Systems Techniques and Documentation

Systems Techniques
and Documentation
Chapter 2
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 2-1
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 Techniques
in 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.
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 2 - 10
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 analysis
2 Systems design
3 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 Punched Tape
On-Line Storage
Magnetic Disk
Magnetic Tape
Specialized Input/Output
Symbols
Document Communication
Link
Manual Input
Off-Line Storage
Display
Specialized Process Symbols
Auxiliary
Decision Operation
Predefined
Process Merge
Preparation Extract
Collate
Manual
Operation Sort
Additional Symbols
Connector
Off-page Connector Transmittal

Tape
Terminal
Parallel Mode
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
Normal Direction of Flow

Review
Review
Invoice
Invoice and
and
Approve
Approve
Approved
Approved
Invoice
Invoice
Reverse Flow Shown with Arrowheads
Approved
Approved Review
Review
and Invoice
Invoice
Invoice
Invoice and
Approve
Approve
Use of Connector Symbol

Stores Purchasing
Requisition A
Requisition
Requisition
Requisition
A
Bidirectional Flow Shown with Arrowheads

Requisition
Requisition
Prepare
Purchase Order Vendor
Vendor
and Update Files
Files
Vendor Files
Purchase
Purchase
Order
Order
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
System: Payroll
Author: Mr. Foxx
Description:
Chart Number: 3.1 Calculate Gross Pay Date: 6/9/0X
Input Process Output
Payroll job record Accumulate hours Gross pay records

worked
Payroll master file Payroll master file
Find correct pay rate
Error messages
Compute gross pay
Hierarchy Chart
1.0
Payroll
Payroll System
System
2.0 3.0 4.0

Data
Data Preparation
Preparation Processing
Processing Review
Review
Hierarchy Chart
3.1 3.2
Calculate
Calculate Calculate
Calculate
Gross
Gross Pay
Pay Net
Net Pay
Pay
3.11 3.12 3.13

Accumulate
Accumulate Find
Find Correct
Correct Compute
Compute
Hours
Hours Worked
Worked Pay
Pay Rate
Rate Gross
Gross Pay
Pay
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 Flow
Diagram Symbols
Terminator
Process Data Flow
Data Store
Data Flow Diagram
Process
Process
Timekeeping
Timekeeping Payroll
Payroll Employees
Employees
Data
Data
Payroll Data
Data Flow Diagram
Current Employee Data

Status
Payroll
Verify
Verify Data
Data
Payroll
Payroll Valid
Timekeeping
Timekeeping Data
Data
P1
P1
Valid Payroll Data

Data Flow Diagram
Employee Data Net Pay and

Deductions
Data to Calculate
Calculate
Process Pay
Pay Paychecks Employees
Employees
P2
P2
Valid Payroll Data

Data Flow Diagram
Process
Process
Update
Update Payroll Details Journal
Employee Payroll
Employee Journal
Journal Data
Files
Files Current
Net Pay and
Deductions
Paychecks Employees
Compute
Compute Employees
Net
Net Pay
Pay
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
Purchasing
Purchasing Suppliers
Suppliers
Approve
Approve Select
Vendor Select
Vendor Vendors
Vendors
List
List
Request
Request
for
for
Quotation
Quotation
Prepare
Prepare
Quotation
Quotation
Request
Request
for
for
Quotation
Quotation
Analytic Flowchart
Purchasing
Purchasing Suppliers
Suppliers
Quotations
Quotations Quotations
Quotations
Prepare
Prepare
Select
Select Purchase
Bid Purchase
Bid Order
Order
Purchase
Purchase Purchase
Purchase
Order
Order Order
Order
Document Flowchart
Controller Vice President Manufacturing

Accounts Payable Purchasing Agent Receiving Stores
Purchase
Purchase Purchase
Purchase
Purchase
Purchase Requisition
Requisition Requisition
Requisition
Requisition
Requisition 11 11
22
Purchase
Purchase 2
To Vendor Purchase
Purchase Order
Order
Order
Order 33
11
Purchase
Purchase 2 Purchase
Purchase
Order
Order 34 Order
Order
55 5 44
Forms Distribution Chart
Purchasing Inventory Payables Production Accounting

Purchase
Order Copy
1 1 1
2 2 2
3 3
4 4
5
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 1 2 3 4
Inconnector Inconnector
Go to
reference reference
 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.
Decision Table Format
Decision Table Format
Table Title Rules

1 2 3 ...
If: Condition stub Condition Entry
Then: Action stub Action Entry
Decision Table for
Processing Labor Distribution
1 2 3
15 Regular Hours Y – –
15 Overtime Hours Y N Y
15 Shift Bonus Hours Y – N
Regular Dollars x x x
Overtime Dollars x x
Shift Dollars x x
Error No Shift or OT
End of Chapter 2

Systems Techniques and Documentation

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Systems Techniques

 Systems techniques are tools used in the

1 Characterize the use of systems techniques

3 Define common systems techniques, such

Characterize the use of

 Auditors are typically concerned with the

 Auditors undertake compliance testing to

 Auditors must have a basic understanding

 What are working papers?

 What are some of the systems techniques

 Systems analysis involves collecting and

 Systems implementation involves the actual

Describe the use of

Punched Card Punched Tape

Off-page Connector Transmittal

 Symbols are used in a flowchart to

Normal Direction of Flow

Reverse Flow Shown with Arrowheads

Use of Connector Symbol

Bidirectional Flow Shown with Arrowheads

Define common systems

 These charts are used primarily by systems

Payroll job record Accumulate hours Gross pay records

2.0 3.0 4.0

3.11 3.12 3.13

 A systems flowchart identifies the overall or

Process Data Flow

Current Employee Data

Valid Payroll Data

Employee Data Net Pay and

Valid Payroll Data

Controller Vice President Manufacturing

Purchasing Inventory Payables Production Accounting

 Every process symbol should be

 Narrative techniques are useful in the

 Resource utilization analysis must always

 Work measurement involves four basic steps.

1 Identify the tasks.

 Branching and decision tables are used

Branching Table Formats

 A decision table is a tabular representation

Decision Table Format

Table Title Rules

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