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Accounting Information Systems

Fourteenth Edition

Chapter 3

Systems Documentation Techniques

Chapter 3: Systems Documentation Techniques

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Learning Objectives

Prepare and use data flow diagrams to understand, evaluate, and document information systems.

Prepare and use flowcharts to understand, evaluate, and document information systems.

Prepare and use business process diagrams to understand, evaluate, and document information systems.

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Why Document Systems?

Accountants must be able to read documentation and understand how a system works (e.g., auditors need to assess risk)

Sarbanes–Oxley Act (SOX) requires management to assess internal controls and auditors to evaluate the assessment

Used for systems development and changes

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It has been said that a picture is worth a thousand words, and that certainly is true when it comes to an easy way to understand an organization’s information system. Documenting an information system requires great skill; however, the ability to understand and read a documentation can be quite intuitive.

Although there are many methods used in business to document systems, the text uses the three most popular for accountants: data flow diagrams, systems flowcharts, and Business Process Modeling Notation (BPMN).

Data Flow Diagrams (DFD)

Focuses on the data flows for:

Processes

Sources and destinations of the data

Data stores

DFD are visually simple and can be used to represent the same process at a high abstract (summary) or detailed level.

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Basic Data Flow Diagram Elements

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Chapter 3: Systems Documentation Techniques

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There are five basic elements to the data flow diagram:

The square box symbol represents where the data is coming from (source) and where it ends (destination). An example from a revenue cycle perspective is that the customer would be a data source.

2. The arrows are symbols showing the directional flow of data from a source to

either: a transformative process, data store, or data destination.

The circle is a symbol that shows a transformative process. This can be at a high “context” level such as “process revenue cycle”; or it could be at a more detailed level such as “sales order entry”.

4. The two horizontal lines represent data storage.

A triangle is used in a DFD which would identify controls associated with the process.

Entity

Represents a source of data or input into the system (e.g. customer)

Represents a destination of data or output from the system (e.g. credit manager)

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Data Flows

Movement of data among:

Entities (sources or destinations)

Processes (e.g. update receivables)

Data stores

Label should describe the information moving (e.g. customer payment)

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Process

Represents the transformation of data

E.g. preparing data for submission would be a process or updating receivables

Data Store

Represents data at rest

e.g. inventory information is an example of a stored data (a line above and below)

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Basic Guidelines for Creating a DFD

Understand the system that you are trying to represent.

A DFD is a simple representation meaning that you need to consider what is relevant and what needs to be included.

Start with a high level (context diagram) to show how data flows between outside entities and inside the system. Use additional DFD’s at the detailed level to show how data flows within the system.

Identify and group all the basic elements of the DFD.

Name data elements with descriptive names, use action verbs for processes (e.g., update, edit, prepare, validate, etc.).

Give each process a sequential number to help the reader navigate from the abstract to the detailed levels.

Edit/Review/Refine your DFD to make it easy to read and understand.

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Understand the system that you are trying to represent: if you don’t understand the system that you are trying to visually represent, no one else will understand what you created. Ways to help you understand are to actually observe the process taking place, interview and ask questions, and try to do a walkthrough of a transaction to understand how the data flows, where it generates from, what activities occur within the process, and who else uses this information. It is also good to identify the source documents used as you may have seen in the chapter. Figure 3-5, for example, identifies the source document on top of the data flow arrow.

Only relevant data elements should be included in the data flow diagram.

Starting with a level of abstraction, generally drawing a context DFD that shows the data flowing between outside entities (e.g., customer) and inside the organization allows for a simple big picture of the process. Using a hierarchy to “drill-down” into the details (e.g., sales invoice process) can show more information. By creating a hierarchy of levels of detail allows the reader of the DFD to either just get the overall big picture of a process, or really get the details of a process. It would be difficult and messy creating information overload if there was no organization of the DFD making the DFD too cluttered to read.

Identify and group the data flows. If, for example, the data flows together they are in one arrow, when it separates out, they use multiple arrows. An example of this would be a sales order, some orders may be approved and continue to move through the process whereas others may not be approved and would flow back to the customer. Similarly, identify and group transformation processes, data stores, data sources, and destinations.

By being descriptive, it helps the reader understand the process better.

Giving a process a sequential number helps provide an information trail to the reader of the DFD as they move from abstract to detailed versions of the process.

As with anything, refining your draft and receiving feedback help provide for a clear understanding as to what you intend the reader will understand from your DFD.

Flowcharts

Describe an information system showing:

Inputs and Outputs

Information activities (processing data)

Data storage

Data flows

Decision steps

Key strengths of flowcharts are that they can easily capture control via decision points, show manual vs. automated processes.

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Flowcharts Symbols

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Types of Flowcharts

Document: shows the flow of documents and data for a process, useful in evaluating internal controls

System: depicts the data processing cycle for a process

Program: illustrates the sequence of logic in the system process

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Document Flowchart

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Document Flowchart (cont’d)

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Employee receives paycheck

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System Flowchart

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Program Flowchart

Note: decision diamond

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Guidelines for Drawing Flowcharts

Understand the system you are trying to represent.

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

Organize the flowchart so as it reads from top to bottom and left to right.

Clearly label all symbols.

Use page connectors (if it cannot fit on a single page).

Edit/Review/Refine to make it easy to read and understand.

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Business Process Diagrams

Is a visual way to represent the activities in a business process.

Intent is that all business users can easily understand the process from a standard notation (BPMN: Business Process Modeling Notation).

Can show the organizational unit performing the activity.

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Business Process Diagram Basic Symbols

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Payroll Business Process Diagram Example

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Note that a major difference between the data flow diagrams and flowcharts compared to the business process diagram is that the business process diagram can distinguish the department or location that the activity takes place. These rows—such as New Employee, Human Resources, Payroll, and so on—in the above figure are called swim lanes.

Guidelines for Drawing Data Flow Diagrams

Identify and understand the business process.

Decide the level of detail (summary or detailed DFD).

Organize diagram using as many rows needed to explain the process.

Enter each business process on the diagram showing where it begins and ends.

Draw a rough sketch, refine, and finalize.

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Key Terms

Documentation

Narrative description

Data flow diagram (DFD)

Data source

Data destination

Data flow

Process

Data store

Context diagram

Flowchart

Document flowchart

Internal control flowchart

System flowchart

Program flowchart

Business process diagram (BPD)

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Chapter 3: Systems Documentation Techniques

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