Information Technology 1 Accounting Information

Systems (Principles of Systems Analysis and Design)

Overview of the Three Information Technology

Subjects for Accountancy
Structure of the Course
Infotech 1: Accounting Information Systems
Principles of Systems Analysis and Design
Infotech 2: Accounting Information Systems
Application of the Principles of Systems Analysis
and Design
Infotech 3: Accounting Information Systems
Auditing
The Need to Study Information Technology
1. The role of accountants with respect to AIS
a. User
b. Developer
> one of the services that can be rendered by
an accountant is systems development; this
is an excellent career path as a systems
analyst or project manager.
c. Auditor or Evaluator
>to ensure the reliability of the accounting
information generated from the AIS
d. Globalization of organization and services
> dealing with diverse consumer demands,
complex logistical problems, accommodate
local customs and legal obligations
> these create the need for a rapid and
reliable information and communication
network
e. Business process outsourcing (BPO’s)
f. User involvement
> end-users are involved in systems
development in order to ensure that their
requirements are met
> transactions are processed where they
happen and when it happens
4. CPA Licensure Examination Syllabus
Auditing in a Computerized Information Systems
(CIS) Environment - Internal control in a CIS
environment - Basic approach to the audit of CIS

2. The importance of information to modern

organization
a. Valued resource
b. Effective and efficient AIS is a competitive
advantage
3. The trends in Information and IS
a. Focus on strategic information as a strategic
resource
> market share, new products to be
marketed, price changes made by
competitors, expected long term interest
rates
b. Focus on continuous improvement
c. Fusion of information and services
> the use of methods and technologies for
strategic advantage
- total quality management, JIT
inventory management, EDI networks,
electronic mails, on-line/real time
transaction processing particularly for
service oriented industries and
organization
 MODULE 1
INTRODUCTION TO SYSTEMS ANALYSIS

What is a System?
 a regularly interacting or interdependent group
of elements forming a unified whole
 a collection of related parts treated as a unit
where its components interact.

Business Systems
Systems Analysis
 a collection of:
- policies  the detailed investigation of business or
- procedures information systems.
- methods or techniques  it is the scientific study of the systems process,
- People including investigation of inputs and outputs, in
- machines order to find better, economical, and more
- and other elements that interact and efficient means of processing. Systems Analysis
enable the organization to reach its Proud
goals. Advantages of Systems Analysis
Information Systems 1. Greater efficiency
 a business system that process data and make it  Faster turn-around
available to users for decision making.  Consistent operations and procedures
-Reduction of errors
2. Maximizing profits
SYSTEMS FUNDAMENTALS  Optimum use of resources
Systems Environment  Reduction of human effort
 people, facilities, rules, policies and regulations - Uncover duplication or redundancy
that surround a system.
Limitations of Systems Analysis
Systems Boundary  Some business problems are beyond the scope
 the perimeter or line of demarcation between a of systems analysis techniques.
system and the environment.  Systems analysis requires time and money.
 The human element can cause complications.
Subsystem  Effort is required to sell/promote a system
 one of the parts of a system which perform a > people must be encouraged to cooperate
specified task that is consonant with the goals
of a larger system of which it is a part.
 for example, a firm’s IS might be composed of
Manufacturing Systems, Marketing Systems,
AIS, etc.

Data Cycle

Inputs
Processing
Outputs
 MODULE 2 & 3
THE SYSTEMS ANALYST AND THE SDLC The Systems Development Life Cycle
Planning Phase
Duties 0f the Systems Analyst  the analyst recognizes, diagnose and define the
 Project management problem.
 Planning the orderly flow of business information
 Modifying or redesigning existing business systems Analysis Phase
o Database design  the analyst reviews the in-place systems.
o Forms design and management
 Training of personnel Design Phase
 Handling communication  the analyst puts down on paper the elements of
o internal: vertical and horizontal a new or improved system.
o external communication
 Systems implementation Development Phase
 Systems optimization  the new system is actually built.

Implementation Phase
Critical Success Factors of a Systems Analyst  changeover to the new or improved system.

