Accounting Information Technology and Business Solutions 2 nd

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Accounting, Information Technology, and Business Solutions, 2 nd Edition By Hollander, Denna, Cherrington Flowcharting

Accounting, Information Technology, and Business Solutions, 2 nd Edition By Hollander, Denna, Cherrington Flowcharting and Data Flow Diagrams Power. Point slides by: Bruce W. Mac. Lean, Faculty of Management, Dalhousie University Supplemental Chapter A Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Objectives n The objective of this supplement is to introduce you to two types

Objectives n The objective of this supplement is to introduce you to two types of documentation tools: ä ä n Flowcharts and Data Flow Diagrams You should be able to: ä ä Understand prepare flowcharts describing the information system and procedures used in the system Understand prepare data flow diagrams depicting the logic of the system Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Purpose and Description of Flowcharts n n n Graphically document information systems Summarize pages

Purpose and Description of Flowcharts n n n Graphically document information systems Summarize pages of narrative Focus on the physical aspects of information flows Types of flowcharts • System flowcharts show the entire system configuration, including documents, data flows, and processes • Document/Procedure flowcharts show the creation, flow, and destinations of documents and the procedures performed on them • Hardware flowcharts show the hardware configuration • Program flowcharts show the logic and processing steps of a computer program Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Basic Elements of System/Document Flowcharts n n n May draw freehand or with a

Basic Elements of System/Document Flowcharts n n n May draw freehand or with a template Software packages - Visio, Power. Point, Designer Three simple graphical elements may be combined to represent various types of physical information flows and processes ä Symbols Flow lines Areas of responsibility Cashier Dept A Irwin/Mc. Graw-Hill Bank Ó The Mc. Graw-Hill Companies, Inc. , 2000

Document Flow in a Manual System Employee involved in the transaction Record transaction journal

Document Flow in a Manual System Employee involved in the transaction Record transaction journal entry Start Prepare source document Source Document Accounting department Recorded 3 document Transaction Journal Post Journal entries to sub. ledger General Ledger Adjust and close ledger Prepare financial statements 1 2 3 N Customer N Irwin/Mc. Graw-Hill Subsidiary Ledger Trial Balance N= numeric Financial Statements Investors/ Creditors Ó The Mc. Graw-Hill Companies, Inc. , 2000

Sales/Collection Document Flowchart Sales Clerk Accounts Receivable Clerk Cash Receipts Clerk From Customer 1

Sales/Collection Document Flowchart Sales Clerk Accounts Receivable Clerk Cash Receipts Clerk From Customer 1 2 Start Payment Prepare Sales Invoice Sales 1 2 Invoice Check customer credit 3 Invoice Endorse check prepare remittance advice Remittance 1 2 advice 1 N Remittance Advice N Record transaction and update ledger 3 N Transaction Journal Accounts Receivable Ledger 2 Customer N Irwin/Mc. Graw-Hill N= numeric Ó The Mc. Graw-Hill Companies, Inc. , 2000

Flowchart Symbols: Documents Invoice Shipping Receipt Ledger 1 2 3 (A) Single Document 4

Flowchart Symbols: Documents Invoice Shipping Receipt Ledger 1 2 3 (A) Single Document 4 Sales Invoice (D) Two overlapping symbols - same document Irwin/Mc. Graw-Hill (B) Non-Processed Document Sales Order 4 (C) Overlapping symbolssame document 3 2 Invoice (E) Two overlapping symbols different documents Ó The Mc. Graw-Hill Companies, Inc. , 2000

Flowchart Symbols (A) On-line Manual Device (B) Terminal Display (C) I/O (Input/Output) (D) Manual

Flowchart Symbols (A) On-line Manual Device (B) Terminal Display (C) I/O (Input/Output) (D) Manual Process (E) On-line Computer Process (I) Disk Storage (J) Magnetic Tape Storage N A Permanent Temporary File (F) Off-line or Noncomputer Process Irwin/Mc. Graw-Hill (G) Off-line Paper File (H) On-line Data Storage Ó The Mc. Graw-Hill Companies, Inc. , 2000

Flowchart Symbols on page 2: 1 To Customer Start From Bank (B) Start (or

Flowchart Symbols on page 2: 1 To Customer Start From Bank (B) Start (or end) Process (A) Enter/Exit System p. 4 1 Indicates the flow will continue at the on-page connector #1 to page 4 connector #1 on page 4: 1 Indicates where the flow continues from the on-page connector #1 (C) On-page Connectors 1 p. 2 connector #1 from page 2 (D) Off-page Connectors -------- (E) Annotation (F) Decision Irwin/Mc. Graw-Hill (G) Calculator/ Register Tape (H) Physical Object (I) Flow Lines (J) Communication Link Ó The Mc. Graw-Hill Companies, Inc. , 2000

