Accounting 3603

HAPTER 3Systems Development and Documentation Techniques 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#C 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# INTRODUCTIONDocumentation includes the following types of tools:Narratives (written descriptions)FlowchartsDiagramsOther written material

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# INTRODUCTIONDocumentation covers the who, what, when, where, why, and how of:Data entryProcessingStorageInformation outputSystem controls

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# INTRODUCTIONHow do accountants use documentation?At a minimum, they have to read documentation to understand how a system works.They may need to evaluate the strengths and weaknesses of an entitys internal controls.Requires heavy reliance on documentationThey may peruse documentation to determine if a proposed system meets the needs of its users.They may prepare documentation to:Demonstrate how a proposed system would workDemonstrate their understanding of a system of internal controls

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# INTRODUCTIONDocumentation techniques are necessary tools for accountants:SAS-94 requires that auditors understand the automated and manual procedures an entity uses.This understanding can be gleaned through documenting the internal control systema process that effectively exposes strengths and weaknesses of the system.SOX (2002) effectively requires that publicly-traded corporations and their auditors document and test the companys internal controls.Auditing Standard No. 2 promulgated by the PCAOB requires that the external auditor express an opinion on the clients system of internal controls. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# INTRODUCTIONIn this chapter, we discuss two of the most common documentation tools:Data flow diagrams

Graphical descriptions of the sources and destinations of data. They show:Where data comes fromHow it flowsThe processes performed on itWhere it goes 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# INTRODUCTIONIn this chapter, we discuss two of the most common documentation tools:Data flow diagramsFlowcharts

Include three types:Document flowcharts describe the flow of documents and information between departments or units.System flowcharts describe the relationship between inputs, processing, and outputs for a system.Program flowcharts describe the sequence of logical operations performed in a computer program. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSA data flow diagram consists of four basic elements:Data sources and destinationsData flowsTransformation processesData stores 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMS(elements)

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSCustomer(A)1.0ProcessPayment(C)2.0UpdateA/R(F)CreditManager(K)Bank(J)AccountsReceivable(H)CustomerPayment (B)RemittanceData(D)ReceivablesInformation(I)Deposit (E)Example of a data flow diagram of the customer payment process from Figure 3-3 in your textbook.(G) 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSData sources and destinationsAppear as squaresRepresent organizations or individuals that send or receive data used or produced by the systemAn item can be both a source and a destination 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSCustomer1.0ProcessPayment2.0UpdateA/RCreditManagerBankAccountsReceivableCustomerpaymentRemittancedataReceivablesInformationDepositData sources and destinations are marked in red. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSData flowsAppear as arrowsRepresent the flow of data between sources and destinations, processes, and data storesLabels should describe the information moving 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSCustomer1.0ProcessPayment2.0UpdateA/RCreditManagerBankAccountsReceivableCustomerpaymentRemittancedataReceivablesInformationDepositData flows are shown in red.

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSCustomer1.0ProcessPayment2.0UpdateA/RCreditManagerBankAccountsReceivableCustomerpaymentRemittancedataReceivablesInformationDepositData flows should always be labeled.The exception is a data flow moving into or out of a data store. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSIf a data flow is two-way, use a bi-directional arrow.

UpdateReceiv-ablesGeneralLedger 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSIf two data elements flow together, then the use of one data flow line is appropriate.

CustomerProcessPaymentCash Recd & Remittance Slip 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSIf the data elements do not always flow together, then multiple lines will be needed.

