One of the first major projects for a new public company with cash resources is to upgrade to a more robust ERP system. It’s not uncommon for a company to go public with a tier 2 or tier 3 ERP systems, or even QuickBooks, as opposed to a tier 1 system such as Oracle or SAP.
Tier 3 systems lack the internal control functionality inherently built into higher-tier ERP systems—such as user role management—to enforce:
Segregation of duties
Park and post of journal entries
Integration with various supporting modules or systems
For companies using a tier 3 system, it’s easier for management to override controls or to adjust already-posted entries. Additionally, there are typically few logical controls to enforce segregation of duties.