Systems Techniques

and Documentation

Chapter 2

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–1
 Learning Objective 1

Characterize the use of systems

techniques by auditors and
systems development personnel.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–2
 Users of Systems Techniques

Systems techniques are tools.

Analysis Design Documentation

They are largely graphical (pictorial) in nature.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–3
 Use of Systems
Techniques in Auditing

What are the two basic components

of an auditing engagement?

2. The financial
1. The interim audit
statement audit

Compliance testing Substantive testing

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–4
 Internal Control Evaluation

Auditors are typically concerned with the

flow of processing and distribution of
documents within an application system.

Auditors use charts to analyze the

distribution of documents in a system.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–5
 Compliance Testing

Compliance testing requires an understanding

of the controls that are to be tested.

Auditors must have a basic understanding

of systems techniques.

– input-process-output (IPO)
– hierarchy plus input-process-output (HIPO)
– logical data flow diagrams (DFD)
 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–6
 Working Papers

These are the records kept by an auditor

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

Required by professional standards

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–7
 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
– system flowcharts
– branching and decision tables

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–8
 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

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–9
 Systems Analysis

Much of a systems analyst’s job involves

collecting and organizing facts.

Systems techniques examples:

Interviewing Observations

Document reviews Matrix

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 10
 Systems Design

A blueprint must be formulated

for the complete system.

Input/output (matrix) analysis

Systems flowcharting

Data flow diagrams

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 11
 Systems Implementation

Systems implementation involves the

actual carrying out of the design plan.

What systems techniques serve

as a documentation tool?

Program flowcharts

Decision tables
 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 12
 Learning Objective 2

Describe the use of flowcharting

techniques in the analysis of
information processing systems.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 13
 Systems Techniques

What is a flowchart?

A flowchart is a symbolic diagram

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

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 14
 Basic Symbols

Input/output

Process

Flowline

Annotation

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 15
 Specialized Input/Output Symbols

Punched
card
Punched
tape
Online
storage
Magnetic
disk
Magnetic
tape
 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 16
 Specialized Input/Output Symbols

Document
Communication
link
Manual
input
Offline
storage
Display

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 17
 Specialized Process Symbols

Auxiliary
Decision operation
Predefined
process Merge

Preparation Extract

Manual
operation Collate Sort

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 18
 Additional Symbols

Connector

Transmittal tape
Off-page
connector

Terminal Parallel mode

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 19
 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.
 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 20
 Symbol Usage Illustration

Normal Direction of Flow

Review
Invoice and
approve

Approved
invoice

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 21
 Symbol Usage Illustration

Reverse Flow Shown with Arrowheads

Approved Review
and Invoice
invoice
approve

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 22
 Symbol Usage Illustration

Use of Connector Symbol

Stores Purchasing
Approved A
invoice

Invoice
A

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 23
 Symbol Usage Illustration

Bidirectional Flow Shown with Arrowheads

Requisition

Prepare
purchase order Vendor
and update files
vendor files

Purchase
order

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 24
 Learning Objective 3

Define common systems techniques,

such as HIPO charts, systems
flowcharts, and logical
data flow diagrams.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 25
 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.
 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 26
 IPO Chart

System: Payroll
Author: Mr. Foxx Description: Calculate
Chart Number: 3.1 Gross Pay Date: 6/9/0X
Input Process Output
Payroll job record Accumulate hours Gross pay records
Payroll master file worked Payroll master file
Find correct pay rate Error messages
Compute gross pay

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 27
 HIPO Illustration

1.0
Payroll
Payroll system
system

2.0 3.0 4.0

Data
Data preparation
preparation Processing
Processing Review
Review

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 28
 HIPO Illustration

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.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 29
 Systems and Program Flowcharts

A systems flowchart identifies the overall

or broad flow of operations in a system.

