Systems Documentation

Techniques
Chapter 3

Copyright © 2015 Pearson Education, Inc.

3-1
 INTRODUCTION
• Questions to be addressed in this chapter
include:
▫ What is the purpose of documentation?
▫ Why do accountants need to understand
documentation?
▫ What documentation techniques are used in
accounting systems?
▫ What are data flow diagrams and flowcharts?
 How are they alike and different?
 How are they prepared?
Copyright © 2015 Pearson Education, Inc.
 INTRODUCTION
• How do accountants use documentation?
▫ At a minimum, they have to read documentation to
understand how a system works (e.g., auditors need to
assess risk).
▫ They may need to evaluate the strengths and
weaknesses of an entity’s internal controls.
 Requires heavy reliance on documentation.
▫ They may peruse documentation to determine if a
proposed system meets the needs of its users.
▫ They may prepare documentation to:
 Demonstrate how a proposed system would work
 Demonstrate their understanding of a system of internal
Copyright © 2015 controls
Pearson Education, Inc.
 Why Document Systems?
• Sarbanes-Oxley Act (SOX) requires management
to assess internal controls and auditors to
evaluate the assessment
• SAS-94 requires that auditors understand the
automated and manual procedures an entity uses.
▫ This understanding can be gleaned through
documenting the internal control system—a
process that effectively exposes strengths and
weaknesses of the system.
• Used for systems development and changes
Copyright © 2015 Pearson Education, Inc.
3-4
 INTRODUCTION
• In this chapter, we discuss two of the most
common documentation tools:
▫ Data flow diagrams
• Graphical descriptions of the sources
and destinations of data. They show:
– Where data comes from
– How it flows
– The processes performed on it
– Where it goes

Copyright © 2015 Pearson Education, Inc.

 INTRODUCTION
• In this chapter, we discuss two of the most
common documentation tools:
▫ Data flow diagrams
▫ Flowcharts
• Include three types:
– Document flowcharts describe the flow of documents and
information between departments or units.
– System flowcharts describe the relationship between inputs,
processing, and outputs for a system.
– Program flowcharts describe the sequence of logical
operations performed in a computer program.

Copyright © 2015 Pearson Education, Inc.

 DATA FLOW DIAGRAMS
• A data flow diagram (DFD) graphically describes
the flow of data within an organization. It is
used to:
▫ Document existing systems
▫ Plan and design new systems
• An ERD is a data model, and a DFD is a process
model

Copyright © 2015 Pearson Education, Inc.

 Data Flow Diagrams (DFD)

Focuses on the data flows for:

• Processes
• Sources and destinations of the data (also called
external entities)
• Data stores

DFD are visually simple, can be used to represent

the same process at a high abstract or detailed
level.
Copyright © 2015 Pearson Education, Inc.
3-8
 DATA FLOW DIAGRAMS
• Data sources and destinations (External entities)
▫ Appear as squares
▫ Represent organizations, individuals, or organizational units that
send or receive data used or produced by the system
• An item can be both a source and a destination
• Used to define system boundaries
• Named with a noun

Copyright © 2015 Pearson Education, Inc.

 DATA FLOW DIAGRAMS
• Data sources and
destinations are marked
in red. Accounts
• Can you tell which are Receivable
sources and which are
destinations?

Customer Remittance Receivables

payment 1.0 2.0
data Information Credit
Customer Process Update
Payment A/R Manager

Deposit

Bank
Copyright © 2015 Pearson Education, Inc.
 DATA FLOW DIAGRAMS
• Data flows
▫ Appear as arrows, named with nouns
▫ Represent the flow of data between sources and
destinations, processes, and data stores
▫ A data flow can be used to represent the creation,
reading, deletion, or updating of data in a file or
database (data store).
▫ At least one end of every data flow should either come
from or go to a process.

Copyright © 2015 Pearson Education, Inc.

 DATA FLOW DIAGRAMS
• Processes
▫ Appear as circles
▫ Represent the transformation of data
▫ Must be numbered and labeled with a single action
verb and an object
▫ Avoid the use of two verbs in the process name

Copyright © 2015 Pearson Education, Inc.

