Chapter 03

C HAPTER 3
System Development and Documentation Techniques
2006 Prentice Hall Business Publishing
Accounting Information Systems, 10/e
Romney/Steinbartof 64 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?
2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart 2 of 68
INTRODUCTION
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 entitys 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
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
Romney/Steinbart 4 of 68
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.
INTRODUCTION
Which method should you useflowcharts or DFDs?
62.5% of IS professionals use DFDs. 97.6% use flowcharts. Both can be prepared relatively simply using available software. Both are tested on professional exams. CONCLUSION: You need to know them both.
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
DATA FLOW DIAGRAMS

A data flow diagram consists of four basic elements:
Data sources and destinations. Also called external entities Data flows Processes Data stores
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
Tue 12-10 (1) DATA FLOW DIAGRAMS

Data sources and destinations are marked in red. Can you tell which are sources and which are destinations?
Customer payment
Accounts Receivable
Customer
1.0 Process Payment
Remittance data
2.0 Update A/R
Receivables Information
Credit Manager
Deposit
Bank
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.
DATA FLOW DIAGRAMS

If two data elements flow together, then the use of one data flow line is appropriate.
Customer
Cash Rect & Remittance Slip
Process Payment
DATA FLOW DIAGRAMS

If the data elements do not always flow together, then multiple lines will be needed.
Customer Inquiry
Customer
Customer Payment
Process Payment
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 the word and in the process name
DATA FLOW DIAGRAMS

The processes are shown in red. Every process must have at least one data inflow and at least one data outflow.
Accounts Receivable
Customer
Customer payment
1.0 Process Payment
Remittance data
2.0 Update A/R
Receivables Information
Credit Manager
Deposit
Bank
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
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.
Thu 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

DATA FLOW DIAGRAMS

Departments Govt. Agencies
Payroll Processing System
Employee checks
Employees
Human Resources This is the context diagram for the S&S payroll processing system (Figure 3-5 in your textbook).
Bank
Management
Mon 11-10 (2) 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.
DATA FLOW DIAGRAMS

Departments Human Resources New employee form Employee Change form 1.0 Update empl. Payroll file Time cards 2.0 Pay Employees Payroll Disbursement data Employee checks Employees
Payroll check
Bank
This diagram shows the next level of detail for the context diagram in Figure 3-5.
3.0 Prepare reports
Employee/ Payroll file
5.0 Update Gen. Ledger
Payroll report
4.0 Pay taxes
Payroll tax disb. voucher General Ledger Tax report & payment Govt. Agencies Romney/Steinbart 22 of 68
Management
DATA FLOW DIAGRAMS

Departments Human Resources New employee form Employee Change form 1.0 Update empl. Payroll file Time cards Employee paychecks Employees
2.0 Pay Employees

Payroll Disbursement data
Payroll check
Bank
Suppose we exploded Process 2.0 (pay employees) in the next level. The sub-processes would be numbered 2.1, 2.2, 2.3, etc.
3.0 Prepare reports
Payroll report
4.0 Pay taxes
Management
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.
Extra HW CONTEXT DIAGRAM

KITCHEN CUSTOMER 0
Customer Order
Receipt Food Ordering System
Food Order
Management Report
RESTAURANT MANAGER
LEVEL 0 DIAGRAM
KITCHEN CUSTOMER
1.0
Customer Order Receipt Transform Customer Food Order Food Order
3.0 2.0 Update Goods Sold Goods Sold Data Inventory Data Update Inventory
Formatted Goods Sold Data D1 GOODS SOLD Daily Goods Sold Amounts
Formatted Inventory Data D2 INVENTORY
4.0
Produce Management Report
Daily Inventory Depletion Amounts RESTAURANT MANAGER