A program flowchart (block flowchart)

is more detailed concerning
individual processing functions.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 30
 Logical Data Flow
Diagram Symbols
Name Symbol Meaning
Represents sources and
Terminator destinations of data
Task or function
Process being done

Data store A repository of data

Communication
Data flow channel
 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 31
 Data Flow Diagram

Payroll Process
Process
Timekeeping data payroll Paychecks Employees
Timekeeping payroll Employees
data
data

Payroll Payroll
data details
Payroll Data
 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 32
 Data Flow Diagram Expanded
Current
status Employee
data

Payroll Verify
data Verify
Timekeeping
Timekeeping payroll
payroll
data
data
P1

Data
valid Valid
payroll data

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 33
 Data Flow Diagram Expanded

Employee Net pay and

data deductions

Data to Calculate
Calculate Paychecks Employees
process pay
pay Employees

P2

Valid
payroll data

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 34
 Data Flow Diagram
Expanded Further

Update
Update Process
Process
employee
employee
Current payroll
payroll Details Journal
files
files amounts journal
journal data

Net pay and

deductions

Compute
Compute Paychecks Employees
net
net pay
pay Employees

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 35
 Analytic, Document, and Forms
Distribution Flowcharts

An analytic flowchart is similar

to a systems flowchart in level
of detail and technique.

A document flowchart is similar to an

analytic flowchart but contains less
detail about the processing functions
of each entity shown on the chart.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 36
 Analytic, Document, and Forms
Distribution Flowcharts

The forms distribution chart illustrates

the distribution of multiple copy
forms with an organization.

Purchase Receive

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 37
 Analytic Flowchart

Purchasing Suppliers
Approve
Approve Select
vendor Select
vendor vendors
vendors
list
list

Prepare Requests
Requests
Prepare for
quotation
quotation for
requests quotation
quotation
requests

Requests
Requests
for
for Quotations
Quotations
quotation
quotation

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 38
 Analytic Flowchart

Purchasing Suppliers

Quotations
Quotations Quotations
Quotations

Select Prepare
Prepare
Select purchase
purchase
bid
bid order
order

Purchase
Purchase Purchase
Purchase
order
order order
order

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 39
 Document Flowchart
Controller Vice President Manufacturing
Accounts Purchasing Agent Receiving Stores
Payable Purchase Purchase
Purchase Purchase
Purchase
Purchase requisition
requisition requisition
requisition
requisition
requisition 11 11
22 2
Purchase
Purchase Purchase
order Purchase
To Vendor order order
order
11 33 Purchase
Purchase
Purchase 2 order
Purchase 3 order
order
order 44
55 4
5

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 40
 Forms Distribution Chart

Purchasing Inventory Payables Production Accounting

Purchase
order copy
1 1 1
2 2 2
3 3
4 4
5

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 41
 Analytical Flowcharting Illustration

Symbol selection System analysis

Drawing the flowchart Sandwich rule

Use of connector symbol Entity-column relations

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 42
 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

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 43
 Resource Utilization Analysis

Work measurement involves four basic 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.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 44
 Resource Utilization Analysis

(Average time/unit + Idle time/unit)

× Average volume = Total task time

Total time available ÷ Total task time

= Capacity utilization

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 45
 Decision Analysis Techniques

Decision to be made

Conditions that can occur

Path to be followed for each condition

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 46
 Branching Table Format

Code
1 2 3 4
equal to
Inconnector Inconnector
Go to
reference reference

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 47
 Decision Table Format

Table Title Rules

1 2 3 … N
If: Condition stub Condition entry
Then: Action stub Action entry

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 48
 Decision Table for
Processing Labor Distribution

Line Condition action Rule  1 2 3 4 5 6 7 8

1 15 Regular hours Y – – – N
If 2 15 Overtime hours Y – N – Y – N
3 15 Shift bonus hours Y N Y N Y N Y N

10 Regular dollars × × × ×
11 Overtime dollars × ×
Then 12 Shift dollars × ×
13 Error no shift or OT × × ×
14 Nest record × × × × × × ×
Go to – F (Function); R (Rule, same table); T (Table)

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 49
 End of Chapter 2

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 50