Chapter 6

6.1 Flowcharting & Data Flow

Diagramming

1
 INTRODUCTION
 Documentation includes the following types of
tools:
 Narratives (written descriptions)
 Flowcharts
 Diagrams
 Other written material
 Documentation covers the who, what, when, where,
why, and how of:
 Data entry
 Processing
 Storage
 Information output
 System controls
2
 How do accountants use documentation?
At a minimum, they have to read documentation
to understand how a system works.
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 controls 3
 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
- Flowcharts
• Include three types:
– Document flowcharts describe the flow of documents
and information between departments or units.
4
 – 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.
 Documentation tools help accountants
by:
Organizing very complicated systems into a
form that can be more readily understood.
Helping new team members understand a pre-
existing system.
5
Data Flow Diagrams

 A data flow diagram (DFD) graphically

describes the flow of data within an
organization.
 It is used to document existing systems
and to plan and design new ones.
 There is no ideal way to develop a DFD.

6
Data Flow Diagrams

 A data flow diagram (DFD) is composed of

the following four basic elements:
1 Data sources and destinations
2 Data flows
3 Transformation processes
4 Data stores

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Data Flow Diagram Symbols

Data Source and destinations

Data Flows

Transformation Processes

Data Stores

8
Data Flow Diagram Symbols
 A data source or data destination symbol on the
DFD represents an organization or individual that
sends or receives data that they system uses or
produces.
 A data flow represents the flow of data between
processes, data stores and data sources and
destinations.
 A transformation process represents the
transformations of data.
 A data store is a temporary or permanent repository
of data.
 A data dictionary contains description of all the
elements, stores, and flows in a system.
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Data Flow Diagrams

Data Data flow (B) Process Data flow (D)

source (C)
(A)
Data flow (E)
Data
destination
(J)

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 Data Flow Diagrams

Data store (H)

Data flow (G)

Data flow (D) Process Data

Data flow (I) destination
(F) (K)

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Data Flow Diagrams

Customer Remittance data

payment (B) (D)
Customer Process
(A) payment
(C)
Deposit (E)

Bank
(J)

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Data Flow Diagrams
Accounts
receivable
(H)
(G)
Remittance Receivables
data information
(D) Update (I) Credit
receivables manager
(F) (K)

13
 Data Flow Diagrams

 Data flow diagrams are subdivided into

successively lower levels in order to provide
increasing amounts of detail.
 The highest-level DFD is referred to as a
context diagram.
 What is the context diagram for S&S payroll
processing?

14
Data Flow Diagrams

Time
cards
Departments
Payroll
processing
system
Human
resources Employee
data
15
Data Flow Diagrams

Tax reports and payments Government

agencies

Payroll Employee Employees

paychecks
processing
system Payroll
check Bank

Payroll report Management

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Data Flow Diagrams

 The context diagram for payroll processing

shows that the payroll processing
system...
– receives time cards from different departments.
– receives employee data from the human
resources department.

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Data Flow Diagrams

 When these data are processed, the

system produces...
– tax reports and payments for governmental
agencies.
– employee paychecks.
– a check to deposit in the payroll account at the
bank.
– management payroll reports.

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Flowcharts

 A flowchart is an analytical technique used

to describe some aspect of an information
system in a clear, concise, and logical
manner.
 Flowcharts use a standard set of symbols
to pictorially describe transaction
processing procedures.

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Flowchart Symbols

 Flowcharting symbols can be divided into

the following four categories:
1 Input/output symbols
2 Processing symbols
3 Storage symbols
4 Flow and miscellaneous symbols

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Flowcharting Symbols:
Some Input Output Symbols
Symbol Name

Document
Online keying

Display
Input/output;
Journal/ledger
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Flowchart Symbols:
Some Processing Symbols

Symbol Name

Manual operations

Computer processing

Auxiliary operation

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 Flowchart Symbols:
Some Storage Symbols
Symbol Name

Magnetic disk

Magnetic tape

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Flowchart Symbols: Some Flow and
Miscellaneous Symbols
Symbol Name
Document or processing flow
On-page connector

Off-page connector

Terminal

Decision
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What are Document Flowcharts?
 A document flowchart illustrates the flow of
documents and information between areas of
responsibility within an organization.
 A document flowchart is particularly useful in
analyzing the adequacy of control procedures.
 Flowcharts that describe and evaluate internal
controls are often referred to as internal control
flowcharts.

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What are System Flowcharts?

 System flowcharts depict the relationship

among the input, processing, and output of
an AIS.
 A system flowchart begins by identifying
both the inputs that enter the system and
their origins.
 The input is followed by the processing
portion of the flowchart.
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What are Computer System Flowcharts?
 The resulting new information is the output
component.
 System flowcharts are an important tool of
system analysis, design, and evaluation.

