SYSTEMS TECHNIQUES AND DOCUMENTATION 2004 Prentice Hall Business

SYSTEMS TECHNIQUES AND DOCUMENTATION 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 1

Learning Objective 1 Characterize the use of systems techniques by auditors and systems development personnel. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 2

Users of Systems Techniques Systems techniques are tools. Analysis Design Documentation They are largely graphical (pictorial) in nature. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 3

Use of Systems Techniques in Auditing What are the two basic components of an auditing engagement? 1. The interim audit 2. The financial statement audit Compliance testing Substantive testing 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 4

Internal Control Evaluation Auditors are typically concerned with the flow of processing and distribution of documents within an application system. Auditors use charts to analyze the distribution of documents in a system. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 5

Compliance Testing Compliance testing requires an understanding of the controls that are to be tested. Auditors must have a basic understanding of systems techniques. – input-process-output (IPO) – hierarchy plus input-process-output (HIPO) – logical data flow diagrams (DFD) 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 6

Working Papers These are the records kept by an auditor of the procedures and tests applied, the information obtained, and conclusions drawn during an audit engagement. Required by professional standards 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 7

Working Papers What are some of the systems techniques used by auditors to document and analyze the content of working papers? – internal control questionnaires – analytic flowcharts – system flowcharts – branching and decision tables 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 8

Use of Systems Techniques in Systems Development What are three phases of a systems development project? 1. Systems analysis 2. Systems design 3. Systems implementation 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 9

Systems Analysis Much of a systems analyst’s job involves collecting and organizing facts. Systems techniques examples: Interviewing Observations Document reviews Matrix 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 10

Systems Design A blueprint must be formulated for the complete system. Input/output (matrix) analysis Systems flowcharting Data flow diagrams 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 11

Systems Implementation Systems implementation involves the actual carrying out of the design plan. What systems techniques serve as a documentation tool? Program flowcharts Decision tables 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 12

Learning Objective 2 Describe the use of flowcharting techniques in the analysis of information processing systems. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 13

Systems Techniques What is a flowchart? A flowchart is a symbolic diagram that shows the data flow and sequence of operations in a system. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 14

Basic Symbols Input/output Process Flowline Annotation 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 15

Specialized Input/Output Symbols Punched card Online storage Magnetic tape Punched tape Magnetic disk 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 16

Specialized Input/Output Symbols Document Manual input Communication link Offline storage Display 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 17

Specialized Process Symbols Decision Auxiliary operation Predefined process Merge Preparation Extract Manual operation Collate Sort 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 18

Additional Symbols Connector Off-page connector Terminal Transmittal tape Parallel mode 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 19

Symbol Use in Flowcharting Symbols are used in a flowchart to represent the functions of an information or other type of system. Normal direction of flow is from left to right and top to bottom. Open arrowheads should be used on reverse-direction flowlines. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 20

Symbol Usage Illustration Normal Direction of Flow Invoice Review and approve Approved invoice 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 21

Symbol Usage Illustration Reverse Flow Shown with Arrowheads Approved invoice Review and approve Invoice 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 22

Symbol Usage Illustration Use of Connector Symbol Stores Purchasing Approved invoice A Invoice A 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 23

Symbol Usage Illustration Bidirectional Flow Shown with Arrowheads Requisition Prepare purchase order and update vendor files Vendor files Purchase order 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 24

Learning Objective 3 Define common systems techniques, such as HIPO charts, systems flowcharts, and logical data flow diagrams. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 25

IPO and HIPO Charts These charts are used primarily by systems development personnel. At the most general level of analysis, only the basic input-process-output relations in a system are of concern. Additional processing detail is provided by hierarchy plus input-process-output. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 26

IPO Chart System: Payroll Author: Mr. Foxx Description: Calculate Gross Pay Chart Number: 3. 1 Date: 6/9/0 X Input Process Output Payroll job record Accumulate hours Gross pay records Payroll master file worked Payroll master file Find correct pay rate Error messages Compute gross pay 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 27

