Acc4071 Week03 Std

Systems Techniques and Documentation

Chapter 2

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Learning Objective 1

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

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Use of Systems Techniques Techniques Analysis

Graphical tools used

Design

for… Documentatio n

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se o ys ems ec n ques n Auditing 

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

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Internal Control Evaluation  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.

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Compliance Testing 

Compliance testing of internal controls:   

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Existence Effectiveness Continuity

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)

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Working Papers 

Records kept by the auditor: Procedures performed Tests applied Information obtained Conclusions Required by professional standards System techniques are used to document and analyze working papers:  Analytic and system flowcharts DFDs, HIPO charts, program flowcharts Branching and decision tables    

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Systems Development  – Three Phases Systems Analysis

Systems Design Systems Implementation  2013

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Systems Analysis 

Collecting and organizing facts:     

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Interview techniques Questionnaires Document reviews Observation Matrix techniques

System techniques useful for these activities

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Systems Design  

Formulate a blueprint. Tools are needed to assist in the design process:   

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Input/Output (matrix) analysis System flowcharts DFDs

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Systems Implementation  

Carrying out the design plan Documentation is one of the most important activities  Assists in training new employees. Ensures system design specifications are met.

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System techniques used to document new system:  

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Program flowcharts Decision tables Pearson Education, Inc. Publishing as Prentice Hall, AIS, 11/e, by Bodnar/Hopwood

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se o ys ems ec n ques or Sarbanes-Oxley Act (SOX) Compliance 

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

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Learning Objective 2 Describe the use of flowcharting techniques in the analysis and documentation of information processing systems.

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Flowcharts  A symbolic diagram that shows the data flow and sequence of operations Most commonly used system technique Standard symbols are used

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Basic Symbols Input/output Process Flowline  Annotation  2013

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Specialized Input/Output Symbols Punched card Online storage Magnetic tape  2013

Punched tape Magnetic disk

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Specialized Input/Output Symbols Document

Manual input

Communication link

Offline storage

Display  2013

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Specialized Process Symbols  Auxiliary operation

Decision Predefined process

Merge

Preparation

Extract

Manual operation  2013

Collate

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Additional Symbols Connector Off-page connector Terminal  2013

Transmittal tape

Parallel mode

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Symbol Use in Flowcharting 

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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.

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Symbol Usage Illustration

Normal Direction of Flow Invoice

Review and approve

Approved invoice

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Symbol Usage Illustration

everse Flow Shown With Arrowhead

Approved invoice

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Review and approve

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Invoice

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Symbol Usage Illustration

Use of Connector Symbol Stores

Purchasing

Approved invoice

A

Invoice A  2013

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Symbol Usage Illustration idirectional Flow Shown with Arrowhea Requisition Prepare  purchase order and update vendor files

Vendor files Purchase order

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Learning Objective 4 Define and illustrate a variety of common systems techniques, including HIPO charts, logical data flow diagrams, business process diagrams, and resource utilization analysis.

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IPO and HIPO Charts 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.

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IPO Chart System: Payr oll Descri ption: Calcul ate Author: M r. F oxx Gr oss Pay  Chart N umber : 3.1  I nput

Payroll job record Payroll master file

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Pr ocess 

Date: 6/9/0X  Output 

Accumulate hours Gross pay records worked Payroll master file Find correct pay rate Error messages Compute gross pay

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HIPO Illustration 1.0

Payroll system 2.0

Data preparation

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4.0

3.0

Processing

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Review

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HIPO Illustration 3.1

3.2

Calculate gross pay

Calculate net pay

3.11

3.12

Accumulate hours worked

Find correct  pay rate

3.13

Compute gross pay

Each nu mber ed modul e woul d be detail ed in an I PO chart.  2013

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Systems and Program Flowcharts 

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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. 

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Each processing function in a systems flowchart is further detailed in a program flowchart. Pearson Education, Inc. Publishing as Prentice Hall, AIS, 11/e, by Bodnar/Hopwood

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Symbols Name

Symbol

M eani ng

Terminator

Represents sources a destinations of data

Process

Task or function being done

Data store

A repository of data

Data flow

Communication channel

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Data Flow Diagram

Timekeeping

Payroll data

Process  payroll data

Payroll data

Paychecks

Employees

Payroll details

Payroll Payrolldata Data  2013

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Data Flow Diagram Expanded Current  status

Timekeeping

Payroll data

Employee data

Verify  payroll data P1  Data valid

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Valid  payroll data

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Data Flow Diagram Expanded Employee data

 Net pay and deductions

Data to  process

Calculate  pay

Paychecks

Employees

P2

Valid  payroll data  2013

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aa

Update employee files

ow

Current amounts

agram Further Process  payroll  journal

xpan e

Details

Journal data

 Net pay and deductions

Compute net pay

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Paychecks

Employees

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Learning Objective 3

Illustrate the preparation of analytic flowchart for a business process.