Input

Storage Process

Output 27
What are Program Flowcharts?

 A program flowchart describes the specific

logic to perform a process shown on a
systems flowchart.
 A flow line connects the symbols and
indicates the sequence of operations.
 The processing symbol represents a data
movement or arithmetic calculation.

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What are Program Flowcharts?

Input data

No
If a condition is met

Yes
Perform calculation

Update record
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What are Program Flowcharts?
 The input/output symbol represents either
reading of input or writing of output.
 The decision symbol represents a comparison of
one or more variables and the transfer of flow to
alternative logic paths.
 All points where the flow begins or ends are
represented by the terminal symbol.

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Flowchart for Processing
Credit Orders
Enter
Start sales
order

Approved No Reject
for credit? order

Yes

Inventory No Back-
available? order

Yes

Fill order Stop

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Differences Between
DFDs and Flowcharts
 DFDs emphasize the flow of data and
what is happening in a system, whereas a
flowchart emphasizes the flow of
documents or records containing data.
 A DFD represents the logical flow of data,
whereas a flowchart represents the
physical flow of data.

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 Differences Between DFDs and Flowcharts
 Flowcharts are used primarily to document
existing systems.
 DFDs, in contrast, are primarily used in the
design of new systems and do not concern
themselves with the physical devices used to
process, store, and transform data.
 DFDs make use of only four symbols.
 Flowcharts use many symbols and thus can
show more detail.
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FLOWCHARTS VS. DFDs

 DFDs place a heavy emphasis on the

logical aspects of a system.
 Flowcharts place more emphasis on
the physical characteristics of the
system.
 An example may be useful.

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FLOWCHARTS VS. DFDs

 EXAMPLE: The registrar’s office of a

small college receives paper enrollment
forms from students. They sort these
records alphabetically and then update
the student record file to show the new
classes. They also prepare class lists
from the same data. The sorted
enrollment forms are forwarded to the
bursar’s office for billing purposes.
Class lists are mailed to faculty
members. 35
 Registrar’s Office

Students Enrollment Sort

Student
Forms Forms
s
Enrollment
Forms

Update Sorted
1.0 A Enrollment
Update Student Student
Records Forms
Student Records
Records
Enrollment Sorted Prepare
Forms
Enrollment Class
Forms Lists
2.0
Prepare Enrollment
Bursar Here’s a
Class Lists Forms flowchart Sorted
Class
that goes Enrollment
Class Lists
Lists with the Forms
story
Faculty
Faculty Bursar
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FLOWCHARTS VS. DFDs

 Now let’s change the story so that

students enter enrollment data online.
The registrar’s office sends a tape file
of the enrollment data to the bursar’s
office and continues to send paper
class lists to faculty.

37
 Here’s the
Original
revised DFD.
DFD
Students Students How has it
changed?
Enrollment Enrollment
Forms Data

1.0 1.0
Update Student Update Student
Student Records Student Records
Records Records
Enrollment Enrollment
Forms Data

2.0 2.0
Prepare Bursar Prepare Bursar
Enrollment Enrollment
Class Lists Forms Class Lists Data

Class Class
Lists Lists

Faculty Faculty
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 Registrar’s Office Registrar’s Office

Enrollment Sort Enrollment

Stude Forms Studen
nts Forms Data
ts

Update Sorted Update

A Enrollment Enrollment
Student Student
Forms Data
Records Records

Sorted Prepare
Enrollment Class Bursar Prepare
Forms Lists Student Class
Records Lists
Sorted
Class
Enrollment Here’s the revised Class
Lists
Forms flowchart. How has it Lists
changed?
Facult Bursar
y Faculty
Original
Flowchart 39
FLOWCHARTS VS. DFDs

 Moral of the story: Changes in the

physical characteristics of the process
do affect the flowchart but have little or
no impact on the DFD.
 The DFD focuses more on the logic.
 When deciding which tool to employ,
consider the information needs of
those who will view it.
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6.2. Phases of System Development

41
The Systems Development Life
Cycle
 What are the five steps in the systems
development life cycle (SDLC)?
1. Systems analysis
2. Conceptual design
3. Physical design
4. Implementation and conversion
5. Operations and maintenance

42
43
The Players
 Who are the people involved in developing
and implementing AIS?
 Management
 Accountants
 Information systems steering committee
 Project development team
 Systems analysts and programmers
 External players

44
The Players

 What are top management’s roles?

– providing support and encouragement
– establishing system goals and objectives
– determine information requirements

45
The Players

 What are accountants’ roles?

– determine their information needs
– may be members of the project development
team
– play an active role in designing system controls

46
The Players

 What are the steering committee’s roles?