 Creativity: Innovation and renovation

 Persuasive communication skill: verbal / written
 Positive attitude toward others
 Willingness to work with others
 Technical knowledge
 Knowledge of business
 Ability to solve problems
For each phase of the SDLC, there is one or more
deliverable called work product or work output.
 It is a finite, measurable amount of work also
known as milestones that mark the completion
of a phase.

SYSTEMS DEVELOPMENT LIFE CYCLE

Characteristics of the Scientific Method of Problem
Solving

 Reproducibility of results (standard routines)

 Accuracy of results (use of factual knowledge)
 Efficient expenditure of time and effort
 Plan of action
 Transferability of results

Steps of the Scientific Method of Problem Solving

 Recognize the problem and identify the causes
 Express the problem in quantitative terms
 Analyze choices and select an alternative
 Implement the solution
 Evaluate results and optimize
 MODULE 4 Decision Tree
TOOLS OF THE ANALYST  a diagram that illustrates the branches or logic in
a program or solution to a problem.
System model
 a representation of an in-place or proposed
system that describes the data flow throughout
the structure. It is documented through a variety
of design diagrams.
o design diagram is a graphic or a visual
representation of a structure, e.g., data
flow diagrams, decisions trees, etc.

Traditional Design Tools

 Gantt Chart
 Decision tree
 Decision table Decision Table
 Flowcharts  a chart that shows the actions to be taken in light
of various conditions.
Gantt Chart
 a scheduling tool that shows when activities
begin and end.
Flowchart Dataflow Diagram
 a graphic representation of the steps in the solution  a graphic illustration that shows the flow of data and
of a problem, in which symbols are used to show logic within the system.
data flow and the system plan.
o system flowchart
 a diagram that illustrates the
movement of data throughout the
organization.

Context Diagram
 shows the entire system as one general element.
 overall view where all sources and sinks are linked to
one entity using flow lines or pipes.
 limited or no details

o program flowchart
 shows the sequence of steps
performed in a computer program.

Decomposed or exploded context diagram

 drawn to refine or show more details, or expand
individual elements
 the first level of explosion is an entity taken from the
context diagram.
Task List
 a short list of key steps that will be followed in
carrying out a task

example: Project Management Task List

1. define problem and specify goals
2. assign individuals to project
3. establish timetable, schedule work
4. define budget and allocate resources
5. track and monitor project
6. generate reports and documentation

