ch02

2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 2 - 1

Systems Techniques and Documentation

Chapter 2


Overview

Systems techniques are tools used in the analysis, design, and documentation of system and subsystem relationships.

They are largely graphical (pictorial) in nature.

Systems techniques are used by accountants who do systems work.


Learning Objectives

1 Characterize the use of systems techniques by auditors and systems development personnel.

2 Describe the use of flowcharting techniques in the analysis of information processing systems.


Learning Objectives

3 Define common systems techniques, such as HIPO charts, systems flowcharts, and logical data flow diagrams.


Learning Objective 1

Characterize the use of systems techniques by auditors and systems

development personnel.


Use of Systems Techniquesin Auditing

What are the two basic components of an auditing engagement?

1 The interim audit which usually requires some type of compliance testing.

2 The financial statement audit which involves substantive testing.


Internal Control Evaluation

Auditors are typically concerned with the flow of processing and distribution of documents within an application system.

Auditors need techniques that systematically structure the system under study.

Auditors use charts to analyze the distribution of documents in a system.


Compliance Testing

Auditors undertake compliance testing to confirm the existence, assess the effectiveness, and check the continuity of operation of internal controls on which reliance is to be placed.

Compliance testing requires an understanding of the controls that are to be tested.


Compliance Testing

Auditors must have a basic understanding of systems techniques used in systems analysis and design.

What are some of these techniques?– input-process-output (IPO)– hierarchy plus input-process-output (HIPO)– logical data flow diagrams (DFD)


Working Papers

What are working papers? They are the records kept by an auditor of

the procedures and tests applied, the information obtained, and conclusions drawn during an audit engagement.

The auditor is required by professional standards to maintain working papers.


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 – systems flowcharts– branching and decision tables


Use of Systems Techniques in Systems Development

What are the three phases of a systems development project?

1 Systems analysis2 Systems design3 Systems implementation


Systems Analysis

Systems analysis involves collecting and organizing facts.

Systems techniques assist the analyst in performing these tasks.

What are some of these techniques?– matrix techniques– logical data flow diagrams


Systems Implementation

Systems implementation involves the actual carrying out of the design plan.

Documentation is one of the most important parts of systems implementation.

What systems techniques serve as a documentation tool?

– program flowcharts– decision tables



Describe the use of flowcharting techniques in the analysis of information

processing systems.


Systems Techniques

What is a flowchart? A flowchart is a symbolic diagram that

shows the data flow and sequence of operations in a system.

Flowcharts are probably the most common systems technique.


Basic Symbols

Input/Output

Process

Flowline

Annotation


Specialized Input/Output Symbols

Punched Card

On-Line Storage

Magnetic TapeMagnetic Disk

Punched Tape


Specialized Input/Output Symbols

Document

Manual Input

Display

CommunicationLink

Off-Line Storage


Specialized Process Symbols

Decision

PredefinedProcess

Preparation

ManualOperation

AuxiliaryOperation

Merge

Extract

Sort

Collate


Additional Symbols

Connector

Off-page Connector

Terminal

Parallel Mode

Transmittal Tape


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



InvoiceInvoiceReview

andApprove

Reviewand

Approve

ApprovedInvoice

ApprovedInvoice

Normal Direction of Flow



InvoiceInvoiceReview

andApprove

Reviewand

Approve

ApprovedInvoice

ApprovedInvoice

Reverse Flow Shown with Arrowheads



Use of Connector Symbol

RequisitionRequisition


PurchasingStores

A

A




PurchaseOrder

PurchaseOrder

VendorFiles

VendorFiles

Bidirectional Flow Shown with Arrowheads

Prepare Purchase Order

and Update Vendor Files



Define common systems techniques, such as HIPO

charts, systems flowcharts, and logical data flow

diagrams.


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.


IPO Chart

Payroll job record

Payroll master file

Accumulate hours worked

Find correct pay rate

Compute gross pay

Gross pay records

Payroll master file

Error messages

Author: Mr. Foxx

Chart Number: 3.1

System: Payroll

Description: Calculate Gross Pay Date: 6/9/0X

Input Process Output


Hierarchy Chart

Payroll SystemPayroll System

Data PreparationData Preparation ProcessingProcessing ReviewReview

1.0

2.0 3.0 4.0


Hierarchy Chart

Calculate Gross PayCalculate Gross Pay

Calculate Net PayCalculate Net Pay

Accumulate Hours Worked

Accumulate Hours Worked

Find Correct Pay Rate

Find Correct Pay Rate

Compute Gross PayCompute Gross Pay

3.1 3.2

3.11 3.12 3.13

Each numbered module would be detailed in an IPO chart.


