Finance and Accounting Systems
08 February 2006
Riordan Manufacturing has recently been experiencing a financial crisis. Due to increasing administrative and operational costs the company’s net profit has significantly been reduced. It is apparent that a streamlined method of operations will enable the company to provide improved product distribution and customer support. Pursuant to the Riordan Manufacturing mandate regarding the remediation of the current situation in Finance and Accounting, a solution to unify the existing Finance and Accounting systems is included in this proposal. The current situation has been deemed unacceptable by Riordan Manufacturing’s parent company, Riordan Enterprises. Business process reengineering at Riordan Manufacturing is required to rectify legacy system obsolescence and incompatible system interactions. Riordan Manufacturing’s finance and accounting systems need to be standardized and integrated throughout the enterprise due to increasing administrative and operational costs. Current Operations
Riordan Manufacturing currently has three operating entities. Branches are located in Georgia, Michigan, and California, with a joint venture in China. Each site has their own Finance and Accounting System that provides data for consolidation at the corporate site in San Jose. Each system is comprised of the following components: General Ledger, Accounts Payable, Accounts Receivable, Order Entry, Procurement, Sales and Purchasing History, Invoicing and Shipping, Payroll, Financial Reporting, EDI*, Bar Code Reading* , EDSS (Executive Decision Support System)* . Items with an asterisk denote the San Jose location only (Riordan Manufacturing 2005). All three sites have separate and distinct Finance and Accounting systems running on UNIX, VAX4000 workstations, and AS/400 environments. In one instance, a process application at the Michigan site went unsupported due to the vendor ceasing operations. The current Finance and Accounting systems in place do not provide any degree of seamless compatibility and is the root cause for data being re-entered and account codes being converted from one system to another (University of Phoenix, 2003). The Finance and Accounting systems are labor intensive since the Income and Balance Sheet must be compiled manually and is not available as late as 15 to 20 days after month end. Additionally, compliance with new government report requirements in the Enron era are difficult to achieve within the date of regulation.
Current operations in Human Resources are similar to the Finance and Accounting situation. The company’s training and development records are kept in a Microsoft Excel spreadsheet. Excel is used to track resumes and employment status. In addition, Excel is used by the compensation manager to store results of analysis, salary surveys, and compensation decisions. Employee files are kept by the managers, as there is not a central employee file storage area. Excel is being used for information that is sensitive and directly related to employee privacy. Since Excel files can easily be hacked, this is a direct liability to Riordan Manufacturing, and may not meet due diligence requirements for government regulations. In the short term, implementing a PeopleSoft solution to address these security issues in addition to creating a central storage area for employee files, will give Human Resources better control over the employee files and reduce abuses by managers. The current HRIS was installed in 1992 as a part of the Finance Systems package (University of Phoenix, 2003). It currently keeps track of basic employee and salary information. Changes are currently submitted on special forms by the manager and entered manually by the payroll clerk.
General and administrative costs are increasing significantly. For the...