HIPO Illustration 1. 0 Payroll system 2. 0 Data preparation 3. 0 4. 0 Processing Review 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 28

HIPO Illustration 3. 1 3. 2 Calculate gross pay Calculate net pay 3. 11 Accumulate hours worked 3. 12 Find correct pay rate 3. 13 Compute gross pay Each numbered module would be detailed in an IPO chart. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 29

Systems and Program Flowcharts A systems flowchart identifies the overall or broad flow of operations in a system. A program flowchart (block flowchart) is more detailed concerning individual processing functions. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 30

Logical Data Flow Diagram Symbols Name Symbol Meaning Terminator Represents sources and destinations of data Process Task or function being done Data store A repository of data Data flow Communication channel 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 31

Data Flow Diagram Timekeeping Payroll data Process payroll data Paychecks Employees Payroll details Payroll Data 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 32

Data Flow Diagram Expanded Current status Timekeeping Payroll data Employee data Verify payroll data P 1 Data valid Valid payroll data 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 33

Data Flow Diagram Expanded Employee data Net pay and deductions Data to process Calculate Paychecks pay Employees P 2 Valid payroll data 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 34

Data Flow Diagram Expanded Further Update employee files Current amounts Process payroll journal Details Journal data Net pay and deductions Compute net pay Paychecks Employees 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 35

Analytic, Document, and Forms Distribution Flowcharts An analytic flowchart is similar to a systems flowchart in level of detail and technique. A document flowchart is similar to an analytic flowchart but contains less detail about the processing functions of each entity shown on the chart. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 36

Analytic, Document, and Forms Distribution Flowcharts The forms distribution chart illustrates the distribution of multiple copy forms with an organization. Purchase Receive 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 37

Analytic Flowchart Purchasing Approve vendor list Suppliers Select vendors Prepare quotation requests Requests for quotation Quotations 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 38

Analytic Flowchart Purchasing Suppliers Quotations Select bid Quotations Prepare purchase order Purchase order 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 39

Document Flowchart Controller Accounts Payable Purchase requisition 2 To Vendor Purchase order 5 Vice President Manufacturing Purchasing Agent Receiving Purchase requisition 1 Purchase order 1 2 Stores Purchase requisition 1 2 Purchase order 3 3 4 5 Purchase order 4 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 40

Forms Distribution Chart Purchasing Inventory Purchase order copy 1 2 Payables Production Accounting 1 1 2 2 3 4 5 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 41

Analytical Flowcharting Illustration Symbol selection System analysis Drawing the flowchart Sandwich rule Use of connector symbol Entity-column relations 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 42

Narrative Techniques Narrative techniques are useful in the fact-finding stage of system analysis. What are some examples of narrative techniques? Open-ended and closed-ended questionnaires Document reviews 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 43

Resource Utilization Analysis Work measurement involves four basic steps. 1. Identify the tasks. 2. Obtain time estimates for performing the tasks. 3. Adjust these time estimates. 4. Analyze requirements based on these data. 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 44

Resource Utilization Analysis (Average time/unit + Idle time/unit) × Average volume = Total task time Total time available ÷ Total task time = Capacity utilization 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 45

Decision Analysis Techniques Decision to be made Conditions that can occur Path to be followed for each condition 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 46

Branching Table Format Code equal to Go to 1 2 3 4 Inconnector reference 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 47

Decision Table Format Table Title Condition stub If: Then: Action stub Rules 1 2 3 Condition entry … N Action entry 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 48

Decision Table for Processing Labor Distribution If Then Line 1 2 3 10 11 12 13 14 Condition action Rule 15 Regular hours 15 Overtime hours 15 Shift bonus hours 1 Y Y Y 2 – – N 3 – N Y 4 – – N 5 N Y Y 6 7 8 – N N Y N Regular dollars × × Overtime dollars × × Shift dollars × × Error no shift or OT × × × Nest record × × × × Go to – F (Function); R (Rule, same table); T (Table) 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 49

QUESTIONS ? ? ? 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 50