Why you need to conduct ERP audits
ERP auditing is the process of reviewing your tools and technologies in this space to ensure they're functioning as efficiently as they should be and delivering a satisfactory return on investment.
There are different types of checks that can help you achieve a range of goals. A compliance audit, for example, will focus on ensuring that your ERP applications and practices are in line with the latest rules and regulations in your industry, which is crucial if you want to avoid the financial and reputational risks of non-compliance.
A waste audit can help you achieve better results by identifying and eliminating inefficiencies in your ERP framework, such as overproduction and underutilized assets.
To maximize positive results from your ERP audits - which can range from increased data accuracy to higher levels of security - it's important to take a methodical approach that minimizes the risk of anything being missed.
One simple but effective strategy is to create a checklist that will help you ensure the auditing process stays on track and delivers tangible outcomes.
1. Establish your goals
Like many other crucial business projects and activities, ERP auditing needs to work towards clear goals in order to generate the best results. A critical first step in the process is knowing what you want to achieve at the end of it, which could be anything from analyzing the technical capabilities of your software to assessing its vulnerability to cyber attacks.
Make sure the aims you establish at this point are connected to your business strategy and the broader objectives the company is currently trying to achieve. If there's an initiative underway to optimize your supply chain, for example, you'll want to assess your ERP system's capacity for collecting and managing data on procurement and purchasing.
2. Assemble your team
The goals you established in the first step will inform the decisions you make when you come to put together a team of people to carry out this task.
An ERP audit examining whether your software is technically resilient and reliable enough to meet high levels of user demand, for instance, will require insights from experienced members of the IT department in order to deliver worthwhile results.
However, it's also important to ensure the audit team is diverse, with a range of stakeholders from across the business able to take part in the process. Frontline employees who use the system every day, for example, will be able to provide feedback on its strengths and weaknesses, as well as practical insights into how it could be improved.
3. Follow a process to identify and record issues
One of the main goals of any ERP audit is to identify deficiencies or challenges associated with your software and, crucially, to outline potential responses and actions to address these issues.
Before the process begins, the members of the audit team should fully understand the steps involved in reporting their findings and flagging points of concern that might require further attention.
You might want to consider using specialist project management or communication tools to support the team and ensure information is being shared between members as efficiently as possible.
It's also important to ensure consistency in how points of concern are recorded and tracked throughout the audit. Whenever an issue is logged, it should be accompanied by information including:
- An overview of the nature of the problem
- When it was found
- Potential risks and additional issues that could arise if it goes unaddressed
This helps to maintain complete transparency in your ERP audits and also reduces the likelihood of potentially serious problems being overlooked or misunderstood.
4. Follow up on your findings
Once the audit has been carried out, make sure you have a plan in place to analyze the findings and outline subsequent steps that will help you address your most pressing challenges.
A key part of this stage of the ERP audit is ranking issues by severity. If it’s become clear that the way data is managed and stored in your system is exposing your organization to cybersecurity threats or raising compliance concerns, for example, you'll want to take action as quickly as possible.
Get key stakeholders and decision-makers from across the business involved in evaluating the audit findings and agreeing what measures should be taken.
This is where you'll start to see your ERP audits generate clear outcomes and make a real difference to the business, so make sure you're dedicating sufficient time and expertise to this vital phase of the process.
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