Management Report
DFD Balance
KITCHEN CUSTOMER Customer Order Receipt 2.0 Update Goods Sold Goods Sold Data Formatted Goods Sold Data D1 GOODS SOLD Daily Goods Sold Amounts 4.0 Produce Management Report Management Report RESTAURANT MANAGER
1.0
Food Order
Transform Customer Food Order
3.0 Update Inventory
Inventory Data
Formatted Inventory Data D2 INVENTORY
Daily Inventory Depletion Amounts
PROCESS 1 ON THE LEVEL 0 DIAGRAM
SUB PROCESS 1 THIS LEVEL 1 DIAGRAM 1.1
Level 1 Diagram
1.3 Transform Order to Kitchen Format Food Order Inventory Data
Customer Order
Process Customer Order
Customer Order
Customer Order Customer Order Customer Order 1.4 1.2 Generate Customer Receipt Receipt Generate Good Sold Increments
1.5
Generate Inventory Decrements
Goods Sold Data
NOTE HOW WE HAVE THE SAME INPUTS AND OUTPUTS AS THE ORIGINAL PROCESS SHOWN IN THE LEVEL 0 DIAGRAM
Another Level 1 Diagram

ORGINAL LEVEL 0 PROCESS Daily Goods Sold Amounts 4.0 Produce Management Report Daily Inventory Depletion Amounts Management Report
Daily Inventory Depletion Amounts 4.1 Access Goods Sold and Inventory Data Inventory Data
LEVEL 1 PROCESSES
Daily Goods Sold Amounts
Goods Sold Data
4.2 Aggregate Goods Sold and Inventory Data

4.3 Prepare Management Report Management Report
PROCESSES 2.0 AND 3.0 ON THE LEVEL 0 DIAGRAM DO NOT NEED FURTHER DECOMPOSTION
Mon 13-10 DATA FLOW DIAGRAMS

Lets step through some guidelines on how to create a DFD. RULE 1: Understand the system. Observe the flow of information and interview people involved to gain that understanding. RULE 2: Ignore control processes and control actions (e.g., error corrections). Only very critical error paths should be included. RULE 3: Determine the system boundaries where it starts and stops. If youre not sure about a process, include it for the time being.
DATA FLOW DIAGRAMS

RULE 4: Draw the context diagram first, and then draw successively greater levels of detail. RULE 5: Identify and label all data flows. RULE 6: Data flows that always flow together should be grouped together. Those that do not flow together should be shown on separate lines. RULE 7: Show a process (circle) wherever a data flow is converted from one form to another. Likewise, every process should have at least one incoming data flow and at least one outgoing data flow.
DATA FLOW DIAGRAMS

RULE 8: Processes that are logically related or occur simultaneously can be grouped in one process. RULE 9: Number each process sequentially. A process labeled 5.0 would be exploded at the next level into processes numbered 5.1, 5.2, etc. A process labeled 5.2 would be exploded into 5.2.1, 5.2.2, etc. RULE 10: Process names should include action verbs, such as update, prepare, etc.
DATA FLOW DIAGRAMS

RULE 11: Identify and label all data stores. RULE 12: Identify and label all sources and destinations. An entity can be both a source and destination. You may wish to include such items twice on the diagram, if needed, to avoid excessive or crossing lines. RULE 13: As much as possible, organize the flow from top to bottom and left to right.
DATA FLOW DIAGRAMS

RULE 14: Youre not likely to get it beautiful the first time, so plan to go through several iterations of refinements. RULE 15: On the final copy, lines should not cross. On each page, include: The name of the DFD The date prepared The preparers name
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 employees 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.
DATA FLOW DIAGRAMS

Departments Human Resources New employee form Employee Change form 1.0 Update empl. Payroll file Time cards 2.0 Pay Employees Payroll Disbursement data Employee paychecks Employees
Payroll check
Bank
3.0 Prepare reports
Payroll report
4.0 Pay taxes
Management
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.
Mon 18-10 FLOWCHARTS