example: Systems Design

1. determine end-user requirements
2. investigate hardware, software and vendor
capabilities
3. write general design specifications
4. establish benchmark test
5. write software design specification
6. write hardware design specification
7. solicit bids and cost estimates
 MODULE 5 & 6 Project Management
PLANNING AND ANALYSIS PHASE  The coordination of all aspects so that it is
completed in accordance with the agreed scope
PRELIMINARY PLANNING AND INVESTIGATION and assessing its overall performance.
o defining the goals
Recognizing the problem: o managing the resources
 user complaints o scheduling the work
 request for services o periodic reporting and evaluation
 management initiative o assessing overall performance
 systems analyst pursuit of continuous improvement
Why Projects Fail
Deliverable:  Lack of commitment on the part of management
 The Project Plan or The Project Charter  Insufficient money or personnel
o problem definition  Unrealistic timetable
 statement of the problem or  Project manager failure
objectives general and specific
 scope
o recommendation:
 proceed, defer, discontinue THE ANALYSIS PHASE
Analysis Phase
Scope  Review and detailed investigation of the system
 Logical scope to understand what is needed and what needs
o defines what is included in the project; to be improved
‘where’ it starts and ‘where’ it ends o assess information and data
 Temporal scope requirements
o time line; ‘when’ it starts and ‘when’ it ends o conducting work samples, time studies,
 Organizational scope and interviews
o the structure of the project team o analyzing documents
o the structure of the end-users
 Financial scope Deliverables
o feasibility study  Systems requirements
 cost-benefit analysis o Hardware / software
o End-user requirements
Final Recommendation
 Temporal scope Fact Finding Techniques
o time is of the essence 1. Interviews
 Financial scope  face to face, teleconference, video conference >
o excessive cost to implement o who, what, why, when, where, how
 Degree of importance o structured: set of prepared questions
o business stopping are asked
o nice-to-have o unstructured: wide ranging questions
 Proceed immediately
 Defer implementation until conditions and other 2. Direct observation
factors change  first hand opportunity to see a system in action
 Elect not to implement (GSTD)
o Hawthorne Effect: a theory of Elton
Mayo that people behave differently
 when they know that they are being
observed.
3. Review of documentation
 methodical study of official documents
o policies, procedures, personnel
guidelines, forms, reports, bulletins.
4. Audit
 used to rate efficiency, study data flow patterns,
weaknesses of the system.
5. Questionnaires
 provided to internal and external parties
 avoid too many open-ended questions
6. Time and motion study
 documents and accurately measures the clock
times and physical motions involved in
performing a given task
7. Cost analysis
 activity based cost management
8. Facilities Inventory
 helps to know the needed additional investment
based on existing availabilities
9. Communication traffic survey
 to analyze the communication link that ties
together the parts of the system
 the measure of the volume of traffic handled by
communications circuit is called throughput
measured in transmission rate of information
bits
 includes the study and documentation of
message response time
o response time is the amount of lapsed
time between the completion of
entering a request and the start of
receiving an answer
10. Statistical analysis
 how frequent, how long, waiting time,
delays, backorders, out-of-stock, overdue
accounts, stock covers, etc.
 comparisons and relationships
Sampling Methods
 to learn the characteristics of a population
without examining each individual case
o population refers to all the cases under
study
o sample refers to a selected number that
is representative of the study group
1. Random sampling
 all the elements of the group are available for
selection at the same time.
2. Systematic sampling
 according to an organized pattern,
e.g., every 10th customer.
3. Stratified sampling
 population is first divided into levels, class or
divisions then select a few at random from each
stratum to ensure that each group is
represented.
4. Cluster sampling
 geographical divisions
5. Quota sampling
 set the specified number from each group
Assessments
Quantitative assessment
 translates variables to numbers
Qualitative assessment
 describes condition in general and subjective
terms
Software Options
1. In-house or User-developed
 written by the firm’s own systems programmers
 follows in detail the specifications derived by the
systems analyst
 tailor fitted for the end users’ requirements
2. Application package
 off- the-shelf applications that covers in general
the needs of most companies engaged in the
same kind of trade
 some specific requirements may not be met
Gap Analysis MODULE ?
 comparison of what the application package THE DESIGN PHASE
offers versus the business requirements
 done in a Conference Room Pilot where end- System design
users participate  the reduction of a plan or concept to a set of
specifications that describes a new or modified
Gap Resolutions system
 Program revisions, done either by the in-house
programmers or the software provider
 Bolt-on or program interface if possible
Deliverables
 Work-around (manual procedures)
 Final Design
o in conformity with the output of the
analysis phase and the applicable
policies
 procedures, methods,
input/output forms, hardware
and software evaluation

Structured Systems Design

Logical Design

 the conceptual plan or structure of a system

before it is physically implemented.

Design Phase
Prototype
 a mock-up or developmental model for test
purposes.

Physical Design
 the tangible structure after the logical design has
been converted to functional elements.

BetaTest
 end-user testing before acceptance

Design Guidelines
1. Simplicity
 select the most precise and direct method of
achieving an end result.
 the simplest system is usually the best.
2. Modular structure following the top-down approach
 develop systems in segments, dividing the task
into smaller more manageable parts.
 for example, the AIS can be developed in
modules based on the transaction processing
cycles.
3. Expandability
 it is easier to add on to a system that has been
designed for expansion than to redevelop one
that has not.
4. Audit Trails
 enable the analyst to track the information and
data flow throughout the system facilitating
problem diagnosis.
5. End-User Orientation
 a system should be designed to meet users’
needs.
 a critical job in the analysis phase is to determine
the requirements of the end-users that will serve
the needs of the business.
6. User friendly
 the system should be comfortable and not
intimidating to the users.
 it should adapt to the users’ and not the other
way around.
 efficient use of drop-down menus and pop ups.
“technology is a useful servant but a dangerous
master.”
7. Consistency
 all elements of a system should be consistent in
their structure and logic.
 examples: valuations, coding conventions
12/01/21
01/12/21
8. Efficiency
 elimination of redundancies. e.g. a data should
be entered only once.
 systems generated financial entries
 automatic closing entries and reversals of
adjusting entries
9. Security and control 4. establish benchmark test
 protection against loss of data, fraud and  set up the procedures to evaluate software and
unauthorized access. hardware performance
o terminal access  examples:
o account number/name o compare processing speed
o passwords o software capability
o file access o data communications
o processing access  accomplished by working with vendors and
programmers
Design Guidelines
Simplicity 5. write software design specification
Modular structure  final design of the chosen software
Expandability o user-written, or
Audit trail o application package
End-user orientation
User-friendly 6. write hardware design specification
Consistency  work with systems engineers to finalize the
Efficiency hardware requirements
Security and control  some considerations:
o deployment of work terminals: type,
Systems Design Task List location, accessibility, security
1. determine end-user requirements o data storage demand and back-up
Data Cycle
7. solicit bids and cost estimates
 the system under design must meet the
economic constraints placed on it.
 if final bid prices are too high, or if bids fail to
address design requirements, some redesign
may be in order.