Flowchart Element 2: Flow Lines n n n Flow lines are used to connect

Flowchart Element 2: Flow Lines n n n Flow lines are used to connect the symbols on the document flow chart. A solid line indicates the flow of a document or object A dotted or dashed symbol indicates a flow of information rather than the physical document Arrows are used when the documents or information flow is not left-to-right or top-to-bottom Some flowcharts also show communication flows such as by telephone modem or satellite Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Flowcharting Element 3: Area of Responsibility n n Areas of responsibility are displayed to

Flowcharting Element 3: Area of Responsibility n n Areas of responsibility are displayed to enable the flowchart reader to clearly identify changes in responsibility as the documents flow through the system. They are represented on flowcharts by segmenting and labeling columns. Areas of responsibility may be departments, sections within a department, or individual employees within a department. Judgment must be used in choosing the level of subdivision that one column should represent. Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Preparation Conventions n n Left-to-right, Top-to-bottom All documents must have an origin and termination

Preparation Conventions n n Left-to-right, Top-to-bottom All documents must have an origin and termination ä ä indicate origin by darkening one corner of the symbol each copy of the document must flow to – a permanent file symbol – a symbol denoting an exit from the system, or – an off-page connector – a document destruction symbol (small black box) – “cradle to grave” documentation Irwin/Mc. Graw-Hill n Keep flowcharts uncluttered ä ä n Make sure progress of a document is clear. Diagram a document ä ä ä n place areas with frequent interchange in adjacent columns enter narrative only in symbols before and after each process entering or leaving a file entering or leaving a page or area of responsibility Make sure the flowchart is complete Ó The Mc. Graw-Hill Companies, Inc. , 2000

The Basic Elements of Hardware and System Flowcharts n n Hardware flowcharts show the

The Basic Elements of Hardware and System Flowcharts n n Hardware flowcharts show the hardware configuration of a system. The same symbols are used, but they are used to represent physical pieces of computer hardware. ä ä ä n the document symbol - printer, the magnetic tape symbol - tape drive, a disk symbol - disk drive, a computer process symbol - central processor, and an off-line process symbol - auxiliary hardware like an optical character reader. The type of hardware is recorded on the face of the symbol. Irwin/Mc. Graw-Hill n Program flowcharts depict the detailed logic of a computer program. ä ä ä n Only five symbols are used in program flowcharting: Input/Output (see C on Exhibit A 4), Process (see E on Exhibit A-4), Decision (see F on Exhibit A-5), Start/End (see B on Exhibit A-5), and Flow lines (see I on Exhibit A-5). As always, a description of the logic is recorded on the face of the symbol. Ó The Mc. Graw-Hill Companies, Inc. , 2000

Summary n n The flowchart is one of the easier types of documentation for

Summary n n The flowchart is one of the easier types of documentation for information customers and management to understand. Often, auditors use system, document, and procedure flowcharts to understand business and systems controls in an environment Irwin/Mc. Graw-Hill n n The primary weakness of the flowchart is that it is tied to physical information flows and system characteristics that hide the procedural essence of the system. Some flowcharts are full of data and processing artifacts because they are tied to an outdated information technology. Ó The Mc. Graw-Hill Companies, Inc. , 2000

Data Flow Diagrams (DFD) n n Data flow diagramming symbols are used for a

Data Flow Diagrams (DFD) n n Data flow diagramming symbols are used for a variety of system analysis purposes, including graphically displaying the logical flows of data through a process. Unlike flowcharts which represent the physical components of an information system, data flow diagrams can provide a more conceptual, nonphysical display of the movement of data through a system. Data flow diagrams disregard such things as organizational units, the computer on which the data are processed, and the media on which the data are stored. The movement of data across offices or departments within a particular system environment are not represented. Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Data Flow Diagrams (DFD) n There are different categories of data flow diagrams: 1.

