring an effective system rather than losing money.

Cost analysis: • The cost is involved in the acquisition and customization of the system. Different vendors charge differently according to the ERP brand. 

• Additionally, ERP installation on the computer systems by suppliers consultants is also chargeable from the company (Jagoda, and Samaranayake 2017).

• Besides this, user training and maintenance cost is also to be paid by the company.
Benefit analysis:

• The installation of ERP makes the procedure automated and streamlined by eliminating labor costs and error through its superior intelligence system. Hence, it increases its capabilities and creates new opportunities for increasing revenue.

• Prediction of sales forecast promotes just-in-time delivery by keeping the required stock in inventory. This helps to minimize the cost involved in keeping those stocks that are not in demand.

• ERP system has built-in intelligence which can and enhance the company's reliability and increase brand loyalty of customers. In this way, ERP helps in retaining existing customers.

xii. Staff training requirements

Answer: Most of the companies, install ERP software and customize it according to their requirements along with upgrading the computer. However, without providing necessary training to end-user and core user, the ERP installation is of no use. There are various methods for delivering ERP training to the selected employees, such as instructor-led training (ILT) approach, self-learning method, and job-based training method (Hamilton, 2016). The ILT approach is a collaborative learning method, with employees who can ask their doubts and learn from fellow trainees. In the self-learning method, the employees navigate and explore the ERP system by themselves using the software manual copy. This approach is cost-effective and time-saving for the company, however, it is risky for the beginners. In the job-based training method, employees are categorized on the basis of their job role. Each group of employees is provided different training according to their specified task. This matter is highly effective and quick and delivery. For the given case study of Cockatoo Ridge Wines, the job-based training method is highly effective for training its staff.

xiii. Support documentation requirements (download a copy of the system manual and attach with the plan)

Answer: The supporting document with the ERP installation project plan is the user system manual. In the present report, the user manual of Infor ERP is provided where details related to the masters data, repository, business control model, and organisation modelling are given.

xiv. IT support requirements

Answer: Cockatoo Ridge Wines is a mid-sized company having at least 50 employees. For its ERP implementation, it is required to have certain IT support from the vendor as well as from the client side. The IT support will be provided by the consultants and technicians from the supplier side for effectiveimplementation and operation of the software on the user's system. However, the client should also consider the basic software requirements for ERP installation. The software requirements includes Windows XP sp1, Windows Server 2003, Windows Home Server, Windows 7, Windows 8, Windows 10, Windows Server 2008, Windows Server 2012, and Windows Server 2016 (Ahmadi, Papageorgiou, and Yeh 2015).

xv. Perceived risks and a contingency plan

Answer: With digital advancement, ERP solutions conduct merging of technology, data, and business operations. However, with the ease of data analysis, there exists a potential risk with ERP installation. If these ERP associated risks are known beforehand, it will be manageable by the company. Some of the common risk associated with ERP installation is described below:

• Inappropriate software - ERP software of different brands are designed differently. At times, the software purchased by the clients proves to be inappropriate for them based on their system infrastructure or industry requirement.

• Exposure of sensitive data - Lack of security and uncertified ERP vendor increases the risk of sensitive data breaching. This will lead to affect brand image and create a financial loss (Jagoda et al 2017).

• Lack of acceptance - In most of the companies, the end users are reluctant to use the software in place of the traditional method. This is the result of ineffective change management. There are many reasons for this lack of acceptance, such as insufficient training, not user-friendly software and unable to adopt change (Nagpal et al 2015).

The contingency planning for ERP implementation should be prepared by anticipating potential risks and developing strategies accordingly. It is usually led by humanitarian coordinator or the resident coordinator of the particular nation. The contingency plan structure includes, (a) situation and risk analysis, (b) response strategy, (c) operational delivery, (d) coordination and management arrangements, (e) operational support arrangements, (f) preparedness gap arrangements, (g) funding requirements (Ahmadi et al 2015).


Part B: Write a brief report on how the intended solution/product will align with the internal control processes.

Answer: In this part, a printout of transaction record using Tally ERP software is presented. The printout represents the entry of payment. In this approach, it requires to create stock items, group of investments, and ledger purchase.

Internal control is the approach for assuring organizational objectives in terms of operational efficiency and effectiveness and compliance with the regulatory policies. Hence, in short, internal control describes all the activities (transaction processing, business strategy, and financial reporting) which aims at controlling organizational risks (Ofoegbu 2016). Some of the common challenges things to buy internal control team with ERP implementation, includes, poor automated oversight, lack of team resources, lack of business commitment, emphasize on documentation, and lack of accountability. It is essential to ensure that the newly-installed ERP software is aligned with the internal control processes. To ensure the alignment of internal control processes with the ERP system, the company needs to follow four effective strategies.

• Internal control Facebook implementation - The consultants from the purchased ERP vendor to assist in setting the internal control processes in line with the new ERP rollout. In this context, it should manage the full business process at the time of ERP implementation through a controlled framework. It should also provide sufficient training and post go live support to its employees (Jayaram et al 2017).

• Process design system rollout - The supplier should integrate the setup of varying compliance areas in reference to Customs AEO and ISO9001/18001. In this approach, it should implement an integrated process framework which will serve for all compliance areas (Sun et al 2015). Training staff will also help in coordinating processes related to internal control. Furthermore, the implementation of audit software having a workflow to business representatives.

• Automation of authorization - Cockatoo Ridge Wines being a renowned wine company, has to face issues related to effectiveness and efficiency authorization in sales procurement. In order to resolve this issue, the ERP supplier should manage the difference between the level of automation and company size. Furthermore, it should plan and design methodology for standardizing and aligning the processes. The local staff should be trained and explained in detail about the system solution and process implications (Jagoda et al 2017). The technical IT staff and business staff should work in coordination to avoid any complications in internal control processes.

• Redesigning business requirements - For aligning the internal control with the ERP system, a redesigned strategy is to be incorporated. In conjunction with this, the business practices such as finance, PTP, and OTC should be aligned along with the standardization of risk and control framework. Whatever possible, automated controls should be developed in an ERP application. Furthermore, manual control and compensating control should be redesigned (Rubino et al 2017). Finally, collaboration with the client should be conducted through a shoulder to shoulder method with complete transparency.


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