 DATA FLOW DIAGRAMS
• The processes are shown in red.
• Every process must have at least
one data inflow and at least one
Accounts
data outflow.
Receivable

Customer Remittance Receivables

payment 1.0 2.0
data Information Credit
Customer Process Update
Payment A/R Manager

Deposit

Bank
Copyright © 2015 Pearson Education, Inc.
 DATA FLOW DIAGRAMS
• Data stores
▫ Appear as two horizontal lines, named with a noun
▫ Represent a temporary or permanent data repository
▫ Flow out of a data store = retrieval
▫ Flow into a data store = inserting or updating
▫ Data stores on a DFD are related to entities on an ERD

Copyright © 2015 Pearson Education, Inc.

 DATA FLOW DIAGRAMS
• Subdividing the DFD:
▫ Few systems can be fully diagrammed on one
sheet of paper, and users have needs for differing
levels of detail.
▫ Consequently, DFDs are subdivided into
successively lower levels to provide increasing
amounts of detail.
▫ Some data inputs and outputs will not appear on
the higher levels of the DFD but appear as the
processes are exploded into greater levels of
detail.

Copyright © 2015 Pearson Education, Inc.

 DATA FLOW DIAGRAMS
• The highest level of DFD is called a context
diagram.
▫ It provides a summary-level view of the system.
▫ It depicts a data processing system and the
external entities that are:
 Sources of its input
 Destinations of its output
▫ The process symbol is numbered with a “0”

Copyright © 2015 Pearson Education, Inc.

 DATA FLOW DIAGRAMS
Govt.
Depart- e nt Agencies
ym
ments Tim pa
ec t&
ard or
s x rep
Ta
0
Employee checks
Payroll Employees
Processing
orm
System Pay
e f r oll c
e
p loy f orm
hec
k
em e
ew a ng Pa
N ch
yee
y ro Bank
Human plo ll
re
Em po
Resources rt

• This is the context diagram for the

Manage-
S&S payroll processing system
ment
(Figure
Copyright © 2015 Pearson Education, Inc. 3-5 in your textbook).
 DATA FLOW DIAGRAMS
• A Level 0 diagram is a projection of the process on the
Context diagram. It is like opening up that process and
looking inside to see how it works – to show the internal
sub-processes
• On a Level 0 diagram, you repeat the external entities
but you also expand the main process into its
subprocesses. Also data stores will appear at this level.
• The Level 0 diagram must “balance” with the Context
diagram. This means they should both have the same
external entities with the same flows to and from those
entities.
Copyright © 2015 Pearson Education, Inc.
 DATA FLOW DIAGRAMS
Depart-
ments Employees
Employee
New employee Time checks
Human form cards
Resources
1.0
Update 2.0
Employee Payroll
empl. Pay
Change check
Payroll Employ- Bank
form
file ees

Payroll
Disburse-
3.0 ment data 5.0
This diagram Prepare Employee/
Update
reports Payroll file
Gen.
shows the Ledger
next level of Payroll tax
disb. voucher
detail for the Payroll
report
context 4.0 General
Ledger
diagram in Pay
Tax report
Manage- taxes
Figure 3-5. ment
& payment
Govt.
Agencies
Copyright © 2015 Pearson Education, Inc.
 DATA FLOW DIAGRAMS
Depart-
ments Employees
Employee
New employee Time paychecks
Human form cards
Resources
1.0
Update 2.0
Employee Pay Payroll
empl.
Change check
form
Payroll Employ- Bank
file ees
Suppose we Payroll
exploded Process 3.0
Disburse-
ment data 5.0
2.0 (pay Prepare Employee/
Update
employees) in the reports Payroll file
Gen.
next level. The Ledger
Payroll tax
sub-processes disb. voucher
Payroll
would be report
General
numbered 2.1, 2.2, 4.0
Pay Ledger
2.3, etc. Tax report
Manage- taxes
& payment
ment Govt.
Agencies
Copyright © 2015 Pearson Education, Inc.
 DATA FLOW DIAGRAMS
• A Level 1 diagram is a projection of a Level 0
process.
• A Level 1 diagram shows all the processes that
comprise a single process on the level 0 diagram.
• It shows how information moves from and to
each of these processes.
• Level 1 diagrams may not be needed for all Level
0 processes.
• On Level 1 diagrams we do not repeat external
entities. Data stores may not be repeated either.
Copyright © 2015 Pearson Education, Inc.
 CONTEXT
DIAGRAM
KITCHEN
CUSTOMER

0
Customer Order
Food Food Order
Receipt Ordering
System

Management
Report

RESTAURANT
MANAGER

Copyright © 2015 Pearson Education, Inc.