Systems and Program Flowcharts

A systems flowchart identifies the overall or broad flow of operations in a system.

The focus of systems flowcharting concerns media and processing functions rather than the detailed logic of individual processing functions.


Logical Data FlowDiagram Symbols

Terminator

Process

Data Store

Data Flow


Data Flow Diagram

TimekeepingTimekeepingProcessPayroll

Data

ProcessPayroll

DataEmployeesEmployees

Payroll Data


Data Flow Diagram

TimekeepingTimekeeping

VerifyPayroll

DataP1

VerifyPayroll

DataP1

Employee Data

Payroll Data

Current Status

Data Valid

Valid Payroll Data


Data Flow Diagram

Employee Data

Valid Payroll Data

CalculatePay

P2

CalculatePay

P2

Data to Process EmployeesEmployeesPaychecks

Net Pay and Deductions


Data Flow Diagram

EmployeesEmployeesComputeNet PayComputeNet Pay

Net Pay and Deductions

Paychecks

UpdateEmployee

Files

UpdateEmployee

Files

ProcessPayrollJournal

ProcessPayrollJournal

Current

Amounts

Details JournalData


Analytic, Document, and Forms Distribution Flowcharts

An analytic flowchart identifies all significant processing in an application, emphasizing processing tasks that apply controls.

In an analytic flowchart the flow of processing is depicted using symbols connected with flowlines.



A document flowchart is similar in format to an analytic flowchart but contains less detail about the processing functions of each entity shown on the chart.

The only symbol used in a document flowchart is the document symbol.



The forms distribution chart illustrates the distribution of multiple copy forms with an organization.

The emphasis is on who gets what forms rather than on how these forms are processed.


Analytic Flowchart

ApproveVendor

List

ApproveVendor

List

PrepareQuotation

PrepareQuotation

SelectVendors

SelectVendors

Requestfor

Quotation

Requestfor

Quotation

Requestfor

Quotation

Requestfor

Quotation

Purchasing Suppliers Purchasing Suppliers


Analytic Flowchart

PreparePurchase

Order

PreparePurchase

Order

SelectBid

SelectBid

QuotationsQuotations

Purchasing Suppliers Purchasing Suppliers

QuotationsQuotations

PurchaseOrder

PurchaseOrder

PurchaseOrder

PurchaseOrder


Document Flowchart

Controller Vice President Manufacturing

PurchaseRequisition

2

PurchaseRequisition

2

Accounts Payable Purchasing Agent Receiving Stores

2

PurchaseRequisition

1

PurchaseRequisition

1

PurchaseRequisition

1

PurchaseRequisition

1

PurchaseOrder

3

PurchaseOrder

3Purchase

Order 1

PurchaseOrder

12

34 5

PurchaseOrder

4

PurchaseOrder

4

PurchaseOrder

5

PurchaseOrder

5

To Vendor


Forms Distribution Chart

Purchasing Inventory Payables Production AccountingPurchaseOrder Copy

1

2

3

4

5

1

2

1

2

3

4


Sandwich Rule

Every process symbol should be “sandwiched” between an input and an output symbol.

Inputs flow into a process symbol and outputs flow out of the process symbol.


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


Resource Utilization Analysis

Resource utilization analysis must always be considered by systems development personnel in implementing systems.

Work measurement includes the variety of techniques used to model, measure, or estimate clerical or other activities in a production framework.


Resource Utilization Analysis

Work measurement involves four basic steps. What are these 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.


Decision Analysis Techniques

Branching and decision tables are used primarily by systems development personnel.

A branching table is composed of a statement of the decision to be made, a list of the conditions that can occur, and the path to be followed for each condition.



Branching Table Formats

Code Equal to

Go toInconnector

reference

1 2 3

Inconnectorreference

4



A decision table is a tabular representation of a decision-making process.

Decision tables incorporate multiple-decision criteria.

They are constructed on an IF-THEN premise and appear as a two-dimensional matrix in general form.


1 2 3 ... N Condition stub Action stub

Decision Table Format

Condition EntryAction Entry

Decision Table Format

Table Title Rules

If:Then:


Decision Table forProcessing Labor Distribution

15 Shift Bonus Hours Y – N Y15 Overtime Hours Y N Y –15 Regular Hours Y – – N

1 2 3 4

Regular Dollars x x xOvertime Dollars x xShift Dollars x xError No Shift or OT x


End of Chapter 2

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