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Chapter 3

This document discusses systems documentation techniques, specifically data flow diagrams (DFDs), flowcharts, and business process diagrams. It describes how these tools can be used to understand, evaluate, and document information systems. DFDs use symbols to represent data sources, flows, transformation processes, storage, and destinations within a system. Flowcharts provide a graphical description of a system's inputs, processes, and outputs. Business process diagrams describe the business processes used by a company. These documentation tools help accountants and auditors evaluate internal controls and understand how systems operate.

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0% found this document useful (0 votes)
301 views29 pages

Chapter 3

This document discusses systems documentation techniques, specifically data flow diagrams (DFDs), flowcharts, and business process diagrams. It describes how these tools can be used to understand, evaluate, and document information systems. DFDs use symbols to represent data sources, flows, transformation processes, storage, and destinations within a system. Flowcharts provide a graphical description of a system's inputs, processes, and outputs. Business process diagrams describe the business processes used by a company. These documentation tools help accountants and auditors evaluate internal controls and understand how systems operate.

Uploaded by

doaaalaa615
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Accounting Information Systems

Chapter 3. Systems Documentation Techniques


Learning Objectives
After studying this chapter, you should be able to:
1. Prepare and use data flow diagrams to understand, evaluate, and document
information systems.
2. Prepare and use flowcharts to understand, evaluate, and document
information systems.
3. Prepare and use business process diagrams to understand, evaluate, and
document information systems.
3.1. Introduction
Documentation explains how a system works, including the who, what, when,
where, why, and how of data entry, data processing, data storage, information
output, and system controls. Popular means of documenting a system include
diagrams, flowcharts, tables, and other graphical representations of data and
information. These are supplemented by a narrative description of the
system, a written step-by-step explanation of system components and
interactions.
In this chapter, we explain three common systems documentation tools:
data flow diagrams, flowcharts, and business process diagrams.
Documentation tools are important on the following levels:
1. At a minimum, you must be able to read documentation to determine how
a system works.
2. You may need to evaluate documentation to identify internal control
strengths and weaknesses and recommend improvements as well as to
determine if a proposed system meets the company’s needs.

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3. More skill is needed to prepare documentation that shows how an existing


or proposed system operates.
This chapter discusses the following documentation tools:
1. Data flow diagram (DFD), a graphical description of data sources, data
flows, transformation processes, data storage, and data destinations
2. Flowchart, which is a graphical description of a system. There are several
types of flow charts, including:
a. Document flowchart, which shows the flow of documents and
information between departments or areas of responsibility.
b. System flowchart, which shows the relationship among the input,
processing, and output in an information system.
c. Program flowchart, which shows the sequence of logical operations a
computer performs as it executes a program.
3. Business Process diagrams, which are graphical descriptions of the
business processes used by a company.
Accountants use documentation techniques extensively. Auditing
standards require that independent auditors understand the automated and
manual internal control procedures an entity uses. One good way to gain this
understanding is to use business process models or flowcharts to document a
system, because such graphic portrayals more readily reveal internal control
weaknesses and strengths. The Sarbanes-Oxley Act (SOX) of 2002 requires
an internal control report in public company annual reports that (1) states that
management is responsible for establishing and maintaining an adequate
internal control structure and (2) assesses the effectiveness of the company’s
internal controls. SOX also specifies that a company’s auditor must evaluate
management’s assessment of the company’s internal control structures and

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attest to its accuracy. The auditor’s attestation should include a specific


notation about significant defects or material noncompliance found during
internal control tests. This means that both the company and its auditors have
to document and test the company’s internal controls. To do so, they must be
able to prepare, evaluate, and read different types of documentation, such as
business process
models and flowcharts.
Documentation tools are also used extensively in the systems
development process. In addition, the team members who develop
information systems applications often change, and documentation tools help
the new team members get up to speed quickly. Documentation is easier to
prepare and revise when a software package is used. Once a few basic
commands are mastered, users can quickly and easily prepare, store, revise,
and print presentation-quality documentation.
3.2. Data Flow Diagrams
A data flow diagram (DFD) graphically describes the flow of data within an
organization. It uses the first four symbols shown in Figure 3-1 to represent
four basic elements: data sources and destinations, data flows, transformation
processes, and data stores. For example, Figure 3-2 shows that the input to
process C is data flow B, which comes from data source A. The outputs of
process C are data flows D and E. Data flow E is sent to data destination J.
Process F uses data flows D and G as input and produces data flows I and G
as output. Data flow G comes from and returns to data store H. Data flow I is
sent to data destination K. Figure 3-3 assigns specific titles to each of the
processes depicted in Figure 3-2.