 LEVEL 0 DIAGRAM

KITCHEN
CUSTOMER

1.0
Customer Order
Transform Food Order
Receipt Customer
Food Order

3.0
2.0
Update
Update
Goods Inventory Inventory
Goods Sold
Sold Data Data

Formatted
Formatted Goods Inventory Data
Sold Data
INVENTORY
GOODS SOLD D2
D1
Daily Inventory
Daily Goods 4.0 Depletion Amounts
Sold Amounts
Produce
Management RESTAURANT
Report Management MANAGER
Copyright © 2015 Pearson Education, Inc. Report
 DFD Balance
KITCHEN
CUSTOMER

Customer Order 1.0 Food Order

Receipt Transform
Customer
Food Order 3.0
2.0
Update
Update
Inventory
Goods Sold
Goods Inventory
Sold Data Data
Formatted
Formatted Goods Inventory Data
Sold Data
INVENTORY
GOODS SOLD D2
D1
Daily Inventory
Daily Goods 4.0 Depletion Amounts
Sold Amounts
Produce
Management
Report
Management
Report

Copyright © 2015 Pearson Education, Inc.

RESTAURANT
MANAGER
 PROCESS 1 ON SUB PROCESS 1
THE LEVEL 0 THIS LEVEL 1 Level 1 Diagram
DIAGRAM DIAGRAM

1.1 1.3
Process Transform
Customer Order Customer Customer Order Order to Food Order
Order Kitchen
Format
Inventory
Customer Order 1.5 Data
Customer Generate
Order Customer Order Inventory
Decrements

1.4
1.2 Generate
Generate Good Sold
Increments Goods Sold Data
Customer
Receipt

Receipt
NOTE HOW WE HAVE THE SAME INPUTS
AND OUTPUTS AS THE ORIGINAL PROCESS
SHOWN IN THE LEVEL 0 DIAGRAM
Copyright © 2015 Pearson Education, Inc.
 Another Level 1 Diagram

Daily Goods 4.0 Daily Inventory

ORGINAL Sold Amounts Depletion Amounts
LEVEL 0 Produce
PROCESS Management
Report Management
Report

Daily Inventory
LEVEL 1 PROCESSES
Depletion Amounts

4.1 Inventory Data 4.2

Daily Goods Access Aggregate
Sold Amounts Goods Sold Goods Sold
and Inventory and Inventory
Goods Sold Data
Data Data
4.3 Management
Report
Prepare
PROCESSES 2.0 AND 3.0 ON THE LEVEL 0 DIAGRAM Management
DO NOT NEED FURTHER DECOMPOSTION Report
Copyright © 2015 Pearson Education, Inc.
 DATA FLOW DIAGRAMS
• The first paragraph of the narrative for the payroll
process reads as follows:
▫ When employees are hired, they complete a new employee form.
When a change to an employee’s payroll status occurs, such as a
raise or a change in the number of exemptions, human resources
completes an employee change form. A copy of these forms is
sent to payroll. These forms are used to create or update the
records in the employee/payroll file and are then stored in the
file.

Copyright © 2015 Pearson Education, Inc.

 DATA FLOW DIAGRAMS
Depart-
ments Employees
Employee
New employee Time paychecks
Human form cards
Resources
1.0
Update 2.0
Employee Payroll
empl. Pay
Change check
Payroll Employ- Bank
form
file ees

Payroll
Disburse-
3.0 ment data 5.0
Prepare Employee/
Update
reports Payroll file
Gen.
Ledger
Payroll tax
Payroll disb. voucher
report
4.0 General
Pay Ledger
taxes Tax report
Manage- & payment
ment Govt.
Agencies
Copyright © 2015 Pearson Education, Inc.
 DATA FLOW DIAGRAMS
• The data flow diagram focuses on the logical
flow of data.
• Next, we will discuss flowcharts, which place
greater emphasis on physical details.

Copyright © 2015 Pearson Education, Inc.