Data Flow Diagrams (DFD) n There are different categories of data flow diagrams: 1. Data flow diagrams of the current physical system 2. Data flow diagrams of the current logical system 3. Data flow diagrams of the new or proposed logical system 4. Data flow diagrams of the new proposed physical system Irwin/Mc. Graw-Hill n n n Both logical and physical diagrams use the same set of symbols. The logical diagrams show the conceptual flow of data without including any references to the physical characteristics of the system. The physical diagrams, on the other hand, include labels that describe physical attributes of the system, such as labeling worker or job titles, department names, and the names or descriptions of the technology used to process and store the data. Ó The Mc. Graw-Hill Companies, Inc. , 2000

Data Flow Diagram Symbols (A) Process (C) Data store Irwin/Mc. Graw-Hill (B) Data inflow

Data Flow Diagram Symbols (A) Process (C) Data store Irwin/Mc. Graw-Hill (B) Data inflow sources, information outflow destinations (D) Data flow lines Ó The Mc. Graw-Hill Companies, Inc. , 2000

Data Flow Diagram Symbols n Process ä ä Circles are used to represent processes

Data Flow Diagram Symbols n Process ä ä Circles are used to represent processes that take data inflows and transform them to information outflows. The circle contains two labels. The first label is a process number (explained later) and the second is a process name. Some use rectangular boxes with rounded corners. Irwin/Mc. Graw-Hill (A) Process Ó The Mc. Graw-Hill Companies, Inc. , 2000

Data Flow Diagram Symbols n Data Sources and Sinks ä ä ä Rectangles (or

Data Flow Diagram Symbols n Data Sources and Sinks ä ä ä Rectangles (or squares) represent data (inflow) sources and (information outflow) sinks The rectangle is labeled with the name of the data source or sink/destination (e. g. Customer, (B) Vendors, Government Agency). Data inflow sources, The sources and sinks play an important role in information the data flow diagram. outflow The sources and sinks are agents external to (i. e. destinations outside the scope of) the system represented on the diagram. They delineate the boundaries of the system. Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Data Flow Diagram Symbols n Data Flow Lines ä ä ä Data flow lines

Data Flow Diagram Symbols n Data Flow Lines ä ä ä Data flow lines display the route of data inflow and information outflow. They can be straight or curved lines. The data flow is generally labeled with the name of the data (e. g. a customer order, a bill, a financial analysis) and the arrow indicates the direction of the data flow. (D) Data flow lines Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Data Flow Diagram Symbols n Data Stores ä ä ä Two parallel straight lines

Data Flow Diagram Symbols n Data Stores ä ä ä Two parallel straight lines are used to display Inventory a store or collection of data. Some people refer to data stores as data at rest. (C) A description of the data store contents is Data store entered on the symbol. Data stores are used anytime it is necessary to store the output from a process before sending it on to the next process. Some use a rectangular box that is open at one end. Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Constraints: General Rules ¬ All processes should have unique names. If two data flow

Constraints: General Rules ¬ All processes should have unique names. If two data flow lines (or data stores) have the same label, they should both refer to the exact same data flow (or data store). The inputs to a process should differ from the outputs of a process. ® Any single DFD should not have more than about seven processes. Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Constraints: Process Rules 1. No process can have only outputs. (This would imply that

Constraints: Process Rules 1. No process can have only outputs. (This would imply that the process is making information from nothing. ) If an object has only outputs, then it must be a source. 2. No process can have only inputs. (This is referred to as a “black hole”. ) If an object has only inputs, then it must be a sink. 3. A process has a verb phrase label. Irwin/Mc. Graw-Hill Incorrect Correct Incorrect Edit Correct Ó The Mc. Graw-Hill Companies, Inc. , 2000

Constraints: Data Store ² Data cannot move directly from one data store to another

Constraints: Data Store ² Data cannot move directly from one data store to another data store. Data must be moved by a process. ³ Data cannot move directly from an outside source to a data store. Data must be moved by a process that receives data from the source and places the data in the data store. ´ Data cannot move directly to an outside sink from a data store. Data must be moved by a process. µ A data store has a noun phrase label. Irwin/Mc. Graw-Hill No Yes CUSTOMER Ó The Mc. Graw-Hill Companies, Inc. , 2000

Constraints: Source/Sink 11. Data cannot move directly from a source to a sink. It

Constraints: Source/Sink 11. Data cannot move directly from a source to a sink. It must be moved by a process if the data are of any concern to the system. If data flows directly from a source to a sink (and does not involved processing) then it is outside the scope of the system and is not shown on the system data flow diagram DFD. 12. A source/sink has a noun phrase label. Incorrect Customer Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Constraints: Data Flow 13. A data flow has only one direction between symbols. It

