1.0 more than 20 years of experience in

1.0     COMPANIES PROFILE

 

Lebtech
Construction Sdn Bhd (“LCSB”) was incorporated in November 1988 and began its
business upon incorporation with housing development as its main activity and afterwards
expanded to become a construction company under a wholly owned subsidiary of a
company listed on the Kuala Lumpur Stock Exchange (KLSE). LCSB is also a Class
“A” contractor and has attained the highest G7 classification with the
Construction Development Board (CIDB). LCSB has expanded rapidly since 1998 under
its diversification strategy, and it recently secured projects amounting to
more than RM1.50 billion which are sufficient to generate a reasonable level of
profits over the next few years. Along with the diverse expansion, LCSB has
progressed significantly and is currently involved in various prestigious
projects in Malaysia.

Best services for writing your paper according to Trustpilot

Premium Partner
From $18.00 per page
4,8 / 5
4,80
Writers Experience
4,80
Delivery
4,90
Support
4,70
Price
Recommended Service
From $13.90 per page
4,6 / 5
4,70
Writers Experience
4,70
Delivery
4,60
Support
4,60
Price
From $20.00 per page
4,5 / 5
4,80
Writers Experience
4,50
Delivery
4,40
Support
4,10
Price
* All Partners were chosen among 50+ writing services by our Customer Satisfaction Team

 

Total
revenues of RM75.0 million and total assets of RM155.0 million was generated by
LCSB and its approximately 150 employees while its total equity is RM100.0
million, or 65% of total assets. With more than 20 years of experience in the
business, LCSB is financially strong and can afford to offer the very best of
professional expertise to its clients and business associates. LCSB’s vision is
to establish itself as a highly credible and respected organization in the
construction industry. Meanwhile, its mission is to attain success as a
socially responsible Malaysian corporation that excels in all its business
ventures.

 

Lebar
Daun Development Sdn Bhd (KLD) as the second company is related to LCSB via its
directors. The company was incorporated in December 1998 and commenced its operations
in October 1999 with the property development as the main activity, where it
has expanded significantly via its current involvement in prestigious projects
across Malaysia. Its current land bank consists of more than 1000 acres of land
with a total gross development value (GDV) of approximately RM5.0 billion. KLD
was supported by its more than 10 years of experience in property development
and its excellent financial strength and professional expertise, it can afford
to offer the very best in property development and construction to house
buyers, joint venture partners, suppliers, and business associates. 

 

KLD
and its approximately 50 employees generate total revenues of RM80.0 million
and total assets of RM213.0 million. The total equity is RM16.0 million, or 20%
of total assets. Its mission is to succeed as a model organization in property
development renowned for its quality and beauty in every property developed and
delivered to its customers. To accomplish the mission, the company has
undertaken and successfully completed several projects across Malaysia worth
more than RM700.0 million.

 

 

2.0     RELATIONSHIP
OF THE TWO SELECTED COMPANIES

 

These
two companies are related to their directors who is the managing directors are
brothers. The group is led by an executive chairman who is the eldest brother. However,
both companies operate as separate entities based on their main
activities. 

 

KLD’s
main business are the sales of properties such as residential houses, shop
lots, and office buildings. It planned to develop the lands it owns into
residential townships and business centres and will continue looking for new
lands to develop. Means, it owns the lands to be developed, it sells the
properties developed on the lands, and the main income of the company is
collected from the purchase of the properties. 

 

A
client–supplier relationship exists between these two companies, where LCSB is
awarded the contract to construct most of the development on the lands which is
the main income generator of the company plus the contract awarded by the
government’s contracts obtained via the tender application.

 

 

3.0     HISTORY OF IMPLEMENTATION

 

First
and foremost, the implementation contract to implement ERP systems in both LCSB
and KLD was awarded to the IFCA Software Solutions in October 2007 where two
external information technology (IT) consultants from the software system developer
were assigned to the companies once the decision to procure the software system
was made. The implementation project began in November 2007 with a recommended
implementation period of 12 months and the aim to “go live” with the systems in
January 2009.

 

One
team for LCSB and another team for KLD both were worked together with the
project team, who were also split into two teams. Generally, the individuals
most knowledgeable in IT systems and business flows of the companies were
selected for the team. However, due to unforeseen issues, the were delays in
the implementation project because the “go-live” scheduling planning did not go
as smoothly as planned.

4.0     IMPACT
OF THE ERP SYSTEM ON MANAGEMENT CONTROL SYSTEMS

 

These
findings are the results of research done by some of the students from Universiti
Teknologi Mara (UiTM) Shah Alam and Perak. Based on the study, the interviews
were conducted with the group of financial controller, the accountants at both
companies, and an IT executive.

 

4.1     ADVANTAGES

 

ERP
is a fantastic tool for management control system in LCSB. ERP system had added
transparency and was easy to control all the business units and activities. The
variance report in the companies’ ERP system assists in monitoring the
budgeting and planning to ensure that costs have not overrun. If the cost has
neared the budgeted cost, managers will be alerted and quick action will be
taken to overcome the problems.

 

Respondents
such as accountants are monitoring of materials on site. If the materials on
site, such as ready-mixed cement and steel bar, are running low at the
construction site, the purchasing department will be alerted and a new order
will be made to ensure that the work on site will not come to a halt. 

 

The
implementation of an ERP system positively changes a company’s operations and
procedures, including the nature of the job and role played by accountants. In
the accounting literature, the impact of ERP system on the work of an
accountant has been recognized as one of the most important factors shaping the
demand for the accountants’ expertise, knowledge, skills, and responsibilities
in the future. ERP makes computerized knowledge and skills, like an accounting
information system (AIS), more important, which are significantly emphasized by
accounting programmers and courses in colleges and universities that offer
accounting programs.

