Chapter 3

Systems Development
and
Documentation Techniques 3-1
 Learning Objectives
 Prepare and use data flow diagrams to

understand, evaluate, and document information

systems.

 Prepare and use flowcharts to understand,

evaluate, and document information systems.

3-2
 What Is Documentation?
 Set of documents and models
 Narratives, data flow models, flowcharts

 Describe who, what, why, when, and

where of systems:
 Input, process, storage, output, and
controls
3-3
 Why Should You Learn
Documentation?
 You need to be able to read documentation in all its forms: narratives, diagrams,
models.

 You need to be able to evaluate the quality of systems, such as internal control
based in part on documentation.

 SAS 94 requires independent auditors to understand all internal control

procedures.
 Documentation assists in auditor understanding and documentation of their
understanding

 Sarbanes-Oxley states that management:

 Is responsible for internal control system
 Is responsible for assessing the effectiveness of the IC System
 Both management and external auditors need to document and test IC System 3-4
 Data Flow Diagrams

 Graphically describes the flow of data

within a system
 Four basic elements

Entity Data Flow

Process
Data Store

3-5
 Entity

 Represents a source of data or input into

the system

or

 Represents a destination of data or output

from the system
3-6
 Data Flows
 Movement of data among:
 Entities (sources or destinations)
 Processes
 Data stores

 Label should describe the information

moving 3-7
Process
Represents the
transformation of
data

3-8
Data Store
Represents data
at rest
3-9
 Data Flow Diagram Levels
 Context
 Highest level (most general)
 Purpose: show inputs and outputs into a system
 Characteristics: one process symbol only, no data
stores
 Level-0
 Purpose: show all major activity steps of a system
 Characteristics: processes are labeled 1.0, 2.0, and
so on
3-10
 DFD Creation Guidelines
 Understand the system  Identify transformational

 Ignore certain aspects of the processes

system  Group transformational

 Determine system boundaries processes

 Develop a context DFD  Identify all data stores

 Identify data flows  Identify all sources and

destinations
 Group data flows
 Label all DFD elements
 Number each process
3-11
 Subdivide DFD
 DFD Creation
Data Flow DiagramsGuidelines
 Understand the system - observing the flow of
information through an organization and interviewing
the individuals who use and process the data.

 Ignore certain aspects of the system - as DFD

diagrams the origin, flow, transformation, storage and
destinations of data, all control actions and processes
should be ignored.

 Determine system boundaries-determine what to

include in and exclude form the system.
 Guidelines cont’d
Cont’d……..
 Develop a context diagram - a CD is a good way of
depicting system boundaries.
 In the diagram's center is a circle; inside of it is
displayed the system of concern.
 The outside entities, with which the system interacts
directly, are in boxes on either side, connected by
data flows depicting the data passed between them.
 Identify data flows - all data flows shall be identified
entering or leaving the system's boundary, including
where the data originate and the final destination.
 DFD Creation Guidelines
Guidelines cont’d
Cont’d………..
 Group data flows - data elements that always flow
together should be grouped together and shown as one
data flow until they are separated.
 If the data elements do not always flow together, they
should be shown as two separate data flows.

 Identify transformation processes - placing a circle

wherever work is required to transform one data flow
into another.
 Guidelines cont’d
 Group transformation processes - transformation
processes that are logically related or occur at the same
time and place should be grouped together.

 Identify all files or data stores - Each data repository

and data flow into and out of it, should be identified.

3-15
 DFD Creation Guidelines
Guidelines cont’d
Cont’d………

 Identify all data sources and destinations- all

sources and destinations of data should be
identified and included on the DFD.
 Name all DFD elements - data elements should
be given unique and descriptive names
representing what is known about them.
 Guidelines cont’d
 Subdivide the DFD - If there are more than five to seven
processes on a single page, then, shall be decomposed
into high level processes, and then exploded into
successively lower level processes.
 Give each process a sequential number - in completed
DFD, each process is given a sequential number (lower to
higher) that helps readers move back and forth between
different DFD levels.
 Guidelines cont’d
 Repeat the process - developers must work through
organization data flows several times. Each subsequent
pass helps refine the diagram & identify the fine points.
 The DFD shall be organized to flow from top to
bottom and from left to right.

