Zeta Ltd (Zeta) is a small mobile phone accessories manufacturing plant in Shenzhen. Currently, Zeta employs more than 150 individuals, including executives, directors, sales representatives and production workers. Zeta’s accounting information system comprises of manual procedures that are supported by stand-alone PCs (not networked) in several departments. Key elements of its payroll systems are described in the following paragraphs.

The payroll department receives time cards from factory manager and the payroll clerk uses the departmental PC to update the employee payroll records. The payroll clerk also prints the employee pay cheques and two copies of payroll register. One copy of the payroll register is sent to the accounts payable department and the pay cheques are signed by the payroll clerk and sent to the factory manager for distribution to the employees. Another copy of the payroll register and the time cards are filed in the payroll department.

The accounts payable department uses the payroll register to manually prepare two copies of a cash disbursement voucher. One copy of the cash disbursement voucher and the processed payroll register are sent to the cash disbursements department. The second copy of the cash disbursement voucher is sent to the general ledgers department.

The cash disbursement department uses the processed payroll register and the cash disbursement voucher to prepare a cheque for the total payroll. This cheque is signed by the cash disbursement clerk and is sent to the bank for deposit into the payroll imprest account. The voucher, the payroll cheque copy, and payroll register are filed in the cash disbursement department.

The general ledger clerk uses the cash disbursement voucher to update the digital general ledger payroll account from the departmental PC. The disbursement voucher is then filed in the general ledger department.

The management of Zeta is considering upgrading its accounting information system because of operational and internal control problems. Zeta has appointed you to assess its operations and recommend improvements to its internal control procedures.

The financial controller of Zeta would like to replace its legacy accounting system with an enterprise resources planning (ERP). He is considering the possibility of outsourcing the ERP development project to contractors.

(a) Identify and explain TWO (2) important issues that Zeta needs to tackle when managing the ERP contractor.

(b) ERP implementations will have significant impact on the accountants of Zeta. Suggest ANY THREE (3) things that the accountants in Zeta should do in order to prepare for the changes.