Acc4071 Week03 Std

2013 Pearson Education, Inc. Publishing as Prentice Hall, AIS, 11/e, by Bodnar/Hopwood

Chapter 2

2 – 1

Systems Techniquesand Documentation


Learning Objective 1

2 – 2

Characterize the use of systems techniques by auditors andsystems development personnel.


Use of Systems Techniques

2 – 3

Analysis

Design

Documentation

Graphical tools used

for…


Use of Systems Techniques in Auditing

2 – 4

Two Basic Components of an Audit Engagement:1. Interim Audit – Compliance Testing

Internal Control Evaluation

2. Financial Statement Audit – Substantive Testing

Direct Verification of Financial Statement Items


Internal Control Evaluation

2 – 5

Auditors are typically concerned with the flow of processing and distribution of documents within an application system.

Auditors use flowcharts to analyze the distribution of documents in a system.


Compliance Testing

2 – 6

Compliance testing of internal controls:ExistenceEffectivenessContinuity

Consider technology employed by information system:Auditor must understand information system

documentation techniques.Input-process-output (IPO)Hierarchy plus input-process-output (HIPO)Logical data flow diagrams (DFD)


Working Papers

2 – 7

Records kept by the auditor:Procedures performedTests appliedInformation obtainedConclusions

Required by professional standardsSystem techniques are used to document and

analyze working papers:Analytic and system flowchartsDFDs, HIPO charts, program flowchartsBranching and decision tables


Use of System Techniques in Systems Development – Three

Phases

2 – 8

Systems Analysis

Systems Design

Systems Implementation


Systems Analysis

2 – 9

Collecting and organizing facts:Interview techniquesQuestionnairesDocument reviewsObservationMatrix techniques

System techniques useful for these activities


Systems Design

2 – 10

Formulate a blueprint.Tools are needed to assist in the design process:Input/Output (matrix) analysisSystem flowchartsDFDs


Systems Implementation

2 – 11

Carrying out the design planDocumentation is one of the most

important activitiesAssists in training new employees.Ensures system design specifications are met.

System techniques used to document new system:Program flowchartsDecision tables


Use of Systems Techniques for Sarbanes-Oxley Act (SOX) Compliance

2 – 12

Systems documentation is the support for the internal control and process documentation requirements as set forth by the Sarbanes-Oxley Act (SOX).



2 – 13

Describe the use of flowchartingtechniques in the analysis and documentation of information processing systems.


Flowcharts

2 – 14

A symbolic diagram that shows the data flow and sequence of operations

Most commonly used system technique

Standard symbols are used


Basic Symbols

2 – 15

Input/output

Process

Annotation

Flowline


Specialized Input/Output Symbols

2 – 16

Punchedcard

Onlinestorage

MagneticdiskMagnetic

tape

Punchedtape


Specialized Input/Output Symbols

2 – 17

Document

Manualinput

Display

Offlinestorage

Communicationlink


Specialized Process Symbols

2 – 18

Decision

Predefinedprocess

Preparation

Manualoperation

Auxiliaryoperation

Merge

Extract

SortCollate


Additional Symbols

2 – 19

Parallel mode

Transmittal tape

Connector

Off-pageconnector

Terminal


Symbol Use in Flowcharting

2 – 20

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.


Symbol Usage Illustration

2 – 21

Normal Direction of Flow

Reviewand

approve

Approvedinvoice

Invoice



2 – 22

Reverse Flow Shown With Arrowheads

InvoiceReview

andapprove

Approvedinvoice



2 – 23

Use of Connector Symbol

Approvedinvoice

A

Stores

Invoice

A

Purchasing



2 – 24

Bidirectional Flow Shown with Arrowheads

Requisition

Vendorfiles

Preparepurchase order

and updatevendor files

Purchaseorder



2 – 25

Define and illustrate a variety ofcommon systems techniques,including HIPO charts, logicaldata flow diagrams, business processdiagrams, and resource utilization analysis.


IPO and HIPO Charts

2 – 26

Used primarily by systems development personnel to distinguish the level of system detail described in the flowchart.

At the most general level of analysis, only the basic IPO relations in a system are of concern.