 

 

 

They
found that companies’ charts of accounts were expanded due to ERP, which
allowed the performance measurement to become more extensive, standardized, and
thorough as well. In addition, non-financial measures comprehensively revamped
with financial and nonfinancial information were equally important and
integrated with each other in a company’s transactions.

 

However,
when it comes to changes to accounting techniques and activities, Newman and
Westrup’s (2005) findings were similar to those of previous studies. Other than
the expanded chart of accounts, the accounting techniques were not
significantly influenced by the ERP system implementation (as cited by Nazatul,
Anuar, & Ahmad, 2016). In response to the change of activities, Nazatul,
Anuar, and Ahmad (2016) also cited that Sánchez-Rodríguez and Spraakman (2012)
found that management accountants participated less in recording and processing
the transactions. Their job became more about analyzing because more accurate
and timely information from the ERP system provided the opportunity for more
reliable, precise, and valuable decision making.

 

They
certainly have improved their work in terms of spending significantly less time
on data collection and more time on data analysis based on the interviews with
the respondents (accountants). As KLD’s accountant explained, 

 

“There is now more time to analyse
the information from our system. Before, it could have taken us weeks to
prepare a financial report, but with the new system now in place, the
information is available straight away and it allows us to complete our closing
quickly. We can now spend better time on higher level activities, such as
variance analysis and receivables collection trends”.

 

KLD’s
accountant described that she spent more time analyzing the information rather
than just getting the final figures as an example. When asked about the changes
in accounting techniques, the accountants from both companies agreed that the
techniques did not change, but more detailed and accurate data could be obtained
faster because the preparations of financial statements are bound by the
standards set by the professional body, the Malaysian Accounting Standards
Board (MASB).

 

 

The
construction and property developer companies are categorized as specialized
industries so they have to adhere to more detailed and specific accounting
standards. Therefore, the accounting technique does not have any impact upon
the implementation of ERP systems, which has made it easier for non-accountants
to conduct non-relevant accounting roles.

 

The
accountants’ perceptions of the ERP system implementation from both companies
agreed that, although ERP does not change their responsibilities such as to
provide the month end figures, it does ease the burden of preparing such data.
LCSB’s accountant claimed that they hardly had to stay back during the
month-end closing because data can be obtained quicker than before. This is
occurring because with the ERP system all accounting functions, such as general
ledgers, account payables, account receivables, fixed assets, and cash
management, are fully integrated. 

 

Ongoing
updates and adjustments can be done at any time because the perfectly
integrated ERP system connects all functions together. Thus, real-time
information is available for the accountants for effective and efficient
decision making. In addition, more streamlined processes and workflows and the
smooth interface among various departments enhance the accounting trail. Thus,
it is much easier for accountants to perform audits and verifications of the
integrity of the financial figures and, ultimately, prepare financial
statements.

 

In
terms of an ERP system hit on an accountant’s work, it certainly has improved
such work particularly in terms of time as accountants spend significantly less
time on data entry after implementation but more time on data analysis. So,
they can concentrate on analyzing the important financial and non-financial
figures and be more involved in the managerial decision-making process. The ERP
system may change accountants’ roles but the accounting techniques do not
change. The quality of data obtained from the system certainly improves as more
detailed and accurate data can be obtained faster without changing the
techniques because of the preparations of financial accounts are bound to the
standards set by professional accounting bodies. Nevertheless, the
implementation of an ERP system has certainly improved accountants’ roles while
increasing their market value in the industry due to the expertise they acquired.

 

 

4.2     DISADVANTAGES

 

On
the other hand, there are some difficulty needs to be overcome in order to use
ERP systems. The biggest problem is the process of data migration where the
data need to be transferred from the old system to the new ERP system where any
loss of data or duplication of information can tarnish the reliability of the
new ERP system and at the end can lead to poor control and decision making. Fortunately,
the company has been successfully resolved this problem which the vendor (IFCA)
had transferred the legacy data into a new system from the Excel spreadsheet
and manual records. They also performed data verification in order to ensure
that the data were accurately transferred, complete, and able to support new
systems. In addition, to increase data quality, eliminate redundancy, and
remove obsolete information, the data cleaning was also carried out. 

 

Information
extraction from the ERP system is also one of the problems that the companies
need to encounter. This problem needs to be solved because the information
needed by the user must be accurate and complete to enjoy the full influence of
a management control system. The respondent claimed that:

 

“They often encounter problems in getting
the information from the system beyond what is provided by the standard
reports. For instance, different manager requests for different reports and
the format of the reports are often changed. As the systems can only produce a
standard report, to customize the report from the system to cater for the need
of each manager means to incur more cost”.  

 

Thus,
there is the additional tasks to be entertained and completed by the
responsible person which in a high volume context may be unproductive and does
not weigh with the benefits as compared to the time, energy, and cost
committed.

 

Besides,
The ERP system allows the information to be easily accessed, it can also allow
the risk of fraud and unauthorized transactions. In the LCSB and KLD company,
the study found that the companies do not have a solid security or internal
control system where an employee can have control over several parts of the
process. For instances, an accounts assistant is given the responsibility to
amend the suppliers’ master file details and at the same time, he is the person
in charge of making payments, meaning he could create fraudulent payments to
himself through the creation of fake suppliers. In order to reduce the risk of
fraud and unauthorized transactions, the management has to ensure that no
single individual has control over two or more related parts of a process.

 

 

 

 

x

Hi!
I'm Isaac!

Would you like to get a custom essay? How about receiving a customized one?

Check it out