CustomerProcessPaymentCustomer InquiryCustomer Payment 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSProcessesAppear as circlesRepresent the transformation of data 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSCustomer1.0ProcessPayment2.0UpdateA/RCreditManagerBankAccountsReceivableCustomerpaymentRemittancedataReceivablesInformationDepositThe transformation processes are shown in red.Every process must have at least one data inflow and at least one data outflow. Why? 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSData storesAppear as two horizontal linesRepresent a temporary or permanent repository of data 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSCustomer1.0ProcessPayment2.0UpdateA/RCreditManagerBankAccountsReceivableCustomerpaymentRemittancedataReceivablesInformationDepositThe data store is shown in red.Notice that the inflows and outflows to the data store are not labeled. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSSubdividing the DFD:Few systems can be fully diagrammed on one sheet of paper, and users have needs for differing levels of detail.Consequently, DFDs are subdivided into successively lower levels to provide increasing amounts of detail. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSThe highest level of DFD is called a context diagram.It provides a summary-level view of the system.It depicts a data processing system and the external entities that are:Sources of its inputDestinations of its outputOne Process, no data stores 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSPayrollProcessingSystemDepart-mentsHumanResourcesGovt.AgenciesEmployeesBankManage-mentTime cardsNew employee formEmployee change formTax report & paymentEmployee checksPayroll checkPayroll reportThis is the context diagram for the S&S payroll processing system (Figure 3-5 in your textbook). 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMS1.0UpdateEmpl.Payrollfile2.0PayEmploy-ees5.0UpdateGen.Ledger4.0Paytaxes3.0PreparereportsEmployee/Payroll fileGeneralLedgerHumanResourcesDepart-mentsEmployeesBankGovt.AgenciesManage-mentEmployeeChangeformNew employeeformTimecardsEmployeepaychecksPayrollcheckPayrollDisburse-ment dataPayroll taxdisb. voucherTax report& paymentPayrollreportNotice that each process in the DFD is numbered sequentially.This diagram shows the next level of detail for the context diagram in Figure 3-5. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMS1.0UpdateEmpl.PayrollFile2.0PayEmploy-ees5.0UpdateGen.Ledger4.0PayTaxes3.0PrepareReportsEmployee/Payroll FileGeneralLedgerHumanResourcesDepart-mentsEmployeesBankGovt.AgenciesManage-mentEmployeechangeformNew employeeformTimecardsEmployeepaychecksPayrollcheckPayrollDisburse-ment dataPayroll taxdisb. voucherTax report& paymentPayrollreportSuppose we exploded Process 2.0 (Pay Employees) in the next level. The sub-processes would be numbered 2.1, 2.2, 2.3, etc. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DFD Creation GuidelinesUnderstand the systemIgnore certain aspects of the system(control)Determine system boundaries (what to include/exclude, start/end)Develop a context DFDIdentify data flowsGroup data flowsNumber each processIdentify transformational processesGroup transformational processesIdentify all data storesIdentify all sources and destinationsLabel all DFD elementsSubdivide DFD

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DATA FLOW DIAGRAMSThe data flow diagram focuses on the logical flow of data.Flowcharts place greater emphasis on physical details. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# FLOWCHARTSA flowchart is an analytical technique that describes some aspect of an information system in a clear, concise, and logical manner.Flowcharts use a set of standard symbols to depict processing procedures and the flow of data through a systemUsing a pictorial representation is often easier to understand and explain versus a detailed narrative.

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# FLOWCHARTSEvery shape on a flowchart depicts a unique operation, input, processing activity, or storage medium.In the past, flowcharts were manually created using plastic templates.Most flowcharts are now drawn using a software program such as Visio.Microsoft Word, Excel & Power Point also have basic flowcharting capabilities.The software uses pre-drawn shapes, and the developer drags the shapes into the drawing. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# Flowchart Symbol CategoriesInput/OutputProcessingStorageMiscellaneous

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# Flow Chart Symbol Categories(contd)

APermanent 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DOCUMENT FLOWCHARTSA document flowchart shows the flow of documents and information among areas of responsibility in an organization.These flowcharts trace a document from cradle to grave and show:Where a document comes fromWhere its distributedHow its usedIts ultimate dispositionEverything that happens as it flows through the system 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# DOCUMENT FLOWCHARTSInternal control flowcharts are document flowcharts used to evaluate the adequacy of internal controls, such as segregation of duties or internal checks.They can reveal weaknesses or inefficiencies such as:Inadequate communication flowsUnnecessarily complex document flowsProcedures that cause wasteful delaysDocument flowcharts are also prepared in the system design process. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# Document Flowchart

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# Document Flowchart (contd)

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSUnderstand the system, so:Interview users, developers, auditors, and managementAdminister questionnairesRead through narrativesWalk through systems transactions

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSIdentify:Entities to be flowcharted, e.g., departments, functions, external parties (the parties who do things in the story)Documents or information flowsProcesses 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSUse separate columns for the activity of each entity.Example: If there are three different departments or functions that do things in the narrative, there would be three columns on the flowchart. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

What are the entities in this flowchart? 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSFlowchart the normal course of operations, and identify exceptions with annotations.As much as possible, the flow should go from top to bottom and left to right.Use standard flowcharting symbols, and draw with a template or computer.Clearly label all symbols. Use annotations if necessary to provide adequate explanation.

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSGive the flowchart a clear beginning and ending.Show where each document originated and its final disposition.

