The effect of customization on the audit risk of accounting information systems for Navision ERP systems in Kenya – Nairobi county

Abstract

An Accounting Information Systems (AIS) is considered as a collection of data and processing procedures that creates the needed information for its users. These systems range from simple non-computerized systems to complicated Enterprise Resource Planning (ERP) systems. This study therefore sought to establish the effect of customizations on the audit risk of Accounting Information Systems, a case study of the Navision ERP systems installed in Nairobi County in Kenya. The study adopted a quantitative and descriptive design. The research entailed a case study of companies that have implemented Navision ERP system. Stratified sampling was employed in selecting ten companies to be audited across three company categories. The study collected primary data by use of questionnaires. The study concluded that Navision ERP best fits the nature of financial, manufacturing and distribution businesses. The study concluded the higher the customizations within an ERP system the higher the audit risk. The finding also concluded that these companies had customized the ERP system since its installation to align the ERP to the business processes. The study also concluded that customizations were usually authorized before they begun. Furthermore, the study also concluded that there are clear laid out processes in the company for carrying out system customizations. The study recommended that companies seek to reengineer their business processes so as to keep customization to the acceptable level and hence minimize audit risk. The study also recommended that the organizations ensure that they authorize all the customizations a member of the audit team be involved in the customization process. Key to minimizing audit risk was ensuring adequate documentation for the customizations done.