2. investigate hardware, software and vendor The Design Phase

capabilities
 check out available resources to meet the users’
Input Design and Control
needs.
1. Input modes
3. write general design specifications Transaction Oriented Processing
 Assist in developing more detailed design  source data is entered directly into the
specifications processing system at the time the transaction
o Centralized system occurs.
o Decentralized system  real-time or on-line data entry and processing
o Distributed data processing
 Describe the test and evaluation procedures to Batch Processing
be written (test scripts)  stores data until needed for processing
o batch data entry / batch processing
o online data entry / batch processing
2. Input media
 Keyboard Terminals
 Magnetic ink character readers

o laser beam scanner

 Voice recognition devices reads the Universal Product Code /
Quick Response Code

 Optical Scanning Devices

o mark sense reader
an input device that reads special forms
(or cards) usually by electrically sensing
the marks made in predetermined
positions. Also called a mark sense
device.
 o optical character reader 5. Data type check
scans handwritten or printed text and  is the correct type of data entered in the
converts them into electrical pulses field?
suitable for computer processing o numeric, alphanumeric,
alphabetic

6. Combination test
 are the data entered into two fields
properly related?
o for example: account number
and cost center number
combinations.
o raw materials and finished
product combinations.
3. Input verification and control
 Helps ensure that only correct data are 7. Verification
processed.
 one method is to enter the data twice. –
 These application controls must be built into the
 a common example is; the system asks
system.
the user to re-enter the new password
 Combining these controls increases the
 use of captcha
assurance that they provide.
o a program or system intended to
distinguish human from
1. Range test or limit test machine input, typically as a way
 to check if the data entered is within the of thwarting spam and
range, for example, to check price automated extraction of data
ranges, and minimum/maximum order from websites.
per customer.

2. Test for completeness

 required fields or mandatory fields
 consecutively numbered source
documents
 item count

3. Accuracy test
 use of check digits
o generally, a number placed at
the end of a string of numbers to
ensure that no digits had been
transposed or omitted.
o generated by mathematical
algorithm.
4. Sequence test
 ensures that data is entered in the
correct sequence
4. Input Design Guidelines
1. Use a consistent style
 dd/mm/yy or mm/dd/yy
 supplier or vendor
2. Only variable data should be entered 3
3. Use common expressions to identify fields
 consider culture / language
o address versus domicile
o gender vs sex
4. Design forms with the end-user in mind
- e.g., leave adequate space for names
 5. Use codes or abbreviations to simplify data entry The Design Phase
- e.g., M, F
Output System Design
5. Data entry modes
Output Considerations
Formatted Input
Hard copy vs soft copy
 screen includes blank spaces; data is entered
- this considers permanency and speed
where the cursor is.

Would users need to print or reproduce?

Will it be stored or, electronically transmitted or,

mailed?

Output and Forms Control

Assignment of Numbers: makes referencing easier
Revision Number: to keep track of changes in content
Consecutively numbered forms: help maintain accuracy
Pre-printed vs system generated number
Routing: ensures that only authorized users receive a
copy
Prompt Instruction for use
 queries are displayed one line at a time Inventory level for pre-printed forms
Deletion
Menu
 with a group of options to choose from; may use Readability
drop down menus  Spacing, arrangements of headings, size of font,
and margins.
 Identification: reports should be titled to
identify their purpose.
Columns and rows should be clearly labeled
whenever necessary.

