What is ERP Process Controls?

The Process Control Flow application is an advanced business tool designed to conduct detailed detective analysis across two critical business processes: "Order to Cash" (O2C) and "Procure to Pay" (P2P). The application focuses on ensuring that all control measures within these processes are functioning correctly by identifying and analyzing violations based on historical data. These violations indicate areas where the actual business operations deviate from the expected norms, potentially leading to financial discrepancies, operational inefficiencies, or compliance issues.

1. Order to Cash (O2C) Process: The "Order to Cash" process encompasses all steps from receiving a customer order to collecting payment. The application monitors this process to detect and report violations, ensuring that each step, from order entry to invoicing and payment collection, adheres to the set controls.

✔ Price Mismatch Between Sales Order and Invoice: This violation occurs when there is a discrepancy between the price agreed upon in the sales order and the price billed in the invoice. Such mismatches can result in revenue loss, customer dissatisfaction, and accounting inaccuracies. The application analyzes historical sales orders and corresponding invoices to identify and report any deviations.

✔ Duplicate Credit Customer Codes: In the O2C process, each customer is assigned a unique credit customer code for credit management purposes. The application detects instances where the same customer code is used for multiple customers or where a customer has been assigned multiple codes. This ensures the accuracy of customer credit limits and prevents potential fraud or credit mismanagement.

✔ Duplicate Invoice Booking: This violation occurs when an invoice is recorded more than once in the system, leading to inflated revenue figures and potential audit issues. The application identifies and flags such instances by comparing invoice numbers, dates, and amounts, ensuring that each invoice is unique and correctly recorded.2.

2. Procure to Pay (P2P) Process: The "Procure to Pay" process covers the entire lifecycle from procuring goods or services to payment to suppliers. The application ensures that this process operates smoothly and according to the defined controls.

✔ Multiple Item Codes Assigned to the Same Material: In the P2P process, it’s critical that each material is consistently identified with a single item code. The application identifies cases where multiple item codes have been assigned to the same material, which can cause errors in inventory tracking, procurement, and cost management. By detecting these inconsistencies, the application helps maintain accurate inventory records and ensures that procurement activities are correctly aligned.

✔Duplicate Invoice Booking in P2P: Similar to the O2C process, duplicate invoice booking is a critical issue in P2P. When a supplier's invoice is recorded multiple times, it can lead to overpayment and reconciliation issues. The application detects such duplicates by analyzing invoice data and cross-referencing it with purchase orders and goods receipts, ensuring that each payment is accurately processed.

3. Reports and Compliance: The application generates detailed reports that provide insights into the detected violations within both the O2C and P2P processes. These reports are essential for business leaders and compliance officers to take corrective actions and implement preventive measures. They include:

✔ Violation Summary: A high-level overview of the types and frequencies of violations detected, categorized by business process and control type.

✔Detailed Analysis: In-depth analysis of each violation, including data points such as affected transactions, financial impact, and potential root causes.

✔Compliance Recommendations: Suggested actions for rectifying identified issues and enhancing control measures to prevent future violations.