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Figures 3-2 and 3-3 will be used to examine the four basic elements of
a DFD in more detail. In Chapters the following chapters, the basic DFD has
been adapted so that it shows internal controls, using the triangle symbol
(highway warning symbol) shown in Figure 3-1. The internal controls are
numbered, and an accompanying table explains the internal control. Users
who do not wish to indicate internal controls simply ignore the triangle
symbol.
A data source and a data destination are entities that send or receive
data that the system uses or produces. An entity can be both a source and a
destination. They are represented by squares, as illustrated by items A
(customer), J (bank), and K (credit manager) in Figure 3-3.

A data flow is the movement of data among processes, stores, sources,


and destinations. Data that pass between data stores and a source or
destination must go through a data transformation process. Data flows are
labeled to show what data is flowing. The only exception is data flow between

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a process and a data store, such as data flow G in Figure 3-3, because the data
flow is usually obvious. In data flow G, data from the accounts receivable file
is retrieved, updated, and stored back in the file. Other data flows in Figure 3-
3 are B (customer payment), D (remittance data), E (deposit), and I
(receivables data).

If two or more data flows move together, a single line is used. For
example, data flow B (customer payment) consists of a payment and
remittance data. Process 1.0 (process payment) splits them and sends them in
different directions. The remittance data (D) is used to update accounts
receivable records, and the payment (E) is deposited in the bank. If the data
flow separately, two lines are used. For example, Figure 3-4 shows two lines
because customer inquiries (L) do not always accompany a payment (B). If
represented by the same data flow, the separate elements and their different
purposes are obscured, and the DFD is more difficult to interpret. Processes
represent the transformation of data. Figure 3-3 shows that process payment

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(C) splits the customer payment into the remittance data and the check, which
is deposited in the bank. The update receivables process (F) uses remittance
(D) and accounts receivable (H) data to update receivable records and send
receivables data to the credit manager.
A data store is a repository of data. DFDs do not show the physical
storage medium (such as a server or paper) used to store the data. As shown
in Figure 3-3, data stores (H) are represented by horizontal lines, with the
name of the file written inside the lines.

Subdividing The DFD


DFDs are subdivided into successively lower levels to provide ever-increasing
amounts of detail, because few systems can be fully diagrammed on one sheet
of paper. Also, users have differing needs, and a variety of levels can better
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satisfy differing requirements. The highest-level DFD is referred to as a


context diagram because it provides the reader with a summary-level view of
a system. It depicts a data processing system and the entities that are the
sources and destinations of system inputs and outputs. For example, Ashton
drew Figure 3-5 to document payroll processing procedures at S&S. The
payroll processing system receives timecard data from different departments
and employee data from human resources. The system processes these data
and produces (1) tax reports and payments for governmental agencies, (2)
employee paychecks, (3) a payroll check deposited in the payroll account at
the bank, and (4) payroll information for management. Ashton used the
description of S&S’s payroll processing procedures in Table 3-1 to
decompose the context diagram into successively lower levels, each with an
increasing amount of detail. Read this description and determine the
following: How many major data processing activities are involved? What are
the data inputs and outputs of each activity (ignoring all references to people,
departments, and document destinations)?

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The narrative in Table 3-1 describes five data processing activities:


1. Updating the employee/payroll master file (first paragraph).
2. Handling employee compensation (second, fifth, and sixth paragraphs).
Later in this chapter, you will see a breakdown of this activity into smaller
parts in a lower-level DFD.
3. Generating management reports (third paragraph).
4. Paying taxes (fourth paragraph).
5. Posting entries to the general ledger (last paragraph).
The five activities and all data inflows and outflows are shown in Table 3-2.