 Prepare a final copy - the final copy of the DFD

shall be drawn.
3-18
 Guidelines
DFD cont’d
Creation Guidelines
Cont’d………..
Elements in a Data Flow Diagram

 DFD is composed of four basic elements:

 Data sources and destinations,

 Data flows,

 Transformation processes, and

 Data stores

 Each element represents in a DFD by a unique symbol

 Guidelines cont’d
Cont’d………

Process

Data Stores

Source/Destination
Entity
Data Flow
Demarco & Gane & Sarson
Yourdon Symbols
Symbols
 Guidelines cont’d
Cont’d………
21

 The four symbols are combined to show how

data are processed.
Data Flow Diagrams

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

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

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Accounting Information Systems, 9/e, Romney/Steinbart
 Guidelines cont’d
Cont’d……….
 Data source or data destination symbol represents an
organization or individual that sends or receives data
that the system uses or produces.

 Data flow represents the flow of data between

processes, data stores & data sources and destinations.

 Transformation process represents the transformations

of data.
 Guidelines cont’d
Cont’d……….

 Data store - temporary/permanent

repository of data.
 DFDs do not show the physical storage
medium.
 Data stores are represented by horizontal
lines, with respective name recorded
inside. 3-23
 Guidelines cont’d
Cont’d………
 Data dictionary contains description of all the elements,
stores, and flows in a system.
 Maintained to ensure consistency and accuracy
throughout the development process.

Data Flow Diagrams

Accounts
receivable
Customer Remittance data (H)
payment (B) (D)
Customer Process
payment (G)
(A) (C) Receivables
Deposit (E) information
Update (I) Credit
receivables manager
Bank (F) (K)
(J)
©2003 Prentice Hall Business Publishing, 6-18
Accounting Information Systems, 9/e, Romney/Steinbart

©2003 Prentice Hall Business Publishing, 6-17

Accounting Information Systems, 9/e, Romney/Steinbart
 Guidelines cont’d
Cont’d………..

Subdividing the DFD

 DFD are subdivided into successively lower levels in
order to provide ever-increasing amounts of detail.
 Users have differing needs, so a variety of levels can
better satisfy these requirements.
 Guidelines cont’d
 The highest-level DFD is a context diagram.
 It provides the reader with a summary level view
of the system.
 It depicts a data processing system and the
external entities that are the sources and
destinations of the system's inputs and outputs.

3-26
 Guidelines cont’d
Cont’d………
27

Time Tax reports and Gov’t

cards payments Agencies
Departments Employee
paychecks Employees
Payroll
Processing Payroll
System check Bank
Human
resources Manage
Employee Payroll
data ment
report
DFDs – Some Do’s
and Don’ts

First – the Do’s

 DFDs – Some Do’s and Don’ts

 All data flows must

begin at a process, end
at a process, or both.
DFDs – Some Do’s
and Don’ts

 Data stores
cannot
communicate
with entities
 DFDs – Some Do’s
and Don’ts

 Entities cannot
communicate with
other entities.
DFDs – Some Do’s
and Don’ts

 Data stores cannot

communicate with
other data stores.
 DFDs – Some Do’s
and Don’ts

 Processes can
communicate
with other
processes.
 DFDs – Some Do’s
and Don’ts

 All processes must

have an incoming
and outgoing data
flow.
 DFDs – Some Do’s
and Don’ts

 All entities must

be introduced at
the context level.
 DFDs – Some Do’s
and Don’ts

 Only entities
and data store
symbols may
be duplicated.
 DFDs – Some Do’s
and Don’ts

 Do not cross
data flows.
 DFDs – Some Do’s
and Don’ts

 Do not use double-

ended arrow to
represent data
flows.
 DFDs – Some Do’s
and Don’ts

 Do not use
diverging arrow
to represent
data flows
 DFDs – Some Do’s
and Don’ts

 Data stores do
not appear on the
context level
diagram.
 Flowcharts
 Use symbols to logically depict
transaction processing and the flow of
data through a system.

