ch3s (2) - SYSTEMS DEVELOPMENT AND DOCUMENTATION TECHNIQUES...

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Unformatted text preview: SYSTEMS DEVELOPMENT AND DOCUMENTATION TECHNIQUES Chapter 3 What is documentation? Narratives Flowcharts Diagrams Other written material Importance of Documentation SAS-94 requires that auditors understand the automated and manual procedures an entity uses. SOX requires that publicly-traded corporations and their auditors document and test the company's internal controls. Auditing Standard No. 2 requires that the external auditor express an opinion on the client's system of internal controls. Data Flow Diagrams (DFDs) Definition graphically depicts the logical flow of data Elements: Data sources/destinations Data flow lines Processes Data stores Data Flow Diagrams Accounts Receivable Customer Customer payment 1.0 Process Payment Remittance data 2.0 Update A/R Receivables Information Credit Manager Deposit Bank Context Diagram -- Payroll ts or p re d an m ay p s nt e Time cards Departments x Ta Government agencies Employee paychecks Employees Payroll Processing System Payroll check Human resources Bank New employee form Payroll report Employee change form Management Level 0 DFD Employee change form New employee form Human resources 1.0 Update employee/ payroll file Employee/ payroll file 3.0 Prepare reports Departments Time cards y lo p m E ee k ec ch s Employees 2.0 Pay employees Payroll tax disbursement voucher 4.0 Pay taxes Payroll checks Bank Payroll disbursement data 5.0 Update general ledger General ledger Payroll report Management Tax reports and check Government agencies Level 1 DFD for Process 2.0 cks e che loye Departments Time cards Emp Employees Payroll register 2.1 Process payroll 2.2 Prepare cash disbursements Payroll checks Bank Tax rates tables Employee/payroll file Payroll disbursement voucher Data Flow Diagram Example Data Inputs Processes Data Outputs Data Flow Diagram Example CAST Manual Module: Purchases As raw materials are needed for production and bottling, Production sends a purchase requisition to Purchasing where a prenumbered purchase order is completed in quadruplicate. The purchase order must be approved and signed by a purchasing supervisor. Copy 1 of the purchase order is sent to the supplier. Copy 2 of the purchase order is sent to Accounting. Copy 3 of the purchase order is sent to Receiving. Copy 4 of the purchase order and the purchase requisition are held temporarily in Purchasing. As goods are received from suppliers, they are inspected, counted and compared to copy 3 of the purchase order. A prenumbered receiving report is prepared in triplicate. Copy 3 of the receiving report and copy 3 of the purchase order are filed numerically. Copy 2 of the receiving report is sent to Purchasing where it is matched with copy 4 of the purchase order and the purchase requisition and filed numerically. Flowcharts Definition a tool used to depict a part of an information system in a clear, concise, and logical manner Types Document flowchart - depicts flow of documents & information between areas of responsibility within an organization Computer system flowchart depicts how data are captured & input into the system, the processing performed on the data, and the information output by the AIS Program flowchart indicates the sequence of logical operations performed by the computer when executing a program Flowchart Symbols: Input/Output Symbol Name Document; multiple copies Manual or online keying Display Input/output; Journal/ledger Transmittal tape; batch total Terminal or personal computer Flowchart Symbols: Processing Symbol Name Computer processing Manual operation Auxiliary operation Offline keying operation; Flowchart Symbols: Storage Symbol Name Magnetic disk Magnetic tape Diskette Online storage Manual file N numeric A alphabetic D date Flowchart Symbols: Miscellaneous Symbol Name Document or processing flow Data or information flow Communication link A P2/1 On-page connector Off-page connector Flowchart Symbols: Miscellaneous Symbol Terminal Decision Annotation Name P2/2 P2/3 P2/1 Flowchart Example CAST Manual Module: Purchases As raw materials are needed for production and bottling, Production sends a purchase requisition to Purchasing where a prenumbered purchase order is completed in quadruplicate. The purchase order must be approved and signed by a purchasing supervisor. Copy 1 of the purchase order is sent to the supplier. Copy 2 of the purchase order is sent to Accounting. Copy 3 of the purchase order is sent to Receiving. Copy 4 of the purchase order and the purchase requisition are held temporarily in Purchasing. As goods are received from suppliers, they are inspected, counted and compared to copy 3 of the purchase order. A prenumbered receiving report is prepared in triplicate. Copy 3 of the receiving report and copy 3 of the purchase order are filed numerically. Copy 2 of the receiving report is sent to Purchasing where it is matched with copy 4 of the purchase order and the purchase requisition and filed numerically. One Final Note: Each page of each DFD or Flowchart MUST be numbered and have a proper heading which includes: the company name title of the diagram date prepared preparer's name System Flowcharts A system flowchart depicts the relationship among the inputs, processes, and outputs of an AIS. 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 outputs--the resulting new information. In other words, it's the same basic input process output pattern that we saw in the document flowchart. 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. Differences Between DFDs and Flowcharts DFDs emphasize the flow of data and what is happening in a system, whereas a flowchart emphasizes the flow of documents or records containing data. A DFD represents the logical flow of data, whereas a flowchart represents the physical flow of data. Differences Between DFDs and Flowcharts Flowcharts are used primarily to document existing systems and are concerned with the physical aspects of the input, processing and storage of the data. DFDs, in contrast, are primarily used in the design of new systems and do not concern themselves with the physical devices used to process, store, and transform data. Differences Between DFDs and Flowcharts DFDs make use of only four symbols. Flowcharts use many symbols and thus can show more detail. Summary We have: Prepared two types of graphical forms of documentation: Data flow diagrams Flowcharts Discussed the importance of these tools to accountants and when they are employed Discussed the basic guidelines for creating data flow diagrams and flowcharts ...
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