Additional processing detail is provided by HIPO charts.


IPO Chart

2 – 27

Payroll job recordPayroll master file

Accumulate hours workedFind correct pay rateCompute gross pay

Gross pay recordsPayroll master fileError messages

Author: Mr. FoxxChart Number: 3.1

System: PayrollDescription: Calculate

Gross Pay Date: 6/9/0X

Input Process Output


HIPO Illustration

2 – 28

Payroll systemPayroll system

1.0

ProcessingProcessing

3.0

Data preparationData preparation

2.0

ReviewReview

4.0

2013 Pearson Education, Inc. Publishing as Prentice Hall, AIS, 11/e, by Bodnar/Hopwood2 – 29

Calculategross payCalculategross pay

Calculatenet payCalculatenet pay

3.1 3.2

Each numbered module would be detailed in an IPO chart.

Accumulatehours worked

Accumulatehours worked

3.11

Find correctpay rate

Find correctpay rate

3.12

Computegross payComputegross pay

3.13

HIPO Illustration


Systems and Program Flowcharts

2 – 30

System flowchart – identifies the overall or broad flow of operations in a system.

Program flowchart – (block flowchart) is more detailed with regard to individual processing functions than a systems flowchart.Each processing function in a systems

flowchart is further detailed in a program flowchart.


Logical Data Flow Diagram Symbols

2 – 31

TerminatorRepresents sources anddestinations of data

ProcessTask or functionbeing done

Data store A repository of data

Data flowCommunicationchannel

Name Symbol Meaning


Data Flow Diagram

2 – 32

TimekeepingProcesspayroll

data

Payrolldata Employees

Paychecks

Payroll Data

Payrolldata

Payrolldetails

Payroll data


Data Flow Diagram Expanded

2 – 33

Timekeeping

Employeedata

Currentstatus

Validpayroll data

Datavalid

Payrolldata Verify

payrolldataP1


Data Flow Diagram Expanded

2 – 34

Validpayroll data

Employeedata

Net pay anddeductions

Calculatepay

P2

Data toprocess Employees

Paychecks


Data Flow Diagram Expanded Further

2 – 35

Computenet pay

Processpayrolljournal

Currentamounts

Updateemployee

files

Net pay anddeductions

Journaldata

Details

EmployeesPaychecks



2 – 36

Illustrate the preparation of analyticflowchart for a business process.


Analytic, Document, and Forms Distribution Flowcharts

2 – 37

Analytic flowchart – similar to a systems flowchart in level of detail and technique.

Identifies all significant processing in an application, emphasizing processing tasks that apply controls.

Document flowchart – similar in format to an analytic flowchart but contains less detail about processing functions of each entity.

Takes each document used in an application system and identifies points of origin, distribution, and ultimate disposition.

Forms distribution chart – illustrates the distribution of multiple-copy forms within an organization.


Analytic Flowchart

2 – 38

Preparequotationrequests

Requestsfor

quotation

Approvevendor

list

Selectvendors

Requestsfor

quotation

Purchasing Suppliers

Quotations


Analytic Flowchart

2 – 39

Purchasing

Purchaseorder

Suppliers

Quotations

Preparepurchase

order

Quotations

Selectbid

Purchaseorder


Document Flowchart

2 – 40

2

Purchaserequisition

2

Purchaserequisition

1

Purchaserequisition

1

Purchaseorder

3 Purchaseorder

4Purchase

order 5

To Vendor

54

32

Purchaseorder

1

AccountsPayable

Purchasing Agent Receiving StoresController Vice President Manufacturing


Forms Distribution Chart

2 – 41

Purchasing Inventory Payables Production AccountingPurchaseorder copy

2

3

4

5

1 1

2

4

1

2

3


Analytical Flowcharting Illustration

2 – 42

Planning the FlowchartSymbol

selectionDrawing the

flowchartUsing the connector symbol

Systems analysis

Sandwich rule

Entity-column relations



2 – 43

Define and illustrate a variety ofcommon systems techniques,including HIPO charts, logicaldata flow diagrams, business processdiagrams, and resource utilization analysis.


Unified Modeling Language (UML)

2 – 44

UML – Technology that assists in the specification, visualization, and documentation of models developed to structure and design software systems.

