Systems Techniques and Documentation Chapter  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–1 Learning Objective Characterize the use of systems techniques by auditors and systems development personnel  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–2 Users of Systems Techniques Systems techniques are tools Analysis Design Documentation They are largely graphical (pictorial) in nature  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–3 Use of Systems Techniques in Auditing What are the two basic components of an auditing engagement? The interim audit The financial statement audit Compliance testing Substantive testing  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–4 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  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–5 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)  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–6 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  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–7 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  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–8 Use of Systems Techniques in Systems Development What are the three phases of a systems development project? Systems analysis Systems design Systems implementation  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2–9 Systems Analysis Much of a systems analyst’s job involves collecting and organizing facts Systems techniques examples: Interviewing Observations Document reviews Matrix  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 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  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Analytic, Document, and Forms Distribution Flowcharts The forms distribution chart illustrates the distribution of multiple copy forms with an organization Purchase Receive  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Analytic Flowchart Purchasing Approve Approve vendor vendor list list Suppliers Select Select vendors vendors Prepare Prepare quotation quotation requests requests Requests Requests for for quotation quotation Requests Requests for for quotation quotation Quotations Quotations  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Analytic Flowchart Purchasing Quotations Quotations Select Select bid bid Suppliers Quotations Quotations Prepare Prepare purchase purchase order order Purchase Purchase order order Purchase Purchase order order  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Document Flowchart Controller Accounts Payable Purchase Purchase requisition requisition 22 To Vendor Purchase Purchase order order 55 Vice President Manufacturing Purchasing Agent Purchase Purchase requisition requisition 11 Purchase Purchase order order 11 Receiving Purchase Purchase order order 33 Stores Purchase Purchase requisition requisition 11 Purchase Purchase order order 44  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Forms Distribution Chart Purchasing Inventory Purchase order copy Payables Production Accounting 1 2 4  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Analytical Flowcharting Illustration Symbol selection System analysis Drawing the flowchart Sandwich rule Use of connector symbol Entity-column relations  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– 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  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Resource Utilization Analysis Work measurement involves four basic steps Identify the tasks Obtain time estimates for performing the tasks Adjust these time estimates Analyze requirements based on these data  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Resource Utilization Analysis (Average time/unit + Idle time/unit) × Average volume = Total task time Total time available ÷ Total task time = Capacity utilization  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Decision Analysis Techniques Decision to be made Conditions that can occur Path to be followed for each condition  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Branching Table Format Code equal to Go to Inconnector Inconnector reference reference  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Decision Table Format Table Title If: Then: Condition stub Action stub Rules Condition entry … N Action entry  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– Decision Table for Processing Labor Distribution If Then Line 10 11 12 13 14 Condition action Rule 15 Regular hours 15 Overtime hours 15 Shift bonus hours Y Y Y – – N – N Y – – N N Y Y – N N Y N Regular dollars × × × × Overtime dollars × × Shift dollars × × Error no shift or OT × × × Nest record × × × × × × × Go to – F (Function); R (Rule, same table); T (Table)  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2– End of Chapter  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood – 50 ... Publishing, Accounting Information Systems, 9/e, by Bodnar/ Hopwood 2–8 Use of Systems Techniques in Systems Development What are the three phases of a systems development project? Systems analysis Systems... analysis Systems design Systems implementation  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/ Hopwood 2–9 Systems Analysis Much of a systems analyst’s job involves... Publishing, Accounting Information Systems, 9/e, by Bodnar/ Hopwood 2–6 Working Papers These are the records kept by an auditor of the procedures and tests applied, the information obtained, and conclusions