A flowchart is an analytical technique that describes some aspect of an information system in a clear, concise, and logical manner. Flowcharts use a set of standard symbols to depict processing procedures and the flow of data.
FLOWCHARTS
Every shape on a flowchart depicts a unique operation, input, processing activity, or storage medium. Before PCs were common, flowcharts were commonly drawn with templates. Now, it is more common to use a software program such as Visio.
Microsoft and Power Point are also used The software uses pre-drawn shapes, and the developer drags the shapes into the drawing.
DOCUMENT FLOWCHARTS
A document flowchart shows the flow of documents and information among areas of responsibility in an organization. These flowcharts trace a document from origin to disposition and show:
Where a document comes from Where its distributed How its used Its ultimate disposition Everything that happens as it flows through the system
Accounting Information Systems, 10/e Romney/Steinbart 40 of 68
DOCUMENT FLOWCHARTS
Internal control flowcharts are document flowcharts used to evaluate the adequacy of internal controls, such as segregation of duties or internal checks. They can reveal weaknesses or inefficiencies such as:
Inadequate communication flows Unnecessarily complex document flows Procedures that cause wasteful delays
Document flowcharts are also prepared in the system Analysis process.

Flowcharting Symbols: Some Input Output Symbols

Symbol
Name
Document
Online keying
(Manual input from keyboard)
Display
Input/output; Journal/ledger (Data)
Flowchart Symbols: Some Processing Symbols

Symbol Name
Manual operations Computer processing
Auxiliary operation
(optical character scanner)
Flowchart Symbols: Some Storage Symbols

Symbol Name
Magnetic disk (permanent)
On-line Temporary Storage

(General Data storage)
(Stored data, moving data from one location to another)
Magnetic tape
Flowchart Symbols: Some Flow and Miscellaneous Symbols

Symbol Name
Document or processing flow

On-page connector
Off-page connector
Terminal
(Start, stop, begin, end)
Decision
Document Flowchart Symbols

A
Document
Multiple-part document
Off-line File
Journal/ Ledger
Manual Process
Terminal
On-page Connector
Off-page Connector
Annotation
This is part of the document flowchart from Figure 3-9 in your textbook.
GUIDELINES FOR PREPARING A DOCUMENT FLOWCHART

Lets step through some guidelines for preparing a document flowchart:
As with DFDs, you cant effectively prepare a flowchart if you dont understand the system, so:
Interview users, developers, auditors, and management. Administer questionnaires. Read through narratives. Walk through systems transactions
Tue 26-10 GUIDELINES FOR PREPARING A DOCUMENT FLOWCHART

Identify:
All departments using the system (the parties who do things in the story) All documents or information flows All processes performed on the documents
As you read through a narrative, you may want to mark the preceding items with different shapes (e.g., drawing a rectangle around entities, circling documents, etc.).

Use separate columns for the activity of each department.
Example: If there are three different departments or functions that do things in the narrative, there would be three columns on the flowchart. Flowchart the normal course of operations, and identify exceptions with annotations. As much as possible, the flow should go from top to bottom and left to right.

Use standard flowcharting symbols, and draw with a template or computer. Clearly label all symbols. Use annotations if necessary to provide adequate explanation. Show where each document originated and its final disposition. Every manual process should have at least one input and at least one output. If a document goes into a process it must come out Do not show process symbols for:
Forwarding a document to another department Filing a document
Forwarding a document
Filing a document

Do not connect two documents except when forwarding to another column. When a document is forwarded, show it in both locations. When using multiple copies of a document, place document numbers in the upper, righthand corner. Show on-page connectors and label them clearly to avoid excess flow lines. Use off-page connectors if the flow goes to another page.

