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THE ROLE of AUDIT FUNCTIONS in ENTERPRISE RESOURCE PLANNING PROJECTS in a SELECTED ORGANISATION in SOUTH AFRICA by CHANCELIA

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THE ROLE of AUDIT FUNCTIONS in ENTERPRISE RESOURCE PLANNING PROJECTS in a SELECTED ORGANISATION in SOUTH AFRICA by CHANCELIA THE ROLE OF AUDIT FUNCTIONS IN ENTERPRISE RESOURCE PLANNING PROJECTS IN A SELECTED ORGANISATION IN SOUTH AFRICA by CHANCELIA GRAY ANGOUNOU NGUEMA Dissertation submitted in fulfilment of the requirements for the degree Master of Technology: Business Information Systems in the Faculty of Business and Management Sciences at the Cape Peninsula University of Technology Supervisor: Dr Andre de la Harpe Cape Town July 2018 CPUT copyright information The dissertation may not be published either in part (in scholarly, scientific or technical journals), or as a whole (as a monograph), unless permission has been obtained from the University DECLARATION I, Chancelia Gray Angounou Nguema, declare that the content of this dissertation represents my own work, and that the dissertation has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the Cape Peninsula University of Technology. Signed Date i ABSTRACT Enterprise resource planning (ERP) systems integrate business processes (BPs) into one database, facilitate data sharing, and provide real time information to authorised users, leading to an increase in efficiency and effectiveness. However, the implementation of an ERP system is not always a success as some systems turn out to be misaligned with the organisation’s objectives. This misalignment can lead to inadequate controls within the system. ERP systems are designed to improve transactions within the BPs and provide a competitive advantage to organisations. However, this benefit can become a weakness if project implementation fails due to controls in the system not being aligned with the objectives. The aim of the study is to explore how audit functions can contribute to the implementation of ERP projects, and the objective is to propose a guideline that can improve the implementation processes of ERP projects. To address the aim and meet the objective of this study, two main questions are asked: 1) What are the factors to be considered when introducing audit functionality in the implementation of an ERP system? 2) How can audit functions assist organisations in ERP project implementation? A subjectivist philosophical stance is followed and the epistemology lies within the interpretivist paradigm. An inductive research approach is followed and a case study is used as research strategy to conduct the research. The unit of analysis is the Operation Finance and Information Technology departments within the selected organisation, while selected employees (14) within the organisation form the unit of observation. A non-random, purposively selected sampling technique was used. Data were collected by means of semi-structured questionnaires through interviews. Data were analysed by summarising, categorising, and applying thematic analysis. The data analysis shows that audit functions (Operation Finance department, internal and external auditors) bring objectivity and assurance to the project in terms of financial reports, checks and balances, processes, structure, and internal controls. Getting people to cooperate however is a challenge for audit functionalities, and internal and external auditors can be a challenge during project implementation because their practical skills and computer-based knowledge to deal with huge volumes of data is extremely limited. It is highly recommended that the guideline presented in this research is followed, that engagement of audit functions with business processes is introduced and adopted by other role players involved in the project implementation process, and that audit functions should not be seen as a ‘must have’ but rather as support to improve the process. Ethical requirements as requested by CPUT are fulfilled. Keywords: Enterprise resource planning (ERP), audit functions, implementation processes. ii ACKNOWLEDGEMENTS I wish to thank: • YAWEH, the God Almighty for every single word written, for the strength, the inspiration and for the challenges He helped me overcome during this season • My sisters, Julie ADA MVE and Carole WANGA EDOU for the financial support and for believing in me • My dad, Hervais Aristide NGUEMA, for his emotional support; thank you for being harsh when it needed to be done and thank you for your love and believing in me • My stepfather, Gilles Manganneau, for his emotional support. Your words have always been a great encouragement to me even when they were quite tough; thank you for being a great dad to me • My mother, Beatrice Manganneau, thank you for being the best mommy ever • My one, Parfait Ebogowno, for his emotional support. Your presence has been a blessing, encouragement and support when I wanted to give up • My supervisor, Dr Andre de la Harpe, for his guidance, advice, and the time and energy spent on my work iii TABLE OF CONTENTS DECLARATION ...........................................................................................................................I ABSTRACT ................................................................................................................................. II ACKNOWLEDGEMENTS .......................................................................................................... III LIST OF FIGURES .................................................................................................................. VIII LIST OF TABLES ..................................................................................................................... IX GLOSSARY ............................................................................................................................... X DEFINITIONS OF KEY CONCEPTS ......................................................................................... XI CHAPTER ONE: INTRODUCTION ............................................................................................. 1 1.1 Introduction .................................................................................................................... 1 1.2 Background of the research ........................................................................................... 2 1.2.1 Problem statement ........................................................................................................ 2 1.2.2 Aim and objectives of the research ................................................................................ 3 1.2.3 Research questions ....................................................................................................... 3 1.3 Delineation of the research ............................................................................................ 4 1.4 Contribution ................................................................................................................... 4 1.5 Overview of the research ............................................................................................... 4 1.6 Summary ....................................................................................................................... 6 CHAPTER TWO: LITERATURE REVIEW .................................................................................. 7 2.1 Introduction .................................................................................................................... 7 2.2 ERP system history ....................................................................................................... 7 2.2.1 From planning inventory systems to MRP I .................................................................... 7 2.2.2 From MRP I to postmodern ERP ................................................................................... 8 2.2.2.1 MRP I ............................................................................................................................. 9 2.2.2.2 MRP II ............................................................................................................................ 9 2.2.2.3 Modern ERP ................................................................................................................ 10 2.2.2.4 Postmodern ERP ......................................................................................................... 11 2.3 Definitions of ERP systems ......................................................................................... 12 2.4 ERP vendors ............................................................................................................... 13 2.5 ERP project implementation ........................................................................................ 16 2.5.1 Pre-implementation phase ........................................................................................... 16 2.5.2 Implementation phase ................................................................................................. 17 iv 2.5.3 Post-implementation phase ......................................................................................... 17 2.6 ERP project implementation failure .............................................................................. 17 2.7 Auditing history ............................................................................................................ 18 2.7.1 From non-independent to independent auditing ........................................................... 19 2.7.2 From traditional to future auditing ................................................................................ 20 2.8 Audit functions in ERP projects ...................................................................................
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