Page 76 - CITP Review

Therefore, if the application integration is to be effective and efficient, there must necessarily be planning,
P&P, and due diligence to ensure that all new applications follow an enterprise integration framework.

That framework begins with a selected infrastructure, a choice of platform(s) and operating system(s),
and the specific method for integrating all applications within the infrastructure. It would include a
framework or model for ongoing integration of applications across time.

Application integration occurs when two different applications, from two different systems, need to share
information or combine information in order to complete a business process or business report. For
instance, when processing a sales order or quote, the business process may require information from
both the accounting system data and the customer relationships management (CRM) system data. The
same is true in generating a business report for sales history, even if it is an inquiry.

The benefits of application integration versus disparate applications and databases

There are a number of benefits to using an enterprise application integration framework. One is the
reduced risk associated with data transfers. Typically, disparate systems will require data transfers from
one or more systems into financial reporting or accounting systems (for example, transfer of revenue
from a disparate sales system to the GL system; the same for other accounting cycles where the cycle
uses a disparate application). Often these disparate systems then transfer the GL data to yet another
disparate system, financial reporting. Each data transfer has a relatively high IR for risk of data integrity,
and completeness and accuracy assertions.

There is also an efficiency aspect. The more fully integrated the applications, the more automated
transactions and posting to affected systems will occur, and that naturally leads to less time spent
performing all of the data transfers and communications.

That integration also leads to increased effectiveness, specifically the reduction of errors, problems, and
IT risks. The fewer times data is handled, the fewer errors there should be.

Integration among basic financial accounting modules

Application integration is found in many of the COTS basic financial accounting systems such as
Microsoft Dynamics, Sage MAS 90, Intacct, and NetSuite. That is, the system has applications for all of
the accounting cycles (purchasing, payroll, sales, disbursements, and inventory), journal entries, GL, and
financial reporting. Furthermore, all of the transactions are basically interfaced with the relevant
applications.

If the entity does not use an enterprise COTS financial accounting system, then it will need an application
integration plan to make sure the same objectives can be achieved. That is true whether the entity writes
its own code or uses a combination of commercial and proprietary applications.

There are also risks associated with nonintegrated financial systems. Processing and data can be
inefficient due to duplication of them. Reporting errors are more likely in nonintegrated systems. Data
from one system sometimes is rekeyed into another system, causing inefficiencies and increasing the
risk of data errors.

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