Accounting Information Systems: Accounting Information Systems: Essential Concepts and ApplicationsEssential Concepts and Applications Fourth Edition by Wilkinson, Cerullo, Raval, and Fourth Edition by Wilkinson, Cerullo, Raval, and Wong-On-WingWong-On-Wing

Chapter 14: Systems Development

Slides Authored by Somnath Bhattacharya, Ph.D.Florida Atlantic University

Interaction of Systems Development with Accounting

1) Assigning both the controller and the information systems manager to the steering committee

2) Assigning accountants to systems project teams 3) Assigning persons who are knowledgeable in both

accounting and information technology to serve as coordinators between the accounting and information systems functions

4) Establishing an internal audit group, staffed by accountants and systems-oriented auditors

5) Establishing data control groups within accounting departments

Approaches to Systems Development

Top-Down versus Bottom-upIn-House versus OutsourcingRe-engineeringPrototyping

Objectives of Strategic Systems Planning

Integrate the information system development with the firm’s overall planning processes

Ensure orderly development of systems projects, making efficient use of available resources

Recognize changing priorities and newly arising conditions as well as increasing informational demands

Incorporate improvements in information technology as they become relevant to the firm’s needs and promise greater benefits than the cost outlays

Survey of the Present System

ScopeData Types and SourcesBehavioral Issues

Communicate openly with the persons to be affected by the system project

Encourage participation by the affected persons throughout the survey

Emphasize the positive aspects of the project and explain that the resulting system can better meet the users’ needs

Reduce the fears of employees and managers by establishing and publicizing fair personnel policies

A Checklist for Analyzing Information Systems - I

Are tasks and responsibilities clearly defined and assigned?

Are tasks and responsibilities distributed effectively among employees and organizational units?

Are the policies and procedures understood and followed?

Does the productivity of the clerical employees appear to be satisfactorily high?

Do the various organizational units cooperate and coordinate well in maintaining smooth flows of data?

Figure 14-8

Does each product achieve its intended objective?

Are redundant processing operations being performed?

How necessary is the result accomplished by each operation?

Do unnecessary delays occur in obtaining and/or processing data?

Do any operations cause bottlenecks in the flow of data?

Are the number of errors that occur in each operation minimized?

Figure 14-8 Continued

A Checklist for Analyzing Information Systems - II

A Checklist for Analyzing Information Systems - III

Are physical operations adequately planned and controlled?

Is the capacity of the information system sufficient to handle the average volumes of data without large backlogs?

Are the peak volumes of data handled adequately?

How easily does the system adapt to exceptional occurrences and growth in use?

How necessary is each document? Is each document suitably designed for

efficient use?

Figure 14-8 Continued

A Checklist for Analyzing Information Systems - IV

Are all copies of documents necessary?Can reports be prepared easily from the files

and documents?Does unnecessary duplication occur in files,

records, and reports?Are files easily accessible and kept up-to-date?Are sound performance standards developed

and kept up-to-date? Is data processing equipment being used

effectively? Is the system of internal control adequate?Do the informal flows of data and information

harmonize with the formal flows?

Figure 14-8 Continued

A List of Information Systems Capabilities

Efficient and hence economical operationsAdequate capacity for expected growthTimeliness in responding to inquiries and

providing reportsReliability of system hardware and softwareAccurate, up-to-date, and relevant

informationSecurity of the data and system facilitiesFlexibility and adaptability to changes and

new demandsSimplicity, and hence user-friendliness

Figure 14-9

One-time Costs for a New or Improved Computer-based Information System - I

System Design Costs Detailed design Programming

System Installation and Conversion Costs System and program testing File conversion Retraining of displaced employees Training of newly hired analysts, programmers,

and operators Inefficiencies caused by learning new equipment

and procedures

Figure 14-15

One-time Costs for a New or Improved Computer-based Information System - II

System Site Preparation Costs Construction of wiring and piping systems Construction of electrical power supply Construction of air-conditioning system Construction of sprinkler system Construction of other miscellaneous facilities,

such as false flooring, file storage vault, and special lighting

Figure 14-15 Continued

One-time Costs for a New or Improved Computer-based Information System - III

System Hardware Costs Central processing unit Additional processors Secondary storage devices Input-output devices Data communications equipment Terminals Peripheral equipment, such as key-to-disk

devices Transportation of equipment

Figure 14-15 Continued

One-time Costs for a New or Improved Computer-based Information System - IV

System Software Costs Operating system, utility routines, compilers Data communications software Application program packages Data management software packages Decision model software packages Outside computer time-sharing rentals

Figure 14-15 Continued

Recurring Costs Related to a Computer-Based Information System - I

Computer Operations Costs Salaries for computer supervisors, operators,

technicians, data-entry clerks, librarians, security guards, and others

Supplies, including forms, paper, ribbons, and tape Utilities, including power, water, and telephone Rentals of computer hardware Software purchases and upgrades Communications equipment and services Backup equipment and services

Figure 14-16

Recurring Costs Related to a Computer-Based Information System - II

Information System Maintenance Costs Salaries for systems analysts, programmers, repair

technicians, and others Replacement parts and upgrades Printing costs for documentation

