BLOG POST

How to Conduct an ERP Audit – The Complete Checklist

Implementing ERP software can be a highly labour-intensive process, with dozens of deployment and testing hurdles to overcome before the system is primed for go-live. But what comes after that? And how can you ensure your software is operating as well as it should?

In this post, we’re taking an in-depth look at one of the most crucial elements of maintaining an ERP system: auditing. From best-practice tips to a checklist of things to remember, our guide can help you conduct a successful ERP audit and ensure the software is working hard for your business.

 

Quick Links

 

What is an ERP Audit and Why Are They Necessary?

ERP auditing is the process of testing and reviewing enterprise resource planning functions to ensure they’re working as efficiently as possible. The objective is to determine how adequately individual ERP modules are solving problems and streamlining workflows, with a view to make improvements and sure-up the system.

Implementation is only the first step in the ongoing task of managing and refining ERP software. Following go-live, regular maintenance and auditing are essential in ensuring that the system continues to deliver tangible solutions and results for your operation.

Carrying out an ERP audit is essential for the following reasons:

  • Ensures data accuracy – are your ERP modules gathering and segmenting accurate data? Or can improvements be made to safeguard against aggregation anomalies which might harm parts of your business?
  • Safeguards compliance – if you operate within a regulation-heavy industry, regular auditing will ensure that your ERP suite continues to adhere to rules and regs, for cross-supply chain compliance and peace of mind.

 

businesswoman sat at her desk

 

  • Bolsters security – don’t let individual modules of your ERP software jeopardise the security of your supply chain; keeping the system up to date is critical in maintaining the safety of your data and assets.
  • Error avoidance – as your ERP suite beds in and is taken up by the wider business, consider the likelihood of errors; errors which could inadvertently result in a drop in productivity along your supply chain. An audit will highlight these mistakes before they become systemic issues, giving you the opportunity to put them right.
  • Consistent ROI – cost-cutting is one of the key reasons why many invest in ERP solutions. But how can you make sure your system is delivering consistent ROI? Regular auditing is the key, giving you the peace of mind that each process and application is supporting your bottom line.

 

Different Types of ERP Audits Explained

There’s no one-size-fits-all solution to ERP auditing. Instead, the tests, assessments and reviews you carry out will depend on your software, applications and unique business objectives.

As such, several tactical ERP auditing strategies have emerged in recent years, as businesses look to assess the core framework of their system. Let’s take a look at some of the different types of ERP audits and what they’re used for.

Process Audit

This type of auditing looks at processes and workflows throughout your supply chain, assessing their efficiency, necessity and performance. It’s an effective means of identifying bottlenecks and project halt points, so you can take the appropriate streamlining measures.

Compliance Audit

As the name suggests, this form of ERP auditing is all about ensuring compliance. If regulations hold sway in your industry, making sure your processes and procedures align with these legal requirements is critical from a business continuity standpoint.

 

inspector conducting an audit

 

System Audit

System auditing focuses on the technical requirements of the software; for this reason, it’s normally carried out by IT personnel or a trusted third-party vendor. Here, you’re looking to reaffirm that your ERP applications have the appropriate hardware and networking capacity to function at their optimum.

Security Audit

Again, the clue’s in the name; this type of auditing focuses on assessing the security provision of your ERP system. Which applications are most at risk from cyber threats, and what measures are in place to deal with the risk of data loss or corruption?

Waste Audit

A waste audit seeks to identify the unnecessary elements within your ERP framework. From overproduction to process wait times, a lot of variables can be defined as ‘waste’, so getting these in hand can drive efficiency and reduce costs.

 

ERP Audit Checklist: 5 Steps to Auditing Success

Regardless of the auditing measures you plan to execute, a checklist of strategic actions can ensure the assessment aligns with the ‘what’ and the ‘why’ of your auditing activity.

Here are five steps to consider when planning an ERP audit.

Step 1: Identify Your Objectives

What is the purpose of the audit, and what do you hope to achieve? Pinning down key objectives which align with your business goals is imperative to the success of your auditing project.

Let’s take a look at a couple of examples of typical ERP auditing objectives:

  • “This waste audit will look to identify overproduction weaknesses in the supply chain”
  • “The aim of this security audit is to identify and plug holes in the security of individual ERP applications”
  • “The planned system audit will establish if the current network is adequately supporting the ERP software”

 

data on laptop screen

Step 2: Assemble Your Audit Team

Assigning auditors to the project is a crucial step, and one you’ll need to think carefully about. Who in your organisation is best placed to test and review the software in line with your key project objectives?

When assigning auditing roles, look to include as broad a range of disciplines as possible. Sure, IT and engineering personnel may be a must, but other day-to-day users can provide invaluable insight into how the system works on an everyday level.

Step 3: Create a Simple Issue Flagging Process

How easily can your auditors flag issues for review and approval? Developing a simple, transparent process for raising and reviewing auditing outcomes is a crucial step before you launch headlong into the project.

Depending on the scope of the audit, this could be as simple as a shared Google sheet, but to ensure full collaboration, transparency and effective audit management, we’d recommend a Kanban-style process board.

Step 4: Accurate Issue Recording

After you’ve determined where to log system issues, you need to outline the type of information which should be recorded. While this will depend on the type of audit in question, typical issue-related logs should include:

  • A brief description of the problem
  • An outline of the risk should it go unresolved
  • Details of the auditor who found the problem
  • The date and time when the issue was identified

Step 5: Prioritise and Execute Changes

When the audit is complete, it’s important to prioritise issues by severity, before delegating key improvement tasks to the relevant personnel. This is the time to make your auditing activity count, so invest the appropriate time and resources into making the necessary improvements.

 

We hope you’ve found the above guide to ERP auditing useful. If you need help implementing, managing or auditing an ERP system, the expert team at JS3 Global can help. With years of combined experience in overseeing ERP integration projects, we have the know-how to deliver practical solutions for your business. For more information or to discuss your requirements, visit the homepage or call us today on 0161 503 0866.