– set policies that govern the AIS
– ensures top-management participation
– guidance and control
– facilitates coordination and integration of IS
activities

47
The Players

 What are the project

development team’s roles?
– plan each project
– monitor project
– make sure proper consideration is
given to the human element

48
The Players

 What are the system analyst’s and

programmer’s roles?
– study existing systems
– design new systems and prepare specifications
– write computer programs

49
Planning Systems Development

 Why is planning an important step in

systems development?
– consistency
– efficiency
– cutting edge
– lower costs
– adaptability

50
Planning Systems Development

 What types of systems development plans

are needed?
– project development plan
– master plan

51
Planning Techniques
 Two techniques for scheduling and
monitoring systems development activities
are:
1 PERT (program evaluation and review
technique)
 PERT requires that all activities and the precedent
and subsequent relationships among them be
identified.
2 Gantt chart
 A bar chart with project activities listed on the left-
hand side and units of time across the top

52
 Planning Techniques:
Gantt Chart

Project Planning Chart

(Sample Gantt Chart)
______________________________________________
Activity Week Starting
______________________________________________
1
______________________________________________
2
______________________________________________
3
______________________________________________
4
______________________________________________
5
______________________________________________
6
______________________________________________
7
______________________________________________
8
______________________________________________
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Feasibility Analysis
 Systems analysis is the first step in the systems
development life cycle (SDLC).
 A feasibility study (also called a business case) is
prepared during systems analysis and updated as
necessary during the remaining steps in the SDLC.
 The steering committee uses the study to decide
whether to terminate a project, proceed
unconditionally, or proceed conditionally.

54
Feasibility Analysis

 What five important aspects need to be

considered during a feasibility study?
1. Technical feasibility
2. Operational feasibility
3. Legal feasibility
4. Scheduling feasibility
5. Economic feasibility

55
Feasibility Analysis

 Economic feasibility is the most frequently

analyzed of the five aspects.
 What is the basic framework for feasibility
analysis?
– capital budgeting model

56
Feasibility Analysis

 What are some capital budgeting

techniques?
– payback period
– net present value (NPV)
– internal rate of return (IRR)

57
Behavioral Aspects of Change

 Individuals involved in systems

development are agents of change who
are continually confronted by people’s
reaction and resistance to change.
 The best system will fail without the
support of the people it serves.

58
Behavioral Aspects of Change
 Why do behavioral problems occur?
– personal characteristics and background
– manner in which change is introduced
– experience with prior changes
– communication
– disruptive nature of the change process
– fear

59
Behavioral Aspects of Change

 How do people
resist AIS
changes?
– aggression
– projection
– avoidance

16-60
Behavioral Aspects
of Change
 How can behavioral problems be overcome?
– meet needs of the users
– keep communication lines open
– maintain a safe and open atmosphere
– obtain management support
– allay fears
– solicit user participation
– make sure users understand the system

61
Behavioral Aspects of Change
– How can behavioral problems be overcome?
(continued)
– provide honest feedback
– humanize the system
– describe new challenges and opportunities
– reexamine performance evaluation
– test the system’s integrity
– avoid emotionalism
– present the system in the proper context
– control the users’ expectations
– keep the system simple

62
The Systems Development Life
Cycle
 The five steps in the systems
development life cycle (SDLC) includes:
1. Systems analysis
2. Conceptual design
3. Physical design
4. Implementation and conversion
5. Operations and maintenance

63
1.Systems Analysis
 When a new or improved system is
needed, a written request for systems
development is prepared.
 The request describes the current
system’s problems, why the change is
needed, and the proposed system’s goals
and objectives.
 It also describes the anticipated benefits
and costs.
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Systems Analysis

 There are five steps in the analysis

phase:
1. Initial investigation
2. Systems survey
3. Feasibility study
4. Information needs and systems requirements
5. Systems analysis report

65
2.Conceptual Systems Design
 In the conceptual systems design phase,
a general framework is developed for
implementing user requirements and solving
problems identified in the analysis phase.
 What are the three steps in conceptual design?
1. Evaluate design alternatives.
2. Prepare design specifications.
3. Prepare conceptual systems design report.

66
Conceptual Systems Design

Systems
analysis

Prepare
Evaluate Prepare
conceptual
design design
systems
alternatives specifications
design report
67
Conceptual Systems Design

 Evaluate design alternatives:

 The design team should identify and
evaluate design alternatives using
the following criteria:
1. How well it meets organizational and
system objectives
2. How well it meets users’ needs
3. Whether it is economically feasible
4. Its advantages and disadvantages

68
Conceptual Systems Design
 Prepare design specifications:
 Once a design alternative has been selected,
the team develops the conceptual design
specifications for the following elements:
1. Output
2. Data storage
3. Input
4. Processing procedures and operations

69
Conceptual Systems Design
 Prepare conceptual systems design report:
 At the end of the conceptual design a
conceptual systems design report is
developed and submitted.
1. To guide physical systems design activities
2. To communicate how management and user
information needs will be met
3. To help assess systems’ feasibility

70
3.Physical Systems Design

 Physical design translates the broad, user-

oriented AIS requirements of conceptual
design into detailed specifications that are
used to code and test the computer
program.