 Using a pictorial representation is easier

to understand and explain versus a
detailed narrative. 3-41
 Flowchart Symbol Categories
 Input/Output

 Processing

 Storage

 Miscellaneous

3-42
cont’d

3-43
Cont’d

3-44
Cont’d

3-45
 Types of Flowcharts
 Document
 Illustrates the flow of documents through an organization

 Useful for analyzing internal control procedures

 System
 Logical representation of system inputs, processes, and outputs

 Useful in systems analysis and design

 Program
 Represent the logical sequence of program logic

3-46
Document Flowchart

3-47
Document Flowchart (cont’d)

3-48
3-48
System Flowchart

3-49
Program Flowchart

3-50
 Document Flowcharts
 The flow of documents and information among
departments within an organization.
 It also analyzes the adequacy of control procedures in a
system, such as internal checks & segregation of duties.
 Flowcharts that describe & evaluate internal controls are
often referred to as internal control flowcharts.
 It reveal weaknesses or inefficiencies in a system,
like; inadequate communication flows, unnecessary
complexity in document flows, procedures causing
wasteful delays.
 System Flowcharts
 It depict the relationship among the input, processing, and
output of AIS.
 It begins by identifying both the inputs that enter the
system and their origins.
 It follows by the processing portion of the flowchart
 The new information is the output component.
 System flowcharts are an important systems analysis,
design, and evaluation tool.
 They are universally employed in systems work and
provide an immediate form of communication among
workers.
 Cont’d……….
53
 Program Flowcharts
54

 It describes the…….
 Sequence of logical operations performed by a
computer in executing a program.
 Specific logic to perform a process shown on a
systems flowchart.
 A flow line connects the symbols and indicates
the sequence of operations.
 Cont’d………
55

Enter
sales
Output Start order

Approved Reject
No Order
for credit?

Process Yes
Storag Back-
e Inventory No Order
available?
Yes
Output
Fill Stop
order
 Cont’d………
 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.
 DFDs Vs. Flowcharts
 DFDs emphasize on the flow of data and what is
happening in a system, whereas a flowchart emphasizes
the flow of documents or records containing data.
 DFD represents the logical flow of data, whereas a
flowchart represents the physical flow of data.
 DFDs are primarily used in the design of new systems,
whereas Flowcharts are used primarily to document
existing systems.
 DFDs make use of only four symbols, whereas Flowcharts
use many symbols and thus can show more detail.
 Systems Development Process
 Companies change their old systems:
 To respond to changes in user or business needs
 To take advantage of technology changes
 To improve their business process
 To gain a competitive advantage and/or lower costs
 To increase productivity
 To accommodate growth
 To accommodate distribute decision making
 To replace a system that is aged and unstable
 Cont’d………
 Important questions in designing a system are:
 What process must go through to obtain and
implement a new system?
 What types of planning are necessary to ensure the
system’s success?
 How will employees react to a new system?
 How should the new system be justified and sold to
top management?
 How can expected costs and benefits be quantified to
determine whether the new system will indeed be
cost-effective?
 Systems Development Life Cycle

 Whether systems changes are major or minor, most

companies go through a SDLC.
 It is a conceptual model that describes the stages in IS
development project, from an initial feasibility study
through maintenance of the completed application.
 It is a logical process by which systems analysts,
software engineers, programmers and end-users build
IS and computer applications to solve business
problems and needs.
 Cont’d……….
SDLC follows the following steps:
 The existing system is evaluated - deficiencies are
identified.
 The new system requirements are defined - the
deficiencies in the existing system must be addressed
with specific proposals for improvement.
 The proposed system is designed - plans are laid out
concerning the physical construction, hardware,
operating systems, programming, communications, and
security issues.
 Cont’d……….
 The new system is developed - the new components
and programs must be obtained and installed.
 Users must be trained, and it must be tested.
 If necessary, adjustments must be made at this stage.
 The system is put into use - the new system can phased
in and the old system gradually replaced.
 Maintenance must be kept up rigorously at all times.
 Users should be kept up-to-date about the latest
modifications and procedures.
 Cont’d……...
 Romney and Steinhart identified the following five
components of SDLC.
 Systems analysis

 Conceptual design

 Physical design

 Implementation and conversion

 Operations and maintenance

Cont’d……….
 Systems analysis
 The information needed to purchase or develop a new
system is gathered.
 System analysis is the stage of:
 Studying the current business system
 Understanding how the existing system works
 Determining the weakness and strength of the
existing system
 Defining the business needs and requirements
 Cont’d……….
There are five steps in the analysis phase:
 Initial investigation
 Is conducted to screen projects; and the following are
essential to investigate;
 Gaining a clear picture of the problem or need
 Determining the project's viability and expected costs
and payoffs
 Evaluating the project's scope and the nature of the
new AIS, and
 Recommending whether the project should be
initiated as proposed, modified or abandoned.
 Cont’d………
Systems survey

 An extensive study of the current AIS is

undertaken.

