Control or chaos: impact of workarounds on internal controls

Date08 May 2018
Published date08 May 2018
AuthorAimee Pernsteiner,Dawna Drum,Adam Revak
Subject MatterAccounting & Finance,Accounting/accountancy,Accounting methods/systems
Control or chaos: impact of
workarounds on internal controls
Aimee Pernsteiner
Accounting and Finance Department, University of Wisconsin Eau Claire,
Eau Claire, Wisconsin, USA
Dawna Drum
Accounting Department, Western Washington University, Bellingham,
Washington, USA, and
Adam Revak
Accounting and Finance Department, University of Wisconsin Eau Claire,
Eau Claire, Wisconsin, USA
Purpose There have been many studies that investigated the causes of workarounds, but there is less
research on their outcomes, suchas the impact on internal control. Thisstudy aims to investigate the use of
workarounds by a multinational organization that implemented SAP about 10 years ago, and how those
workaroundsaffected internal controls.
Design/methodology/approach A qualitative study is performed by analyzing interviews with
company personnelfor a multinational organization. Employees selectedfor interviews are primarily users of
SAPs accountingfunctions.
Findings Workarounds have signicant impacts on the internal controls over nancial reporting.
Workarounds cause compensating controls to be implemented, which are often manual in nature, and
decreasethe organizational efciency and effectiveness.
Research limitations/implications Workaroundsbecome integrated into an organizations activities
to meet its business needs. This research raises questions to determine when maintaining organizational
efciencyand control outweighs the need to provide customer service and otherbusiness needs.
Practical implications Companiesshould consider whether their business processes can be modied to
ensure that they can be handled within the enterprise system. In addition, the number of compensating
controls required due to workarounds may decrease the organizational efciency expected from having an
enterpriseresource planning system to ensure theintegrity of nancial information.
Originality/value This paper moves beyond nding the causes of workarounds,and expands what is
known about workaroundsand their impact on an organization. An important contributionof this study is to
considerthe intersection of workarounds, ERP systemsand internal controls.
Keywords Internal control, SAP, Workarounds, ERP systems
Paper type Case study
Since the anticipated issues with the year 2000 in organizations software systems,
companies have been replacing legacy systems with enterprise resource planning (ERP)
systems. These systems are softwarepackages purchased with the intention to integrate all
business activities throughout an organization (Markus et al.,2000). Grabski et al. (2011)
summarized the plethoraof research in ERP systems into three waves.
Received14 December 2016
Revised19 April 2017
Accepted30 May 2017
InternationalJournal of
Accounting& Information
Vol.26 No. 2, 2018
pp. 230-244
© Emerald Publishing Limited
DOI 10.1108/IJAIM-12-2016-0116
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