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Analytic, Document, and Forms Distribution Flowcharts  Analytic flowchart  – similar to a systems flowchart in level of detail and technique.

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

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

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.

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Analytic Flowchart Purchasing Approve vendor list

Suppliers Select vendors

Prepare quotation requests Requests for quotation  2013

Requests for quotation

Quotations

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Analytic Flowchart Purchasing

Suppliers

Quotations

Select  bid

Quotations

Prepare  purchase order Purchase order

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Purchase order

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Document Flowchart Controller Accounts Payable

Purchase requisition

Vice President Manufacturing Purr chas Pu chasii n g A ge gen nt

Rece Re ceii vi vin ng

Purchase requisition

Purchase requisition

1

1

2 To Vendor

5  2013

2 Purchase order

1 2

Purchase order

Stor es

3

4

Purchase order

3

Purchase order

4 5

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Forms Distribution Chart Purchasing Inventory  Purchase order copy 1 2

Payables

Production Accounting

1

1 2

2

3 4

3 4

5

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Analytical Flowcharting Illustration

Planning the Flowchart Symbol Systems selection analysis Drawing the flowchart Using the connector symbol

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Sandwich rule Entity-column relations

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Learning Objective 4 Define and illustrate a variety of common systems techniques, including HIPO charts, logical data flow diagrams, business process diagrams, and resource utilization analysis.

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Unified Modeling Language (UML) 

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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.

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Use Case Diagrams Communication Use case

Actor

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Activity Diagram Symbols Name

Activity Flow Document Flow  2013

Symbol

M eani ng Indicates events

Shows the sequence of events

Represents documents and reports Represents the flow of information  between events

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Activity Diagram Symbols (continued) Name

Symbol

Start/end Start

End

Branch Guard expression Fork/join  2013

M eani ng Indicates the start or the end of the activity Represents branching situations

Text

Labels the transitions coming out of a branch Indicates the fork and the subsequent  join of the threads coming out of fork

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Activity Diagram Swimlanes Name

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Name

Name

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Business Process Diagrams 

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. 

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

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BPMN Symbols Name

Task Sequence flow Gateway Event Data object  2013

Symbol

Meaning

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 Provides information about what activities require to be performed and/ or what they produced

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BPMN Swimlanes

Pool

  e   m   a    N

Lane

  e   m   e   a   m   N   a   e    N   m   a    N

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BPMN Additional Symbols Name

Symbol

Meaning

Annotation

Allows modeler to provide additional information to the reader of BPD

Message flow

Shows the flow of messages between two separate process participants

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Narrative Techniques 

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Useful in fact-finding stage of systems analysis Examples of narrative techniques:   

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Interviews Open-ended and close-ended questionnaires Document reviews

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Resource Utilization Analysis 

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Work Measurement – Based on a simple premise…quantitative measurement is essential to design efficient procedures. Four basic steps: 1. Identify tasks 2. Obtain estimates for performing tasks 3.  Adjust the time estimates for idle time 4.  Analyze requirements based on data

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Resource Utilization Analysis 

Work Measurement: (Average time/unit + Idle time/unit) ×  Average volume = Total task time Total time available ÷ Total task time = Capacity utilization

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Work Distribution Analysis - undertaken to assign specific tasks to employees.

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Resource Utilization Analysis 

Branching Tables  – Used to depict a decision function Statement of the decision to be made List of all the conditions that can occur Path to be followed for each condition Matrix Methods – Convenient method for analyzing and displaying a large volume of data using row/column combination   

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Branching Table Format

Code equal to Go to

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1

2

3

4

Inconnector Inconnector reference reference

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Decision Table Format

Table Title

Rules 1

If : Then:

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2

3

Condition stub

Condition entry

Action stub

Action entry

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…

 N

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Decision Table for Processing Labor Distribution

If

Then

Line 1 2 3 10 11 12 13 14

Condition action rule 15 Regular hours 15 Overtime hours 15 Shift bonus hours Regular dollars Overtime dollars Shift dollars Error no shift or OT Nest record

1

2

3

4

5

6

7

8

Y Y Y

 – 

 – 

 – 

 – 

 – 

 – 

N

N Y

N Y Y

N

N Y

N

×

×

×

×

×

×

×

×

×

×

×

×

×

×

N

×

×

×

×

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

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Software for Systems Techniques  Advantages of using software for system techniques:

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Legibility Enhanced formatting and presentation capabilities Enhanced capabilities to revise and reproduce documentation

Examples of specialized software:   

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Microsoft Office applications Computer-aided software engineer (CASE) UML modeling tools

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