Constraints: Data Flow 13. A data flow has only one direction between symbols. It may flow in both directions No between a process and a data store to show a read before an update. To effectively show a read before an update, draw two separate Yes arrows because the two steps (reading and updating) occur at separate times. 14. A fork in a data flow means that exactly the same data goes from a common location to No two or more different processes, data stores, or sources/sinks. (This usually indicates different copies of the same data going to Yes different locations. ) Irwin/Mc. Graw-Hill A B A A Ó The Mc. Graw-Hill Companies, Inc. , 2000

Constraints: Data Flow 15. A join in a data flow means that 17. A

Constraints: Data Flow 15. A join in a data flow means that 17. A data flow to a data store exactly the same data comes from means update (i. e. , delete, any of two or more different add, or change). processes, data stores, or 18. A data flow from a data store sources/sinks, to a common location. means retrieve or use. 16. A data flow cannot go directly back 19. A data flow has a noun to the same process it leaves. There phrase label. More than one must be at least one other process data flow noun phrase can that handles the data flow, produces appear on a single arrow as some other data flow, and returns long as all of the flows on the original data flow to the same arrow move originating process. together as one package. Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Context Level Diagram Events Driven System The highest level of data flow diagrams is

Context Level Diagram Events Driven System The highest level of data flow diagrams is the context diagram External A single system is represented on a context diagram and it provides Events Customers Reports the scope of the system being represented identified. Management in a process symbol in the center of the diagram labeled with a 0. 0 Events The context diagram shows one process (representing the entire system) and the sources/sinks Driven that represent the boundaries of the System system. Investors Financial the input anddata to the Internal The data flow lines Internal into the process represent Statements Creditors Events Departments system (provided by sources) and the data flow lines from the process represent the output information from the system (going to the sinks). Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Event Driven Design - Level Zero System Processes Internal events External events (Data Flow

Event Driven Design - Level Zero System Processes Internal events External events (Data Flow Diagram) 1. 0 Record process 3. 0 Business event data Internal events 2. 0 External events Report process Financial Statements Maintain process Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Exhibit A-9 Level Zero DFD Example r e d Or Customers Shipping Request Bill

Exhibit A-9 Level Zero DFD Example r e d Or Customers Shipping Request Bill Pay m s De In sire fo d rm ati on 2. 0 Deliveries to Customers Accounts Receivable ent Irwin/Mc. Graw-Hill 1. 0 Process Customer Orders 3. 0 Process Payments Decision Makers d n e r o i es ati D rm fo n I Ó The Mc. Graw-Hill Companies, Inc. , 2000

Level One - Record Event Data External event: Record Sale of Merchandise Sales Invoice

Level One - Record Event Data External event: Record Sale of Merchandise Sales Invoice Data 1. 1 Prepare Sales Invoice 1. 2 Review Customer Credit Approved Sales Invoice Data 1. 3 Record Sales Sale Event Data Irwin/Mc. Graw-Hill Ó The Mc. Graw-Hill Companies, Inc. , 2000

Version 1 Example Data Flow Diagram Factory Supervisor Factory supervisor Time cards Accounting Payroll

Version 1 Example Data Flow Diagram Factory Supervisor Factory supervisor Time cards Accounting Payroll Clerk 1 2 N Review time cards Time cards 1 2 N Reviewed time cards Record weekly wages Employee Earnings Records Review time cards Record wages A Time card file (alpha) Irwin/Mc. Graw-Hill Example Flowchart Employee Earnings Records A= alphabetic Ó The Mc. Graw-Hill Companies, Inc. , 2000

Version 2 Example Data Flow Diagram Example Flowchart Factory Supervisor Factory supervisor 1 Time

Version 2 Example Data Flow Diagram Example Flowchart Factory Supervisor Factory supervisor 1 Time cards Accounting Payroll Clerk Time cards 2 1 N Review time cards Reviewed time cards Employee Earnings Records N Key in time cards Record wages Record weekly wages 2 A Earnings Master File A= alphabetic Time card file (alpha) Irwin/Mc. Graw-Hill Companies, Inc. , Time 2000 Card ErrorsÓ The Old. Mc. Graw-Hill Earnings New Earnings

Version 3 Example Data Flow Diagram Factory Supervisor Factory supervisor Time cards Accounting Payroll

Version 3 Example Data Flow Diagram Factory Supervisor Factory supervisor Time cards Accounting Payroll Clerk Time cards 1 2 1 Review time cards Reviewed time cards Record weekly wages Employee Earnings Records Key in time cards Record wages A Time card file (alpha) 2 N N Review time cards Irwin/Mc. Graw-Hill Example Flowchart Employee Earnings Master File Ó The Mc. Graw-Hill Companies, Inc. , 2000 A= alphabetic