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Ashton exploded his context diagram and created the Level 0 DFD
(called Level 0 because there are zero meaningful decimal points—1.0, 2.0,
etc.) shown in Figure 3-6. Notice that some data inputs and outputs have been
excluded from this DFD. For example, in process.2.0, the data inflows and
outflows that are not related to an external entity or to another process are not
depicted (tax tables and payroll register). These data flows are internal to the
“pay employees” activity and are shown on the next DFD level.
Ashton exploded process 2.0 (pay employees) to create a Level 1 DFD
(it has one meaningful decimal place–2.1, 2.2, etc.). Figure 3-7 provides more
detail about the data processes involved in paying employees, and it includes
the tax rates table and the payroll register data flow omitted from Figure 3-6.
In a similar fashion, each of the Figure 3-6 processes could be exploded, using
a Level 1 DFD, to show a greater level of detail. Some general guidelines for
developing DFDs are:
1. Understand the system.
2. Ignore unimportant aspects of the system.
3. Determine system boundaries.

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4. Develop a context diagram.


5. Identify data flows.
6. Data elements that always flow together should be grouped together
and shown as one data flow until they are separated.
7. Identify transformation processes.
8. Transformation processes that are logically related or occur at the same
time and place should be grouped together.
9. Identify all files or data stores.
10. Identify all data sources and destinations.
11. Name all DFD elements.
12.Give each process a sequential number.
13. Refine the DFD.
14. Prepare a final copy.

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3.3. Flowcharts
A flowchart is a pictorial, analytical technique used to describe some aspect
of an information system in a clear, concise, and logical manner. Flowcharts
record how business processes are performed and how documents flow
through the organization. They are also used to analyze how to improve
business processes and document flows. Most flowcharts are drawn using a
software program such as Visio, Word, Excel, or PowerPoint. Flowcharts use
a standard set of symbols to describe pictorially the transaction processing
procedures a company uses and the flow of data through a system.
Flowcharting symbols are divided into four categories, as shown in Figure 3-
8:
1. Input/output symbols show input to or output from a system.
2. Processing symbols show data processing, either electronically or by hand.
3. Storage symbols show where data is stored.
4. Flow and miscellaneous symbols indicate the flow of data, where
flowcharts begin or end, where decisions are made, and how to add

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explanatory notes to flowcharts. General guidelines for preparing good


flowcharts are presented in Focus 3-2.
Focus 3-2.
1 Understand a system before flowcharting it. 5 Page Connectors. If flowchart
2 Identify the entities to be flowcharted. cannot fit on one page use off-
page connectors.
3 Organize flowchart. Design so that data 6 Draw a rough sketch of the
flows from top to bottom and from left to flowchart. Be more concerned
right. Show where documents or processes with capturing content than with
originate, where data is processed, and making a perfect drawing. Review
where data is stored and sent. Show the final it with people familiar with the
disposition of all documents to prevent loose system. Make sure all uses of
ends that leave the reader dangling. Show flowcharting conventions are
data entered into or retrieved from a consistent.
database as passing through a processing
operation (i.e., computer program) first. In
document flowcharts, divide the flowchart
into columns with labels.
4 Clearly label all symbols. Write a 7 Draw the final flowchart. Place the
description of the input, process, or output flowchart name, date, and
inside the symbol. Use arrowheads on all preparer’s name on each page.
flow lines.

Types of Flowcharts
Document flowcharts were developed to illustrate the flow of documents and
data among areas of responsibility within an organization. They trace a
document from its cradle to its grave, showing where each document
originates, its distribution, its purpose, its disposition, and everything that
happens as it flows through the system.

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Figure 3.8 Common Flowcharting Symbols

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A special type of flowchart, called an internal control flowchart, is


used to describe, analyze, and evaluate internal controls. They are used to
identify system weaknesses or inefficiencies, such as inadequate
communication flows, insufficient segregation of duties, unnecessary
complexity in document flows, or procedures responsible for causing wasteful

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delays. The document flowchart Ashton developed for the manual payroll
process at S&S, as described in Tables 3-1 and 3-2, is shown in Figure 3-9.

