Accounting Information Systems:

Essential Concepts and Applications

Fourth Edition by Wilkinson, Cerullo, Raval,

and Wong-On-Wing

Chapter 14: Systems

Development

The University of Trisakti

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-up

In-House versus Outsourcing
Re-engineering
Prototyping

Objectives of Strategic
Systems Planning
Integrate the information system development
with the firms 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
firms needs and promise greater benefits than
the cost outlays

Survey of the Present

System
Scope
Data Types and Sources
Behavioral 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

A Checklist for Analyzing

Information Systems - II
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 - 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 operations
Adequate capacity for expected growth
Timeliness in responding to inquiries and
providing reports
Reliability of system hardware and software
Accurate, up-to-date, and relevant information
Security of the data and system facilities
Flexibility and adaptability to changes and
new demands
Simplicity, 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 ComputerBased 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 ComputerBased 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

Figure 14-17

Features

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

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
Options
Purchasing versus leasing
Single vendors versus multiple vendors
In-house system versus outsourcing
computing services
In-house software development versus
commercial software packages
Types 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 nature
Acquiring firm is dependent on the
software vendor for support
and maintenance and
upgrades

The Sequence in Designing

System Components
Design Controls
& Security Measures

Design
Information
Outputs

Figure 14-19

Design
data base

Design Data
Processing
Operations

Design
Data Inputs

A List of Design Principles

Foster system objectives

Incorporate reasonable tradeoffs
Focus on functional requirements
Serve multiple purposes
Relate to users concerns
Provide a tailored product
Integrate system modules and components
Avoid design excesses
Apply sound methodology

Figure 14-20

System Justification & Selection in the

Systems Development Life Cycle
Determination
of Design
Feasibility
Systems
Planning
Solicitation of
Hardware and
Software Proposals

Systems
Analysis

Systems
Design

Evaluation of
System
Proposals

Selection of
System Hardware
and Software

Systems Justification & Selection

Systems
Operations
Figure 14-21

A List of Resource
Specifications - I
Systems Design Specifications

Figure 14-22

Output
Data-base
Processing
Input
Control & security

A List of Resource
Specifications - II
Hardware Specifications
Processor speeds and capabilities
Secondary storage capacities and access
capabilities
Input-output speeds and capabilities
Compatibility features
Modularity features
Error detection and correction techniques
Data communication capabilities
Special features, such as multiprogramming and
virtual storage
maximum allowable downtime as a percentage of
total time

Figure 14-22 Continued

A List of Resource
Specifications - III
Software Specifications

Programming languages and compilers

Utility packages
Application packages
Operating system capabilities
Data management packages

System Support Specifications

Programming assistance
Training programs
Test facilities and time available
Backup facilities
Maintenance assistance

Figure 14-22 Continued

Techniques for Proposal

Evaluation
The benchmark problem technique
Simulation model technique
Weighted-Rating analysis
technique

Systems Implementation:
Preliminary Actions
Establish implementation
plans and controls
Gantt chart
Network diagrams

Recognize behavioral concerns

Review the organization of
the project team
Complete arrangement for selected system
resources

Implementation Activities - I
Personnel selection and training
Physical site preparation
Detailed system design

Output design
Database design
Input design
Processing design
Controls design

Implementation Activities - II
Application software development
Coding
Structured programming

Software testing
Desk checking
String testing

System testing
Acceptance testing

Implementation Activities - III

Standards development
System components
Performance
Documentation

Documentation
File conversion

Implementation Activities - IV
System conversion: cutover

Direct conversion approach

Parallel operation approach
Modular conversion approach
Phased conversion approach

User signoff

Systems Operations
Fine tuning
Post-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 teams 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
Department
Task
Project
Computer System
Cost accounting
& control reports

Performance Evaluation Systems

* Personnel performance by
Clerks & Operators
Systems professionals
Systems managers
* Equipment performance
* Information system performance
Efficiency
Effectiveness
Performance
reports
Figure 14-27

Accounting Information Systems:

Essential Concepts and Applications
Fourth Edition by Wilkinson, Cerullo,
Raval, and Wong-On-Wing

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