 It may take weeks or months depending

on the complexity and the scope of the
system.
 Cont’d………
 The objectives of a system survey include:
 Gain a thorough understanding of the operations,
policies, and procedures; data and information
flows; AIS strengths and weaknesses; and
available hardware, software, and personnel.
 Make preliminary assessment of current and
future processing needs, and determine the extent
and nature of the changes needed.
 Cont’d………..
 Develop working relationships with users and
build support for the AIS
 Collect data that identify user needs and make
recommendations to management.

 The findings are documented, the existing system

is modeled and analyzed and a survey report is
prepared.
 Cont’d……….
Feasibility study
 A more thorough feasibility analysis is
conducted to determine the project's viability.
 Especially, economic feasibility is important.
 The feasibility analysis is updated as the project
proceeds and costs and benefits become clearer.
 Cont’d……….
Information needs and systems requirements

 The company identifies the information needs of

the AIS users and documents system
requirements.
 Ask users what they need; Analyze existing
system and Create a sample
3-71
 Cont’d……….
Systems analysis report

 Used to summarize and document the analysis

activities and serve as a repository of data
from which system designers can draw.
 Cont’d……….
 A go-no-go decision is made three times during system
analysis:
 During the initial investigation - to determine
whether to conduct a feasibility survey

 At the end of the feasibility study - whether to

proceed to the information requirements phase
 At the completions of the analysis phase - to decide
whether to proceed to the next phase.

3-73
 Conceptual design
 A general framework is developed for implementing user
requirements and solving problems identified in the analysis
phase.
 The three steps in conceptual design?

Evaluate design alternatives

 The design team should identify and evaluate design
alternatives using the following criteria:
 How well it meets organizational & system objectives
 How well it meets users’ needs
 Whether it is economically feasible
 Its advantages and disadvantages
 Cont’d……….
Prepare design specifications
 The team develops the conceptual design specifications
for the following elements:
 Input, Data storage, Processing procedures and
operations, and Outputs.
Prepare conceptual systems design report
 Conceptual systems design report is developed &
submitted.
 To guide physical systems design activities
 To communicate how management and user
information needs will be met
 To help assess systems’ feasibility
 Physical design
 It translates the broad, user-oriented AIS
requirements of a conceptual design into detailed
specifications that are used to code and test the
computer program.

Physical Systems Design

Output Program
design design

File and data Procedures

base design design

Input Controls
design design
©2003 Prentice Hall Business Publishing, 18-16
Accounting Information Systems, 9/e, Romney/Steinbart
 Cont’d………
 At the end of physical design phase the team
prepares a physical systems design report.
 The report becomes the basis for management’s
decision whether to proceed to the
implementation phase.
 Implementation and conversion

 Systems implementation is the process of

installing hardware and software and getting the
AIS up and running.
The Systems Development
Life Cycle: Implementation and
Conversion
Implementation and Conversion
Develop plan
Install hardware and software
Train personnel, test the system
Operation
Complete documentation
and
Convert from old to new system Maintenance
Fine-tune and review
Deliver operational system

©2003 Prentice Hall Business Publishing, 16-15

Accounting Information Systems, 9/e, Romney/Steinbart
 Cont’d……….
 The relationship of the items in this phase and the
conversion process

Systems Implementation
Implementation planning

Develop and Prepare site; Select

test software install and and train
programs test hardware personnel

Complete Test system

documentation

Conversion
©2003 Prentice Hall Business Publishing, 18-27
Accounting Information Systems, 9/e, Romney/Steinbart
 Cont’d……….
Cont’d………

 An implementation plan consists of implementation tasks,

expected completion dates, cost estimates, and the person

responsible for each task.

 There are four conversion approaches.