Conceptual Physical
systems design systems design
71
Physical Systems Design

Output Program
design design

File and data Procedures

base design design

Input Controls
design design
72
Physical Systems Design: Output
Design
 The objective of output design is to
determine the characteristics of
reports, documents, and screen
displays.
 Output fits into one of four
categories:
1. Scheduled reports
2. Special-purpose analysis
3. Triggered exception reports
4. Demand reports
73
Physical Systems Design: File and
Database Design
 What are some file and database design
considerations?
– medium of storage
– organization and access
– processing mode
– maintenance
– size and activity level

74
Physical Systems Design: Input
Design
 When evaluating input design, the
design team must identify the
different types of data input and
optimal input method.
 What are the two principal types of
data input?
1. Forms
2. Computer screens

75
Physical Systems Design: Program
Design
 Program design is one of the most time-
consuming activities in the entire SDLC.
 Programs should be subdivided into small, well-
defined modules to reduce complexity.
 What is this referred to as?
– structured programming
 Modules should interact with a control module
rather than with each other.

76
 Physical Systems Design: Procedures Design
 Procedures design should answer the who,
what, where, and how questions related to all
AIS activities.
 What should procedures cover?
 input preparation
 transaction processing
 error detection and corrections
 controls
 reconciliation of balances
 database access
 output preparation and distribution
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 computer operator instructions
Physical Systems Design: Control Design

What are some control design considerations?

Validity Authorization
Accuracy Security
Numerical Control Availability
Maintainability Integrity
Audit Control
78
Physical Systems Design Report

 At the end of the physical design phase

the team prepares a physical systems
design report.
 This report becomes the basis for
management’s decision whether to
proceed to the implementation phase.

79
4. Systems Implementation

 Systems implementation is the process of

installing hardware and software and
getting the AIS up and running.

80
Systems Implementation
Implementation planning

Develop and Prepare site; Select

test software install and and train
programs test hardware personnel

Complete Test system

documentation

Conversion
81
Systems Implementation:
Implementation Planning
 An implementation plan consists of
implementation tasks, expected
completion dates, cost estimates, and
the person or persons responsible for
each task.
 Planning should include adjustments to
the company’s organizational structure.

82
Systems Implementation: Develop and test
software programs
Seven steps are followed when developing and
testing software programs.
1. Determine user needs.
2. Develop a plan.
3. Write program instructions (code).
4. Test the program.
5. Document the program.
6. Train program users.
7. Install and use the system.

83
Systems Implementation:
Site Preparation
 A PC requires little site preparation.
 A large system may require extensive
changes, such as additional electrical
outlets.
 Site preparation should begin well in
advance of the installation date.

84
Systems Implementation:
Select and train personnel
 Employees can be hired from outside the
company or transferred internally.
 Effective AIS training should include
employees’ orientation to new policies
and operations.
 Training should occur before systems
testing and conversion.

85
Systems Implementation:
Complete Documentation
 Three types of documentation must be
prepared for new systems.
1. Development documentation
2. Operations documentation
3. User documentation

86
Systems Implementation: Test the
System
 There are three common forms of testing.
1. Walk-through
2. Processing of test transactions
3. Acceptance tests

87
Systems Implementation: Conversion

 There are four conversion approaches.

1. Direct conversion
2. Parallel conversion
3. Phase-in conversion
4. Pilot conversion

88
Systems Implementation
Direct Conversion Method
Old system
New system

Parallel Conversion Method

Old system New system

89
Systems Implementation

Phase-in Conversion Method

Old system
New system

90
Systems Implementation
Pilot Conversion Method
1 2 3 1 2 3

Old Old Old Old Old New

1 2 3 1 2 3

Old New New New New New

91
Systems Implementation: Data
Conversion
 Data files may need to be modified in
three ways:
1. Files may be moved to a different storage
2. Data content may be changed
3. File format may be changed

92
5. Operation and Maintenance

 The final step in the SDLC is to operate

and maintain the new system.
 A postimplementation review should be
conducted on a newly installed system.

Implementation Operation and

and conversion maintenance

93
Operation and Maintenance
What are some factors to consider during the
postimplementation review?

Goals and objectives Controls and security

Satisfaction Errors

Benefits Training

Costs Communications

Reliability Organizational changes

Documentation Accuracy

Timeliness Compatibility

94
End of Chapter 6

95