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A system flowchart depicts the relationships among system input,


processing, storage, and output. The sales processing flowchart in Figure 3-
10 represents Ashton’s proposal to capture sales data using state-of-the-art
sales terminals. The terminals will capture and edit the sales data and print a
customer receipt. The terminals periodically send all sales data to corporate
headquarters so that the accounts receivable, inventory, and sales/marketing
databases and the general ledger can be updated. Management and other users
can access the files at any time by using an inquiry processing system.
Guidelines for Preparing Flowcharts
1. Understand the system.
2. Identify departments, job functions, and external parties. Identify
business processes, documents, data flows, and data processing
procedures.
3. Design the flowchart so that data flows from top to bottom and from
left to right. Where appropriate, ensure that all procedures and
processes are in proper order. Show where documents or processes
originate, where data is processed, and where data is stored and sent.
Show the final disposition of all documents to prevent loose ends that
leave the reader dangling.
4. Clearly label all symbols.
5. If a flowchart cannot fit on a single page, clearly number the pages and
use off-page connectors to move from one page to another.
6. Draw a rough sketch of the flowchart.
7. Draw a final copy of the flowchart.

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Figure 3-10 System Flowchart of Sales Processing at S&S

Program Flowcharts
A program flowchart illustrates the sequence of logical operations performed
by a computer in executing a program. The relationship between system and
program flowcharts is shown in Figure 3-11.

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Business Process Diagrams


A Business Process Diagram (BPD) is a visual way to describe the different
steps or activities in a business process. For example, there are many activities
in the revenue cycle. Among them are receiving an order, checking customer
credit, verifying inventory availability, and confirming customer order
acceptance. Likewise, there are multiple activities involved in the expenditure
cycle. Among them are shipping the goods ordered, billing the customer, and
collecting customer payments. All of these activities can be shown on a BPD
to give the reader an easily understood pictorial view of what takes place in a
business process.
While BPDs can describe interactions within an entity as well as
interactions between entities, the BPDs in the textbook do not document the
activities performed by external parties. Thus, a BPD for the revenue cycle
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will only describe the functions performed by the selling company and a BPD
for the expenditure cycle only depicts the activities performed by the
purchasing company.
The Business Process Modeling Initiative Notation Working Group
established standards for drawing BPDs. There are many different symbols
that can be used in drawing a BPD. The text uses only a limited set of those
symbols, as shown in Figure 3-12, to produce easy to create and understand
BPDs.
FIGURE 3-12 Business Process Diagram Symbols

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Ashton prepared the BPD in Figure 3-13 to document payroll


processing at S&S based on the narrative contained in Table 3-1.
FIGURE 3-13 Business Process Diagram of Payroll Processing at S&S

Guidelines for Preparing Business Process Diagrams


1. Identify and understand the business processes. Develop this
understanding by observing organization business processes and data
flows, observing and interviewing those involved in the business process,
reading a narrative description of the system, or walking through system
transactions. Identify departments, job functions, and external parties.

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Identify business processes, documents, data flows, and data processing


procedures.
2. Ignore certain items. Like DFDs, BPDs depict what happens, but do not
specify how (i.e., by means of what technology) a process activity occurs.
Therefore, BPDs do not need to be revised every time the technology used
to accomplish the activity is changed. Unlike flowcharts, you do not need
to show the documents as they flow through the system or show where
they are stored.
3. Decide how much detail to include.
4. Organize diagram. BPDs usually consist of two columns and as many rows
as needed to explain the process. The first column shows the different
employees or departments involved in the business process. The second
column shows the activities performed by the employee shown in the first
column.
5. Enter each business process on the diagram. Show where each business
process begins and ends. Show each activity in the business process in the
order it takes place and in the appropriate row, using the appropriate
symbols.
6. Draw a rough sketch of the BPD. Be more concerned with capturing
content than with making a perfect drawing. Few systems can be
diagramed in a single draft. Review it with the people familiar with the
system.
7. Draw a final copy of the BPD.