 Direct conversion

 Parallel conversion

 Phase-in conversion

 Pilot conversion
 Operations and maintenance
 A post-implementation review should be conducted
on a newly installed system.
The Systems Development
Life Cycle: Operation and
Maintenance
Feasibility analysis
Operation and Maintenance and decision points:
Operate system Economic
Feasibility
Modify system
Do ongoing maintenance Technical Feasibility

Deliver improved system Legal Feasibility

Scheduling
Feasibility
Systems
Operational
Analysis Feasibility

©2003 Prentice Hall Business Publishing, 16-16

Accounting Information Systems, 9/e, Romney/Steinbart
 key Players in SDLC
The people involved in SDLC
 Management
 Providing support and encouragement
 Establishing system goals and objectives
 Determine information requirements
 Accountants
 Determine their information needs
 Members of the project development team
 Play an active role in designing system controls
 Cont’d……….
 Information systems steering committee
 Set policies that govern the AIS
 Ensures top-management participation
 Guidance and control
 Facilitates coordination & integration of IS
activities
 Project development team
 Plan each project
 Monitor project
 Make sure proper consideration is given to the
human element
 Cont’d……….
 System analysts and programmers

 Study existing systems

 Design new systems and prepare specifications

 Write computer programs

 External players

 Others
 People Interacting in SDLC
 Management
 Accountants
 Users
 Information systems steering committee
 Project development team
 Systems analysts and programmers

20-85
 Planning SDLC
 Project Development Plan
 Cost/benefit analysis
 Developmental and operational requirements (people,
hardware, software, and financial)
 Schedule of the activities required to develop and operate the
new application

 Master Plan
 What the system will consist of
 How it will be developed
 Who will develop it
 How needed resources will be acquired
 Where the AIS is headed 20-86
 Planning Technique—PERT Chart
 Program Evaluation and Review Technique
(PERT)
 Network of arrows and nodes representing project
activities that require an expenditure of time and
resources and the completion and initiation of
activities
 Completion time estimates made

 Critical path—the path requiring the greatest amount

of time is determined
Planning Technique—GANTT
Chart
 A bar chart with project activities
on the left-hand side and units of
time across the top
 Graphically shows the entire
schedule for a large, complex
project
3-89
 Feasibility Analysis
 Does it make sense to proceed with new system?
 Economic:
 Will system benefits justify the time, money, and resources required to implement it?
 Technical:
 Can the system be developed and implemented using existing technology?
 Legal:
 Does the system comply with all applicable federal and state laws, administrative
agency regulations, and contractual obligations?
 Scheduling
 Can the system be developed and implemented in the time allotted?
 Operational
 Does the organization have access to people who can design, implement, and operate
the proposed system? Will people use the system?

20-90
 Capital Budgeting: Economic
Feasibility
Techniques
Cost-Benefit Analysis  Payback Period
 Number of years required for the net
 Benefits and costs are estimated savings to equal the initial cost of the
and compared to determine investment.
whether the system is cost  Net Present Value (NPV)
beneficial.  Future benefits are discounted back
to the present.
 Benefits and costs that are not  Initial cost is subtracted.
easily quantifiable are estimated  Positive NPV = economically
and included. feasible.
 Internal Rate of Return (IRR)
 If they cannot be accurately
 The effective interest rate that results
estimated, they are listed, and in an NPV of zero.
their likelihood and expected  A project’s IRR is compared with a
impact on the organization minimum acceptable rate to
determine acceptance or rejection.
evaluated.
 System Failure Due to
Change
 The best system will fail without the support
of the people it serves.
 Why people resist change:
 Fear
 Lack of top management support
 Lack of communication
 Disruptive nature of change
 Methods of instituting change
 Biases and emotions
 Personal characteristics and background
 Types of Resistance
 Aggression
 Behavior that destroys, cripples, or weakens system
effectiveness, such as increased error rates, disruptions,
or deliberate sabotage
 Projection
 Blaming the new system for everything that goes wrong

 Avoidance
 Ignoring a new AIS in the hope that the problem (the
system) will eventually go away
20-93
 Preventing Resistance
 Obtain management support
 Meet user needs
 Involve users
 Stress new opportunities
 Avoid being too emotional
 Provide user training
 Reexamine performance evaluation to make sure they are
aligned with new system
 Keep communication lines open
 Control users expectations
95

Thank you!

The End!