Information System Administration Costs Salaries of systems management, data-base

administrator, internal auditors, secretaries, and others

Insurance Taxes Space and building occupancy costs

Figure 14-16 Continued

Typical Conceptual Design Specifications - I

System Components Output

Features Name Purpose Distribution to users Contents General format Frequency or trigger Timeliness Output medium

Figure 14-17

Typical Conceptual Design Specifications - II

System Components Data base

Features File or table name File or table type File size Contents of record or table Record or table layout File organization method Storage medium Data characteristics Updating frequency Data structure

Figure 14-17 Continued

Typical Conceptual Design Specifications - III

System Components Data processing

Features Sequence of steps

or runs Processing modes,

cycles, volumes Modes of data

communication Processing

capabilities at each physical location

Figure 14-17 Continued

Typical Conceptual Design Specifications - IV

System Components Data input

Features Name Purpose Source Method of collecting data Volume (peak and

average) Contents (data elements) General format Data entry method

Figure 14-17 Continued

Typical Conceptual Design Specifications - V

System Components Control and

security

Features Type Purpose Specific system

components affected

method of correcting error or establishing security

Figure 14-17 Continued

Systems Acquisition OptionsPurchasing versus leasingSingle vendors versus multiple vendorsIn-house system versus outsourcing

computing servicesIn-house software development versus

commercial software packagesTypes of commercial software

General accounting systems Turnkey software systems

Advantages of Commercial Software

Products available without lengthy developmental periods

Soundly designed and well-tested and thus efficient and reliable

Reasonable pricing

Limitations of Commercial Software

Generalized in natureAcquiring firm is dependent on the

software vendor for support and maintenance and upgrades

The Sequence in Designing System Components

Design Controls& Security Measures

DesignInformation

Outputs

Designdata base

Design DataProcessingOperations

DesignData Inputs

Figure 14-19

A List of Design Principles

Foster system objectives Incorporate reasonable tradeoffsFocus on functional requirementsServe multiple purposesRelate to users’ concernsProvide a tailored product Integrate system modules and componentsAvoid design excessesApply sound methodology

Figure 14-20

System Justification & Selection in the Systems Development Life Cycle

SystemsPlanning

SystemsAnalysis

SystemsDesign

SystemsOperations

Determinationof DesignFeasibility

Solicitation of Hardware and

Software Proposals

Evaluation ofSystem

Proposals

Selection ofSystem Hardware

and Software

Systems Justification & Selection

Figure 14-21

A List of Resource Specifications - I

Systems Design Specifications Output Data-base Processing Input Control & security

Figure 14-22

A List of Resource Specifications - II

Hardware SpecificationsProcessor speeds and capabilitiesSecondary storage capacities and access

capabilitiesInput-output speeds and capabilitiesCompatibility featuresModularity featuresError detection and correction techniquesData communication capabilitiesSpecial features, such as multiprogramming and

virtual storagemaximum allowable downtime as a percentage

of total time

Figure 14-22 Continued

A List of Resource Specifications - III

Software SpecificationsProgramming languages and compilersUtility packagesApplication packagesOperating system capabilitiesData management packages

System Support SpecificationsProgramming assistanceTraining programsTest facilities and time availableBackup facilitiesMaintenance assistance

Figure 14-22 Continued

Techniques for Proposal Evaluation

The benchmark problem techniqueSimulation model techniqueWeighted-Rating analysis

technique

Systems Implementation: Preliminary ActionsEstablish implementation

plans and controls Gantt chart Network diagrams

Recognize behavioral concernsReview the organization of

the project teamComplete arrangement for selected

system resources

Implementation Activities - I

Personnel selection and trainingPhysical site preparationDetailed system design

Output design Database design Input design Processing design Controls design

Application software development Coding Structured programming

Software testing Desk checking String testing

System testing Acceptance testing

Implementation Activities - II

Standards development System components Performance Documentation

DocumentationFile conversion

Implementation Activities - III

System conversion: cutover Direct conversion approach Parallel operation approach Modular conversion approach Phased conversion approach

User signoff

Implementation Activities - IV

Systems Operations

Fine tuningPost-implementation evaluation

To assess the degree to which the objectives of the system project have been met

To spot any additional modifications that might be needed in the newly designed system

To evaluate the project team’s performance, both in terms of a quality product and adherence to the project schedule and work plan

To serve as the basis for improving future systems developments and accuracy of cost and benefit estimates

A Framework Pertaining to the Control of System-Related Resources

Measurement of Resource Usage* Personnel Time Reporting Systems* Computer-oriented Monitoring Systems* Effectiveness Monitoring Systems

Chargeback Systems* Chargeback Rates* Usage Measurements by

DepartmentTaskProjectComputer System

Performance Evaluation Systems* Personnel performance by

Clerks & OperatorsSystems professionalsSystems managers

* Equipment performance* Information system performance

EfficiencyEffectiveness

Cost accounting& control reports

Performancereports

Figure 14-27

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Accounting Information Systems: Accounting Information Systems: Essential Concepts and ApplicationsEssential Concepts and Applications Fourth Edition by Wilkinson, Cerullo,Fourth Edition by Wilkinson, Cerullo,Raval, and Wong-On-WingRaval, and Wong-On-Wing