Enron Collapse - how ERP helps

They switched the company 's pension plan administrator before they announced losses

The major player which caused the bankruptcy of the company was its auditor , Arthur Andersen . Andersen was also employed in an accounting firm that Enron hired to audit the company 's books , as required by the law . Speculations arose whether Enron implemented accounting practices that were questionable in misrepresenting the company 's true financial condition . Andersen was tasked to warn the public about those things but he either just let things happen (Louis , 2002 , could not see what

was happening or was simply involved in a cover-up (Doggett , 2009

The demise of Enron has affected other businesses , and they do not want to have the same fate as Enron . Some experts say that Enterprise Resource Planning (ERP ) systems cannot prevent all fraud . However companies with ERP systems can easily comply with the Sarbanes-Oxley Act , which encourages accountability of the top management . ERP systems having centralized databases , can solve some of the problems faced by the companies . Since data sharing with accounting does not occur in real time ' and there is always the need to do significant research to collect data for reports , ERP systems can help companies to avoid these problems . The ERP systems can be used to avoid mistakes such as inconsistency in record keeping and inaccuracy in inventory-costing systems (Antony , n .d

Furthermore , ERP systems can better prevent corporate fraud through the following : archiving , user authorizations , tolerance groups and financial transparency . Archiving is important for auditors in to validate the financial position of the company at any given time . ERP is also useful in keeping track of any changes or input of data . User authorizations help by making sure that the employees perform the transactions that their job requires . Authorizations can also prevent them from making...