If a flowchart takes more than one page, label the pages as 1 of 5, 2 of 5, 3 of 5, etc. Show documents or reports first in the column where they are created. Start with a rough draft; then redesign to avoid clutter and crossed lines. Verify the accuracy of your flowchart by reviewing it with users, etc. Place the flowchart name, the date, and the preparers name on each page of the final copy.
Thu 18-3 SYSTEM FLOWCHARTS

A system flowchart depicts the relationship among the inputs, processes, and outputs of an AIS. They are a pictorial representation of automated processes and files
The system flowchart begins by identifying the inputs to the system. Each input is followed by a process, i.e., the steps performed on the data. The process is followed by outputsthe resulting new information.
Additional Flowcharting Symbols for System Flowcharts
Automated Process
Auxiliary Operation
Video Display
On-line Keyboard
Keying Operation
Diskette
Magnetic Tape
Magnetic Disk
On-Line Storage
System Flowchart Shown in Figure 311 in your textbook
PROGRAM FLOWCHARTS
Program flowcharts illustrate the sequence of logical operations performed by a computer in executing a program. They also follow an input process output pattern.
The program flowchart from Figure 3-11 in your textbook is shown on the right.
FLOWCHARTS VS. DFDs

Now that weve examined both flowcharts and DFDs, it may be useful to discuss the differences again. DFDs place a heavy emphasis on the logical aspects of a system. Flowcharts place more emphasis on the physical characteristics of the system.
Mon 15- 3 FLOWCHARTS VS. DFDs

EXAMPLE: The registrars 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 bursars office for billing purposes. Class lists are mailed to faculty members.
Students
Enrollment Forms
Heres a DFD that goes with the story.
1.0 Update Student Records

Enrollment Forms
Student Records
2.0 Prepare Class Lists

Class Lists
Bursar
Enrollment Forms
Faculty
Registrars Office
Students
Students
Enrollment Forms
Sort Forms
Enrollment Forms

Enrollment Forms
A Student Records
Update Student Records
Sorted Enrollment Forms
Sorted Enrollment Forms Bursar
Prepare Class Lists

Class Lists
Enrollment Forms
Heres a flowchart that goes with the story
Class Lists
Faculty Faculty
2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e
Bursar
Mon 25-10 FLOWCHARTS VS. DFDs

Now lets change the story so that students enter enrollment data online. The registrars office sends a tape file of the enrollment data to the bursars office and continues to send paper class lists to faculty.
Students
Original DFD
Heres the revised DFD.

Students
Enrollment Forms
Enrollment Data

Enrollment Forms
Student Records

Enrollment Data
Student Records

Class Lists
Bursar
Enrollment Forms

Class Lists
Bursar
Enrollment Data
Faculty
Faculty
Registrars Office Enrollment Forms
Registrars Office
Student s
Sort Forms
Students
Enrollment Data
Enrollment Data
Prepare Class Lists
Bursar Student Records
Prepare Class Lists
Class Lists
Heres the revised flowchart.
Class Lists
Faculty
Bursar Faculty
Original Flowchart
2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e
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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C HAPTER 3

System Development and Documentation Techniques

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

DATA FLOW DIAGRAMS

An ERD is a data model, and a DFD is a process model

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

DATA FLOW DIAGRAMS

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

DATA FLOW DIAGRAMS

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

Tue 12-10 (1) DATA FLOW DIAGRAMS

1.0 Process Payment

2.0 Update A/R

DATA FLOW DIAGRAMS

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

DATA FLOW DIAGRAMS

Cash Rect & Remittance Slip

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

DATA FLOW DIAGRAMS

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

DATA FLOW DIAGRAMS

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

DATA FLOW DIAGRAMS

1.0 Process Payment

2.0 Update A/R

DATA FLOW DIAGRAMS

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

DATA FLOW DIAGRAMS

Thu DATA FLOW DIAGRAMS

The process symbol is numbered with a 0

DATA FLOW DIAGRAMS

Payroll Processing System

2006 Prentice Hall Business Publishing

Mon 11-10 (2) DATA FLOW DIAGRAMS

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

DATA FLOW DIAGRAMS

3.0 Prepare reports

Employee/ Payroll file

5.0 Update Gen. Ledger

2006 Prentice Hall Business Publishing

Accounting Information Systems, 10/e

DATA FLOW DIAGRAMS

2.0 Pay Employees

3.0 Prepare reports

Employee/ Payroll file