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Questions
Choose the best answer for the following statements
1. A DFD is a representation of which of the following?
a. the logical operations performed by a computer program
b. flow of data in an organization
c. decision rules in a computer program
d. computer hardware configuration

2. Documentation methods such as DFDs, BPDs, and flowcharts save both


time and money, adding value to an organization.
a. True
b. False

3. Which of the following statements is FALSE?


a. Flowcharts make use of many symbols.
b. A document flowchart emphasizes the flow of documents or records
containing data.
c. DFDs help convey the timing of events.
d. Both a and b are false.

4. A DFD consists of the following four basic elements: data sources and
destinations, data flows, transformation processes, and data stores. Each is
represented on a DFD by a different symbol.
a. True
b. False

5. All of the following are guidelines that should be followed in naming DFD
data elements EXCEPT:
a. Process names should include action verbs such as update, edit, prepare,
and record.
b. Make sure the names describe all the data or the entire process.
c. Name only the most important DFD elements.
d. Choose active and descriptive names.

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6. The documentation skills that accountants require vary with their job
function. However, they should at least be able to do which of the following?
a. Read documentation to determine how the system works.
b. Critique and correct documentation that others prepare.
c. Prepare documentation for a newly developed information system.
d. Teach others how to prepare documentation.

7. Which of the following statements is FALSE?


a. A flowchart is an analytical technique used to describe some aspect of an
information system in a clear, concise, and logical manner.
b. Flowcharts use a standard set of symbols to describe pictorially the flow of
documents and data through a system.
c. Flowcharts are easy to prepare and revise when the designer utilizes a
flowcharting software package.
d. A system flowchart is a narrative representation of an information system.

8. Which of the following flowcharts illustrates the flow of data among areas
of responsibility in an organization?
a. program flowchart
b. computer configuration chart
c. system flowchart
d. document flowchart

9. All of the following are recommended guidelines for making flowcharts


more readable, clear, concise, consistent, and understandable EXCEPT:
a. Divide a document flowchart into columns with labels.
b. Flowchart all data flows, especially exception procedures and error
routines.
c. Design the flowchart so that flow proceeds from top to bottom and from left
to right.
d. Show the final disposition of all documents to prevent loose ends that leave
the reader dangling.

10. How are data sources and destinations represented in a data flow diagram?
a. as a square
b. as a curved arrow

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c. as a circle
d. as two parallel lines
e. none of the above

Prepare and use flowcharts to understand, evaluate, and document


information systems.

1. The correct label for Shape 1 in the flowchart below is


a. Purchase Order 3
b. Purchase Requisition 1
c. Accounts Payable Trial Balance
d. Purchase Order 2

2. The correct label for Shape 2 in the flowchart below is


a. 1
b. Purchase Requisition 1
c. Receiving Report 1
d. 2

3. The correct label for Shape 3 in the flowchart below is


a. Purchase Order 1.
b. Purchase Requisition 1.
c. Receiving Report 1.
d. 4.

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4. An invoice is prepared from the sales file and the shipping file, both of
which are stored on a hard drive. Which one of the following diagrams
represents this activity?
a.

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b.

c.

d.

5. A customer's check is received and sent to the accounting office for


processing. The customer's account receivable file, stored on a hard drive, is
updated. Which one of the following diagrams represents this activity?
a.

b.

c.

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d.

6. A report is generated from data stored on a hard drive. Which one of the
following diagrams represents this activity?
a.

b.

c.

d.

7.Terrell and Monique Anderson run an antique store in their hometown of


Dayton, Ohio. To find items to sell in their shop, they travel around the United
States and Europe buying unique artifacts. Within an hour of making a
purchase, they use their smartphone to take a picture of the item and post a
short tweet about the item on Twitter. Then, they ship the item back to Dayton
for sale in their shop. Which symbol should be used to represent Twitter in a
context diagram of this process?

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a.

b.

c.

d.

8. Terrell and Monique Anderson run an antique store in their hometown of


Dayton, Ohio. To find items to sell in their shop, they travel around the United
States and Europe buying unique artifacts. Within an hour of making a
purchase, they use their smartphone to take a picture of the item and post a
short tweet about the item on Twitter. Which symbol should be used to
represent the preparation of data for their tweet in a context diagram of this
process?
a.

b.

c.

d.

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