Formatted Input
-screen includes blank spaces; data is entered
where the cursor is
Prompt
-queries are displayed one line at a time
Menu
-with a group of options to choose from; may use
drop down menus
 The Design Phase  If you were relying on cloud-stored data for a
vital coursework presentation, or retrieving a
Record, File and Storage Design
hotel booking, or a flight confirmation, that
would’ve been an unmitigated disaster.
Storage Media  plus, there’s always the risk of a cloud storage
host shutting its doors.
File server
 a computer and storage device dedicated to Selection Criteria of Data Storage Media
storing files; any user on the network can store 1. Cost
files on the server. 2. Permanence
Hard disk 3. Activity
External drives 4. Legal consideration
Cloud-based storage solutions 5. Accessibility Access time
The last three are normally used as backups with a file 6. Security
server as the main storage.
Information hierarchy
Some Drawbacks 0f Cloud-based Storage Solutions - Bit
1. Data Backups - Bytes (character)
 the most significant concern is time which will - Fields
eat up precious bandwidth, limiting what you - Record
can do while the process is running. - File
 there are also data caps and costs to consider. - Library
- Database
2. Data Rights
“When you upload, submit, store, send or receive Record Design and Layout
content to or through our Services, you give Google Selection and arrangement of the contents of a record:
a worldwide license to use, host, store, reproduce, - available space on each record
modify, create derivative works, communicate, - data to be included
publish, publicly perform, publicly display and - bytes to be allotted to each field - order of the
distribute such content.” items
“This license continues even if you stop using our Design of data fields
Services.” - fixed length versus variable length records
Ownership versus Usage - - numeric, alphabetic, alphanumeric

3. Hacking Types of records

 you could be the victim of a phishing attack, master records
someone could crack your password, or the - with data of more or less permanent nature,
company’s servers could be hacked. including the current balances
 can lead to a situation where sensitive data are transaction or detail record
stolen and fall into the hands of cyber criminals. - with data relating to a specific transaction or
activity.
4. Lifetime Cost
5. Reliability Types of files
 what happens when your cloud provider’s - master file
services have problems? - transaction or detail file
 even the great Google is not immune. - scratch file
Arrangement of records in a file - can detect transposition or other errors
- Sequential 13246
- Random 12346
- Indexed
 records are stored in a sequential block
and within each block in random order. The Design Phase
 records bear a reference to a location
Database Design
where data is stored (address)

Coding System Database Design

1. Significant digit code
- each element in the code represents a Database Administrator
different characteristics of the data item. - has the responsibility of performing the specialized
example: first digit = type of account task of coordinating software, records, file design,
1 Asset and data management activities
2 Liabilities
3 Equity Schema
4 Income
- the model or plan around which fields, records and
5 Expenses
files are organized.
2. Sequence code
 Linked-list schema: uses pointers to direct
- a group of items is assigned numbers in
the computer to the next record.
sequence which is used instead of the long
piece of data.
3. Mnemonic code
- shortened or contracted symbols which bear
a close relationship to the item it represents.
PAYPRO = payroll procedures
INVBAL = inventory balance

4. Last digit code

- a trailing character to indicate the class to
which the item belongs  Tree schema: resembles an inverted tree
12345 R Retail with a trunk and branches.
12345 W Whole sale - parent and child records
12345 E Export

5. Identifiers
- a character at the beginning to indicate
group or class
S2406 Raw Sugar
S2407 Fructose

6. Check digit codes

- used to detect clerical errors
- the code/number which is a result of a Parent record possesses children or
mathematical formula is added at the subordinate record.
end Each subordinate record has its own
subordinate record.
  Relational database: predicated upon
relationships which are defined by means of
values in named columns in tables.

Database Hardware Configuration

Single-User Database
- only one user can access at a time.

Multi-User Database
- two or more users can access a database
simultaneously.
- the users can be located in the same building or
anywhere in the world.
- to prevent several users from simultaneously
accessing the same data, a record lock is provided.

Distributed Database
- contents of the database are physically stored in
several geographical locations.
- it requires update of all the databases as contrasted
to a multiuser system.