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Identifies where input is coming from 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Inputs 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Process 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Output tostorage 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Input fornextprocess 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Process 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Output 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSEvery manual process should have at least one input and at least one output.Show all data entered into or retrieved from a computer file as passing through a process first.Do not show process symbols for:Forwarding a document to another entityFiling a document 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Forwardinga document 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Filinga document 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSDo not connect two documents except when forwarding to another column.When a document is forwarded, show it in both locations. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Show forwarded document in both locations 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSWhen using multiple copies of a document, place document numbers in the upper, right-hand corner. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

What happens to the document numbers as the documents move to other locations? 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSShow on-page connectors and label them clearly to avoid excess flow lines. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSUse off-page connectors if the flow goes to another page. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

off-page connectors on this flowchart? 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# Document Flowchart (contd)

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# GUIDELINES FOR PREPARING FLOWCHARTSIf a flowchart takes more than one page, label the pages as 1 of 5, 2 of 5, 3 of 5, etc.Show documents or reports first in the column where they are created.Start with a rough draft; then redesign to avoid clutter and crossed lines.Verify the accuracy of your flowchart by reviewing it with users, etc.Place the flowchart name, the date, and the preparers name on each page of the final copy. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# SYSTEM FLOWCHARTSA system flowchart depicts the relationship among the inputs, processes, and outputs of an AIS.The system flowchart begins by identifying the inputs to the system and their origins.These inputs can be:New dataData stored for future useBoth 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# SYSTEM FLOWCHARTSA system flowchart depicts the relationship among the inputs, processes, and outputs of an AIS.The system flowchart begins by identifying the inputs to the system.Each input is followed by a process, i.e., the steps performed on the data.If the process is performed by a computer, the logic of the computer program would be depicted in a program flowchart. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# SYSTEM FLOWCHARTSA system flowchart depicts the relationship among the inputs, processes, and outputs of an AIS.The system flowchart begins by identifying the inputs to the system.Each input is followed by a process, i.e., the steps performed on the data.The process is followed by outputsthe resulting new information.

The output may be:Stored for later useDisplayed on a screenPrinted on paperAn input to the next process 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# System Flowchart

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# 70Another Example System Flowchart

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# 70PROGRAM FLOWCHARTSProgram flowcharts illustrate the sequence of logical operations performed by a computer in executing a program.They also follow an inputprocess output pattern. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

The program flowchart from Figure 3-11 in your textbook is shown on the right.

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

Note that the program flowchart details the logic of processes performed by the computer.

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#

This flowchart becomes the programmers blueprint for writing the actual computer program. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# 75

program flowchartsystems flowchart 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# FLOWCHARTS VS. DFDsDFDs place a heavy emphasis on the logical aspects of a system.Flowcharts place more emphasis on the physical characteristics of the system.

2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# FLOWCHARTS VS. DFDsEXAMPLE: The registrars office of a small college receives paper enrollment forms from students. They sort these records alphabetically and then update the student record file to show the new classes.They also prepare class lists from the same data. The sorted enrollment forms are forwarded to the bursars office for billing purposes. Class lists are mailed to faculty members. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# Students1.0UpdateStudentRecords2.0PrepareClass ListsStudentRecordsFacultyBursarEnrollmentFormsEnrollmentFormsEnrollmentFormsClassListsHeres a DFD that goes with the story. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# Students1.0UpdateStudentRecords2.0PrepareClass ListsStudentRecordsFacultyBursarEnrollmentFormsEnrollmentFormsEnrollmentFormsClassListsStudentsRegistrars OfficeEnrollmentFormsSortFormsSortedEnrollmentFormsUpdateStudentRecordsAPrepareClassListsSortedEnrollmentFormsClassListsSortedEnrollmentFormsBursarFacultyHeres a flowchart that goes with the story 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# FLOWCHARTS VS. DFDsNow lets change the story so that students enter enrollment data online. The registrars office sends a tape file of the enrollment data to the bursars office and continues to send paper class lists to faculty. 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# Students1.0UpdateStudentRecords2.0PrepareClass ListsStudentRecordsFacultyBursarEnrollmentDataEnrollmentDataEnrollmentDataClassListsOriginal DFDStudents1.0UpdateStudentRecords2.0PrepareClass ListsStudentRecordsFacultyBursarEnrollmentFormsEnrollmentFormsEnrollmentFormsClassListsHeres the revised DFD. How has it changed? 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-# Heres the revised flowchart. How has it changed?Registrars OfficeStudentsClassListsBursarFacultyEnrollmentDataUpdateStudentRecordsStudentRecordsEnrollmentDataPrepareClassListsStudentsRegistrars OfficeEnrollmentFormsSortFormsSortedEnrollmentFormsUpdateStudentRecordsAPrepareClassListsSortedEnrollmentFormsClassListsSortedEnrollmentFormsBursarFacultyOriginal Flowchart 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart3-#