SYSTEMS DEVELOPMENT AND DOCUMENTATION TECHNIQUES

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SYSTEMS DEVELOPMENT AND DOCUMENTATION TECHNIQUES

• Chapter 3

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What is documentation?

• Narratives
• Flowcharts
• Diagrams
• Other written material

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Importance of Documentation

• SAS-94 requires that auditors understand the
  automated and manual procedures an entity uses.
• SOX requires that publicly-traded corporations
  and their auditors document and test the
  companys internal controls.
• Auditing Standard No. 2 requires that the
  external auditor express an opinion on the
  clients system of internal controls.

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Data Flow Diagrams (DFDs)

• Definition graphically depicts the logical flow
  of data
• Elements
• Data sources/destinations

• Data flow lines

• Processes

• Data stores

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Data Flow Diagrams
1.0 Process Payment
2.0 Update A/R
Customer payment
Customer
Receivables Information
Remittance data
Credit Manager
Deposit
Bank
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Context Diagram -- Payroll
Governmentagencies
Tax reports and payments
Departments
Time cards
Employee paychecks
Employees
PayrollProcessingSystem
Bank
Payroll check
Humanresources
New employee form
Payroll report
Management
Employee change form
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Level 0 DFD
Employees
Departments
Employee change form
Employee checks
Time cards
New employee form
Humanresources
1.0Update employee/payrollfile
2.0Payemployees
Bank
Payrollchecks
Payroll disbursement data
Payroll taxdisbursement voucher
Employee/payroll file
5.0Updategeneralledger
3.0Preparereports
4.0Paytaxes
Payroll report
General ledger
Governmentagencies
Management
Tax reports andcheck
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Level 1 DFD for Process 2.0
Employees
Departments
Employee checks
Time cards
2.1Processpayroll
2.2Prepare cashdisbursements
Bank
Payroll register
Payrollchecks
Payroll disbursement voucher
Tax rates tables
Employee/payrollfile
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Data Flow Diagram Example
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Data Flow Diagram Example

• CAST Manual Module Purchases
• As raw materials are needed for production and
  bottling, Production sends a purchase requisition
  to Purchasing where a prenumbered purchase order
  is completed in quadruplicate.
• The purchase order must be approved and signed by
  a purchasing supervisor. Copy 1 of the purchase
  order is sent to the supplier. Copy 2 of the
  purchase order is sent to Accounting. Copy 3 of
  the purchase order is sent to Receiving. Copy 4
  of the purchase order and the purchase
  requisition are held temporarily in Purchasing.
  As goods are received from suppliers, they are
  inspected, counted and compared to copy 3 of the
  purchase order. A prenumbered receiving report
  is prepared in triplicate. Copy 3 of the
  receiving report and copy 3 of the purchase order
  are filed numerically. Copy 2 of the receiving
  report is sent to Purchasing where it is matched
  with copy 4 of the purchase order and the
  purchase requisition and filed numerically.

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Flowcharts

• Definition a tool used to depict a part of an
  information system in a clear, concise, and
  logical manner
• Types
• Document flowchart - depicts flow of documents
  information between areas of responsibility
  within an organization
• Computer system flowchart depicts how data are
  captured input into the system, the processing
  performed on the data, and the information output
  by the AIS
• Program flowchart indicates the sequence of
  logical operations performed by the computer when
  executing a program

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Flowchart Symbols Input/Output
Symbol
Name
Document multiple copies Manual or online
keying Display Input/output
Journal/ledger Transmittal tape batch
total Terminal or personal computer
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Flowchart Symbols Processing
Symbol
Name
Computer processing Manual operation Auxiliary
operation Offline keying operation
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Flowchart Symbols Storage
Symbol
Name
Magnetic disk Magnetic tape Diskette Online
storage Manual file N numeric A
alphabetic D date
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Flowchart Symbols Miscellaneous
Symbol
Name
Document or processing flow Data or information
flow Communication link On-page
connector Off-page connector
A
P2/1
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Flowchart Symbols Miscellaneous
Symbol
Name
Terminal Decision Annotation
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P2/2
P2/3
P2/1
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Flowchart Example

• CAST Manual Module Purchases
• As raw materials are needed for production and
  bottling, Production sends a purchase requisition
  to Purchasing where a prenumbered purchase order
  is completed in quadruplicate.
• The purchase order must be approved and signed by
  a purchasing supervisor. Copy 1 of the purchase
  order is sent to the supplier. Copy 2 of the
  purchase order is sent to Accounting. Copy 3 of
  the purchase order is sent to Receiving. Copy 4
  of the purchase order and the purchase
  requisition are held temporarily in Purchasing.
  As goods are received from suppliers, they are
  inspected, counted and compared to copy 3 of the
  purchase order. A prenumbered receiving report
  is prepared in triplicate. Copy 3 of the
  receiving report and copy 3 of the purchase order
  are filed numerically. Copy 2 of the receiving
  report is sent to Purchasing where it is matched
  with copy 4 of the purchase order and the
  purchase requisition and filed numerically.

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One Final Note

• Each page of each DFD or Flowchart MUST be
  numbered and have a proper heading which
  includes
• the company name
• title of the diagram
• date prepared
• preparers name

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System Flowcharts

• A 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.
• In other words, its the same basic input
  process output pattern that we saw in the
  document flowchart.

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Program Flowcharts

• Program flowcharts illustrate the sequence of
  logical operations performed by a computer in
  executing a program.
• They also follow an input process output
  pattern.

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Differences BetweenDFDs and Flowcharts

• DFDs emphasize the flow of data and what is
  happening in a system, whereas a flowchart
  emphasizes the flow of documents or records
  containing data.
• A DFD represents the logical flow of data,
  whereas a flowchart represents the physical flow
  of data.

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Differences BetweenDFDs and Flowcharts

• Flowcharts are used primarily to document
  existing systems and are concerned with the
  physical aspects of the input, processing and
  storage of the data.
• DFDs, in contrast, are primarily used in the
  design of new systems and do not concern
  themselves with the physical devices used to
  process, store, and transform data.

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Differences BetweenDFDs and Flowcharts

• DFDs make use of only four symbols.
• Flowcharts use many symbols and thus can show
  more detail.

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Summary

• We have
• Prepared two types of graphical forms of
  documentation
• Data flow diagrams
• Flowcharts
• Discussed the importance of these tools to
  accountants and when they are employed
• Discussed the basic guidelines for creating data
  flow diagrams and flowcharts