UML version 2.4 – Defines more than a dozen types of diagrams, divided into two categories:1. Structured diagrams – Illustrate static structure of

the system and its components on different abstraction and implementation levels and how they are related to each other.

2. Behavior diagrams – Model the dynamic behavior between the objects in the system; how the system changes over time.


Use Case Diagrams

2 – 45

Use caseUse case

Actor

Communication


Activity Diagram Symbols

2 – 46

Name Symbol Meaning

Activity

Flow

Indicates events

Shows the sequence of events

FlowRepresents the flow of informationbetween events

Document Represents documents and reports


Activity Diagram Symbols (continued)

2 – 47

Name Symbol Meaning

Guardexpression

Fork/join

Labels the transitions coming out of a branch

Indicates the fork and the subsequent join of the threads coming out of fork

Branch Represents branching situations

Text

Start/end Indicates the start or the end of the activityStart End


Activity Diagram Swimlanes

2 – 48

Name Name Name


Business Process Diagrams

2 – 49

Business Process Diagram (BPD) – Graphical representation of a business process.Focuses on the sequence of activities that

constitute a business process, and also on the related business logic.

Business Process Modeling and Notation (BPMN) – Widely accepted standard for modeling business processes using BPDs.Computer industry specific standardProcess-oriented approach to modelingFocus on business process


BPMN Symbols

2 – 50

Name Symbol Meaning

Task

Sequence flow

Gateway

Event

Represents tasks or activities

Shows the order that activities will be performed in a Process

Represents decisions that affect the flow

Represents something that “happens” during the course of a business process

Data objectProvides information about whatactivities require to be performed and/or what they produced


BPMN Swimlanes

2 – 51

Nam

eN

ame

Nam

eN

ame

Pool

Lane


BPMN Additional Symbols

2 – 52

Name Symbol Meaning

Annotation

Messageflow

Allows modeler to provide additionalinformation to the reader of BPD

Shows the flow of messages between two separate process participants


Narrative Techniques

2 – 53

Useful in fact-finding stage of systems analysis

Examples of narrative techniques:InterviewsOpen-ended and close-ended questionnairesDocument reviews


Resource Utilization Analysis

2 – 54

Work Measurement – Based on a simple premise…quantitative measurement is essential to design efficient procedures.

Four basic steps:1. Identify tasks2. Obtain estimates for performing tasks3. Adjust the time estimates for idle time4. Analyze requirements based on data



2 – 55

Work Measurement:(Average time/unit + Idle time/unit) ×

Average volume = Total task timeTotal time available ÷ Total task time =

Capacity utilizationWork Distribution Analysis -

undertaken to assign specific tasks to employees.



2 – 56

Branching Tables – Used to depict a decision functionStatement of the decision to be madeList of all the conditions that can occurPath to be followed for each condition

Matrix Methods – Convenient method for analyzing and displaying a large volume of data using row/column combination


Branching Table Format

2 – 57

Codeequal to

Go toInconnector

reference

1 2 3

Inconnectorreference

4


Decision Table Format

2 – 58

Condition stub

Action stub

1 2 3 … NIf:Then:

Table Title Rules

Condition entry

Action entry


Decision Table for Processing Labor Distribution

2 – 59

Line123

1011121314

Condition action rule 15 Regular hours15 Overtime hours15 Shift bonus hours

Regular dollarsOvertime dollarsShift dollarsError no shift or OTNest record

1YYY

×××

×

2––N

××

×

3–NY

×

×

×

4––N

×

×

5NYY

××

6

–N

××

7

NY

××

8

NIf

Then

Go to – F (Function); R (Rule, same table); T (Table)


Software for Systems Techniques

2 – 60

Advantages of using software for system techniques:

LegibilityEnhanced formatting and presentation capabilitiesEnhanced capabilities to revise and reproduce

documentation

Examples of specialized software:Microsoft Office applicationsComputer-aided software engineer (CASE)UML modeling tools

2013 Pearson Education, Inc. Publishing as Prentice Hall, AIS, 11/e, by Bodnar/Hopwood2 – 61

End of Chapter 2

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Acc4071 Week03 Std