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

Software vendors that market enterprise resource planning (ERP) systems have taken advantage of the increased focus on internal controls that grew out of the Sarbanes-Oxley (SOX) legislation by emphasizing that a key feature of ERP systems is the use of “built-in” controls that mirror a firm’s infra...

Full description

Saved in:
Bibliographic Details
Published inThe Journal of information systems Vol. 25; no. 1; pp. 129 - 157
Main Author Morris, John J.
Format Journal Article
LanguageEnglish
Published Sarasota American Accounting Association 01.03.2011
Subjects
Accounting
Annual reports
Compliance
Effectiveness studies
Enterprise resource planning
Financial reporting
Hypotheses
Impact analysis
Infrastructure
Internal controls
Public Company Accounting Reform & Investor Protection Act 2002-US
Software
Stockholders
United States > US
Online AccessGet full text

Cover

More Information
Summary:Software vendors that market enterprise resource planning (ERP) systems have taken advantage of the increased focus on internal controls that grew out of the Sarbanes-Oxley (SOX) legislation by emphasizing that a key feature of ERP systems is the use of “built-in” controls that mirror a firm’s infrastructure. They argue that these built-in controls and other features will help firms improve their internal control over financial reporting as required by SOX. This study tests that assertion by examining SOX Section 404 compliance data for a sample of firms that implemented ERP systems between 1994 and 2003. The results suggest that ERP-implementing firms are less likely to report internal control weaknesses (ICW) than a matched control sample of non-ERP-implementing firms. It also finds that this difference exists for both general (entity-wide), and individual (account-level) controls.
ISSN:0888-7985
1558-7959
DOI:10.2308/jis.2011.25.1.129