Systems Techniques and Documentation

1. Systems Techniquesand Documentation Chapter 2

2. Characterize the use of systems techniques by auditors and systems development personnel. Learning Objective 1

3. Analysis Design Documentation Users of Systems Techniques Systems techniques are tools. They are largely graphical (pictorial) in nature.

4. Substantive testing Compliance testing Use of SystemsTechniques in Auditing What are the two basic components of an auditing engagement? 1. The interim audit 2. The financial statement audit

5. Internal Control Evaluation Auditors are typically concerned with the flow of processing and distribution of documents within an application system. Auditors use charts to analyze the distribution of documents in a system.

6. Compliance Testing Compliance testing requires an understanding of the controls that are to be tested. Auditors must have a basic understanding of systems techniques. – input-process-output (IPO) – hierarchy plus input-process-output (HIPO) – logical data flow diagrams (DFD)

7. Working Papers These are the records kept by an auditor of the procedures and tests applied, the information obtained, and conclusions drawn during an audit engagement. Required by professional standards

8. Working Papers What are some of the systems techniques used by auditors to document and analyze the content of working papers? – internal control questionnaires – analytic flowcharts – system flowcharts – branching and decision tables

9. Use of Systems Techniquesin Systems Development What are the three phases of a systems development project? 1. Systems analysis 2. Systems design 3. Systems implementation

10. Systems Analysis Much of a systems analyst’s job involves collecting and organizing facts. Systems techniques examples: Interviewing Observations Document reviews Matrix

11. Systems Design A blueprint must be formulated for the complete system. Input/output (matrix) analysis Systems flowcharting Data flow diagrams

12. Systems Implementation Systems implementation involves the actual carrying out of the design plan. What systems techniques serve as a documentation tool? Program flowcharts Decision tables

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

14. Systems Techniques What is a flowchart? A flowchart is a symbolic diagram that shows the data flow and sequence of operations in a system.

15. Input/output Process Flowline Annotation Basic Symbols

16. Punched card Punched tape Online storage Magnetic disk Magnetic tape Specialized Input/Output Symbols

17. Specialized Input/Output Symbols Document Communication link Manual input Offline storage Display

18. Decision Auxiliary operation Predefined process Merge Preparation Extract Manual operation Sort Collate Specialized Process Symbols

19. Connector Transmittal tape Off-page connector Terminal Parallel mode Additional Symbols

20. Symbol Use in Flowcharting 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.

21. Review and approve Approved invoice Symbol Usage Illustration Normal Direction of Flow Invoice

22. Approved invoice Review and approve Symbol Usage Illustration Reverse Flow Shown with Arrowheads Invoice

23. Stores Purchasing Approved invoice A Invoice A Symbol Usage Illustration Use of Connector Symbol

24. Prepare purchase order and update vendor files Vendor files Purchase order Symbol Usage Illustration Bidirectional Flow Shown with Arrowheads Requisition

25. Define common systems techniques, such as HIPO charts, systems flowcharts, and logical data flow diagrams. Learning Objective 3

26. IPO and HIPO Charts These charts are used primarily by systems development personnel. At the most general level of analysis, only the basic input-process-output relations in a system are of concern. Additional processing detail is provided by hierarchy plus input-process-output.

27. Author: Mr. Foxx Chart Number: 3.1 System: Payroll Description: Calculate Gross Pay Date: 6/9/0X Input Process Output Payroll job record Payroll master file Accumulate hours worked Find correct pay rate Compute gross pay Gross pay records Payroll master file Error messages IPO Chart

28. 1.0 Payroll system 2.0 3.0 4.0 Data preparation Processing Review HIPO Illustration

29. 3.11 3.12 3.13 Accumulate hours worked Find correct pay rate Compute gross pay HIPO Illustration 3.1 3.2 Calculate gross pay Calculate net pay Each numbered module would be detailed in an IPO chart.

30. Systems and Program Flowcharts A systems flowchart identifies the overall or broad flow of operations in a system. A program flowchart (block flowchart) is more detailed concerning individual processing functions.

31. Name Symbol Meaning Terminator Represents sources and destinations of data Process Task or function being done Data store A repository of data Data flow Communication channel Logical Data FlowDiagram Symbols

32. Process payroll data Employees Payroll data Paychecks Payroll details Payroll data Payroll Data Data Flow Diagram Timekeeping

33. Current status Employee data Verify payroll data Payroll data P1 Data valid Valid payroll data Data Flow Diagram Expanded Timekeeping

34. Net pay and deductions Employee data Calculate pay Employees Data to process Paychecks P2 Valid payroll data Data Flow Diagram Expanded

35. Update employee files Process payroll journal Journal data Current amounts Details Net pay and deductions Employees Paychecks Data Flow DiagramExpanded Further Compute net pay

36. Analytic, Document, and Forms Distribution Flowcharts An analytic flowchart is similar to a systems flowchart in level of detail and technique. A document flowchart is similar to an analytic flowchart but contains less detail about the processing functions of each entity shown on the chart.

37. Purchase Receive Analytic, Document, and Forms Distribution Flowcharts The forms distribution chart illustrates the distribution of multiple copy forms with an organization.

38. Purchasing Suppliers Approve vendor list Select vendors Requests for quotation Analytic Flowchart Prepare quotation requests Quotations Requests for quotation

39. Quotations Quotations Select bid Prepare purchase order Purchase order Purchase order Analytic Flowchart Purchasing Suppliers

40. Vice President Manufacturing Controller Accounts Payable Purchasing Agent Receiving Stores Purchase requisition 1 Purchase requisition 1 Purchase requisition 2 2 Purchase order 1 Purchase order 3 To Vendor 2 3 4 Purchase order 4 Purchase order 5 5 Document Flowchart

41. Purchasing Inventory Payables Production Accounting Purchase order copy 1 1 1 2 2 2 3 3 4 4 5 Forms Distribution Chart

42. Analytical Flowcharting Illustration Planning the Flowchart: Symbol selection System analysis Drawing the flowchart Sandwich rule Use of connector symbol Entity-column relations

43. Narrative Techniques Narrative techniques are useful in the fact-finding stage of system analysis. What are some examples of narrative techniques? Open-ended and closed-ended questionnaires Document reviews

44. Resource Utilization Analysis Work measurement involves four basic steps. 1. Identify the tasks. 2. Obtain time estimates for performing the tasks. 3. Adjust these time estimates. 4. Analyze requirements based on these data.

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

46. Decision Analysis Techniques Branching Table: Decision to be made Conditions that can occur Path to be followed for each condition

47. Code equal to 1 2 3 4 Go to Inconnector reference Inconnector reference Branching Table Format

48. Table Title Rules 1 2 3 … N Condition entry If: Condition stub Action entry Then: Action stub Decision Table Format

49. 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 Y Y Y × × × × 2 – – N × × × 3 – N Y × × × 4 – – N × × 5 N Y Y × × 6 – N × × 7 N Y × × 8 N If Then Go to – F (Function); R (Rule, same table); T (Table) Decision Table forProcessing Labor Distribution

50. End of Chapter 2