1. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 1
Systems TechniquesSystems Techniques
and Documentationand Documentation
Chapter 2Chapter 2

2. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 2
Learning Objective 1Learning Objective 1
Characterize the use of systemsCharacterize the use of systems
techniques by auditors andtechniques by auditors and
systems development personnel.systems development personnel.

3. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 3
Users of Systems TechniquesUsers of Systems Techniques
Systems techniques are tools.Systems techniques are tools.
They are largely graphical (pictorial) in nature.They are largely graphical (pictorial) in nature.
AnalysisAnalysis DesignDesign DocumentationDocumentation

4. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 4
Use of SystemsUse of Systems
Techniques in AuditingTechniques in Auditing
What are the two basic componentsWhat are the two basic components
of an auditing engagement?of an auditing engagement?
1. The interim audit1. The interim audit
Compliance testingCompliance testing
2. The financial2. The financial
statement auditstatement audit
Substantive testingSubstantive testing

5. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 5
Internal Control EvaluationInternal Control Evaluation
Auditors are typically concerned with theAuditors are typically concerned with the
flow of processing and distribution offlow of processing and distribution of
documents within an application system.documents within an application system.
Auditors use charts to analyze theAuditors use charts to analyze the
distribution of documents in a system.distribution of documents in a system.

6. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 6
Compliance TestingCompliance Testing
Compliance testing requires an understandingCompliance testing requires an understanding
of the controls that are to be tested.of the controls that are to be tested.
Auditors must have a basic understandingAuditors must have a basic understanding
of systems techniques.of systems techniques.
–– input-process-output (IPO)input-process-output (IPO)
–– hierarchy plus input-process-output (HIPO)hierarchy plus input-process-output (HIPO)
–– logical data flow diagrams (DFD)logical data flow diagrams (DFD)

7. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 7
Working PapersWorking Papers
Required by professional standardsRequired by professional standards
These are the records kept by an auditorThese are the records kept by an auditor
of the procedures and tests applied, theof the procedures and tests applied, the
information obtained, and conclusionsinformation obtained, and conclusions
drawn during an audit engagement.drawn during an audit engagement.

8. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 8
Working PapersWorking Papers
What are some of the systems techniquesWhat are some of the systems techniques
used by auditors to document and analyzeused by auditors to document and analyze
the content of working papers?the content of working papers?
–– internal control questionnairesinternal control questionnaires
–– analytic flowchartsanalytic flowcharts
–– system flowchartssystem flowcharts
–– branching and decision tablesbranching and decision tables

9. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 9
Use of Systems TechniquesUse of Systems Techniques
in Systems Developmentin Systems Development
What are the three phases of aWhat are the three phases of a
systems development project?systems development project?
1. Systems analysis1. Systems analysis
2. Systems design2. Systems design
3. Systems implementation3. Systems implementation

10. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 10
Systems AnalysisSystems Analysis
Much of a systems analyst’s job involvesMuch of a systems analyst’s job involves
collecting and organizing facts.collecting and organizing facts.
Systems techniques examples:Systems techniques examples:
InterviewingInterviewing
Document reviewsDocument reviews
ObservationsObservations
MatrixMatrix

11. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 11
Systems DesignSystems Design
A blueprint must be formulatedA blueprint must be formulated
for the complete system.for the complete system.
Input/output (matrix) analysisInput/output (matrix) analysis
Systems flowchartingSystems flowcharting
Data flow diagramsData flow diagrams

12. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 12
Systems ImplementationSystems Implementation
Systems implementation involves theSystems implementation involves the
actual carrying out of the design plan.actual carrying out of the design plan.
What systems techniques serveWhat systems techniques serve
as a documentation tool?as a documentation tool?
Program flowchartsProgram flowcharts
Decision tablesDecision tables

13. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 13
Learning Objective 2Learning Objective 2
Describe the use of flowchartingDescribe the use of flowcharting
techniques in the analysis oftechniques in the analysis of
information processing systems.information processing systems.

14. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 14
Systems TechniquesSystems Techniques
What is a flowchart?What is a flowchart?
A flowchart is a symbolic diagramA flowchart is a symbolic diagram
that shows the data flow andthat shows the data flow and
sequence of operations in a system.sequence of operations in a system.

15. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 15
Basic SymbolsBasic Symbols
Input/outputInput/output
ProcessProcess
AnnotationAnnotation
FlowlineFlowline

16. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 16
Specialized Input/Output SymbolsSpecialized Input/Output Symbols
PunchedPunched
cardcard
OnlineOnline
storagestorage
MagneticMagnetic
diskdisk
MagneticMagnetic
tapetape
PunchedPunched
tapetape

17. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 17
Specialized Input/Output SymbolsSpecialized Input/Output Symbols
DocumentDocument
ManualManual
inputinput
DisplayDisplay
OfflineOffline
storagestorage
CommunicationCommunication
linklink

18. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 18
Specialized Process SymbolsSpecialized Process Symbols
DecisionDecision
PredefinedPredefined
processprocess
PreparationPreparation
ManualManual
operationoperation
AuxiliaryAuxiliary
operationoperation
MergeMerge
ExtractExtract
SortSortCollateCollate

19. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 19
Additional SymbolsAdditional Symbols
Parallel modeParallel mode
Transmittal tapeTransmittal tape
ConnectorConnector
Off-pageOff-page
connectorconnector
TerminalTerminal

20. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 20
Symbol Use in FlowchartingSymbol Use in Flowcharting
Symbols are used in a flowchart toSymbols are used in a flowchart to
represent the functions of anrepresent the functions of an
information or other type of system.information or other type of system.
Normal direction of flow is fromNormal direction of flow is from
left to right and top to bottom.left to right and top to bottom.
Open arrowheads should be usedOpen arrowheads should be used
on reverse-direction flowlines.on reverse-direction flowlines.

21. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 21
Symbol Usage IllustrationSymbol Usage Illustration
InvoiceInvoice
Normal Direction of FlowNormal Direction of Flow
ReviewReview
andand
approveapprove
ApprovedApproved
invoiceinvoice

22. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 22
Symbol Usage IllustrationSymbol Usage Illustration
Reverse Flow Shown with ArrowheadsReverse Flow Shown with Arrowheads
InvoiceInvoice
ReviewReview
andand
approveapprove
ApprovedApproved
invoiceinvoice

23. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 23
Symbol Usage IllustrationSymbol Usage Illustration
Use of Connector SymbolUse of Connector Symbol
ApprovedApproved
invoiceinvoice
AA
StoresStores
InvoiceInvoice
AA
PurchasingPurchasing

24. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 24
Symbol Usage IllustrationSymbol Usage Illustration
Bidirectional Flow Shown with ArrowheadsBidirectional Flow Shown with Arrowheads
RequisitionRequisition
VendorVendor
filesfiles
PreparePrepare
purchase orderpurchase order
and updateand update
vendor filesvendor files
PurchasePurchase
orderorder

25. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 25
Learning Objective 3Learning Objective 3
Define common systems techniques,
such as HIPO charts, systems
flowcharts, and logical
data flow diagrams.

26. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 26
IPO and HIPO ChartsIPO and HIPO Charts
These charts are used primarily byThese charts are used primarily by
systems development personnel.systems development personnel.
At the most general level of analysis,At the most general level of analysis,
only the basic input-process-outputonly the basic input-process-output
relations in a system are of concern.relations in a system are of concern.
Additional processing detail is providedAdditional processing detail is provided
by hierarchy plus input-process-output.by hierarchy plus input-process-output.

27. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 27
IPO ChartIPO Chart
Payroll job recordPayroll job record
Payroll master filePayroll master file
Accumulate hoursAccumulate hours
workedworked
Find correct pay rateFind correct pay rate
Compute gross payCompute gross pay
Gross pay recordsGross pay records
Payroll master filePayroll master file
Error messagesError messages
Author: Mr. FoxxAuthor: Mr. Foxx
Chart Number: 3.1Chart Number: 3.1
System: PayrollSystem: Payroll
Description: CalculateDescription: Calculate
Gross PayGross Pay Date: 6/9/0XDate: 6/9/0X
InputInput ProcessProcess OutputOutput

28. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 28
HIPO IllustrationHIPO Illustration
Payroll systemPayroll systemPayroll systemPayroll system
1.01.0
ProcessingProcessingProcessingProcessing
3.03.0
Data preparationData preparationData preparationData preparation
2.02.0
ReviewReviewReviewReview
4.04.0

29. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 29
HIPO IllustrationHIPO Illustration
CalculateCalculate
gross paygross pay
CalculateCalculate
gross paygross pay
CalculateCalculate
net paynet pay
CalculateCalculate
net paynet pay
3.13.1 3.23.2
Each numbered module would be detailed in an IPO chart.
AccumulateAccumulate
hours workedhours worked
AccumulateAccumulate
hours workedhours worked
3.113.11
Find correctFind correct
pay ratepay rate
Find correctFind correct
pay ratepay rate
3.123.12
ComputeCompute
gross paygross pay
ComputeCompute
gross paygross pay
3.133.13

30. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 30
Systems and Program FlowchartsSystems and Program Flowcharts
AA systems flowchartsystems flowchart identifies the overallidentifies the overall
or broad flow of operations in a system.or broad flow of operations in a system.
AA program flowchartprogram flowchart (block flowchart)(block flowchart)
is more detailed concerningis more detailed concerning
individual processing functions.individual processing functions.

31. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 31
Logical Data FlowLogical Data Flow
Diagram SymbolsDiagram Symbols
TerminatorTerminator
Represents sources andRepresents sources and
destinations of datadestinations of data
ProcessProcess
Task or functionTask or function
being donebeing done
Data storeData store A repository of dataA repository of data
Data flowData flow
CommunicationCommunication
channelchannel
NameName SymbolSymbol MeaningMeaning

32. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 32
Data Flow DiagramData Flow Diagram
TimekeepingTimekeepingTimekeepingTimekeeping
ProcessProcess
payrollpayroll
datadata
ProcessProcess
payrollpayroll
datadata
PayrollPayroll
datadata EmployeesEmployeesEmployeesEmployeesPaychecksPaychecks
Payroll DataPayroll Data
PayrollPayroll
datadata
PayrollPayroll
detailsdetails

33. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 33
Data Flow Diagram ExpandedData Flow Diagram Expanded
TimekeepingTimekeepingTimekeepingTimekeeping
EmployeeEmployee
datadata
CurrentCurrent
statusstatus
ValidValid
payroll datapayroll data
DataData
validvalid
PayrollPayroll
datadata
VerifyVerify
payrollpayroll
datadata
VerifyVerify
payrollpayroll
datadata
P1P1

34. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 34
Data Flow Diagram ExpandedData Flow Diagram Expanded
ValidValid
payroll datapayroll data
EmployeeEmployee
datadata
Net pay andNet pay and
deductionsdeductions
CalculateCalculate
paypay
CalculateCalculate
paypay
P2P2
Data toData to
processprocess
EmployeesEmployeesEmployeesEmployeesPaychecksPaychecks

35. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 35
Data Flow DiagramData Flow Diagram
Expanded FurtherExpanded Further
ComputeCompute
net paynet pay
ComputeCompute
net paynet pay
ProcessProcess
payrollpayroll
journaljournal
ProcessProcess
payrollpayroll
journaljournal
CurrentCurrent
amountsamounts
UpdateUpdate
employeeemployee
filesfiles
UpdateUpdate
employeeemployee
filesfiles
Net pay andNet pay and
deductionsdeductions
JournalJournal
datadata
DetailsDetails
EmployeesEmployeesEmployeesEmployees
PaychecksPaychecks

36. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 36
Analytic, Document, and FormsAnalytic, Document, and Forms
Distribution FlowchartsDistribution Flowcharts
AnAn analytic flowchartanalytic flowchart is similaris similar
to a systems flowchart in levelto a systems flowchart in level
of detail and technique.of detail and technique.
AA document flowchartdocument flowchart is similar to anis similar to an
analytic flowchart but contains lessanalytic flowchart but contains less
detail about the processing functionsdetail about the processing functions
of each entity shown on the chart.of each entity shown on the chart.

37. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 37
Analytic, Document, and FormsAnalytic, Document, and Forms
Distribution FlowchartsDistribution Flowcharts
TheThe forms distribution chartforms distribution chart illustratesillustrates
the distribution of multiple copythe distribution of multiple copy
forms with an organization.forms with an organization.
ReceiveReceivePurchasePurchase

38. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 38
Analytic FlowchartAnalytic Flowchart
PreparePrepare
quotationquotation
requestsrequests
PreparePrepare
quotationquotation
requestsrequests
RequestsRequests
forfor
quotationquotation
RequestsRequests
forfor
quotationquotation
ApproveApprove
vendorvendor
listlist
ApproveApprove
vendorvendor
listlist
SelectSelect
vendorsvendors
SelectSelect
vendorsvendors
RequestsRequests
forfor
quotationquotation
RequestsRequests
forfor
quotationquotation
PurchasingPurchasing SuppliersSuppliers
QuotationsQuotationsQuotationsQuotations

39. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 39
Analytic FlowchartAnalytic Flowchart
PurchasingPurchasing
PurchasePurchase
orderorder
PurchasePurchase
orderorder
SuppliersSuppliers
QuotationsQuotationsQuotationsQuotations
PreparePrepare
purchasepurchase
orderorder
PreparePrepare
purchasepurchase
orderorder
QuotationsQuotationsQuotationsQuotations
SelectSelect
bidbid
SelectSelect
bidbid
PurchasePurchase
orderorder
PurchasePurchase
orderorder

40. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 40
Document FlowchartDocument Flowchart
2222
PurchasePurchase
requisitionrequisition
22
PurchasePurchase
requisitionrequisition
22
PurchasePurchase
requisitionrequisition
11
PurchasePurchase
requisitionrequisition
11
PurchasePurchase
requisitionrequisition
11
PurchasePurchase
requisitionrequisition
11
PurchasePurchase
orderorder
33
PurchasePurchase
orderorder
33 PurchasePurchase
orderorder
44
PurchasePurchase
orderorder
44
PurchasePurchase
orderorder
55
PurchasePurchase
orderorder
55
To VendorTo Vendor
5555
4444
3333
2222
PurchasePurchase
orderorder
11
PurchasePurchase
orderorder
11
AccountsAccounts
PayablePayable
Purchasing AgentPurchasing Agent ReceivingReceiving StoresStores
ControllerController Vice President ManufacturingVice President Manufacturing

41. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 41
Forms Distribution ChartForms Distribution Chart
PurchasingPurchasing InventoryInventory PayablesPayables ProductionProduction AccountingAccounting
PurchasePurchase
order copyorder copy
22
33
44
55
11 11
22
44
11
22
33

42. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 42
Analytical Flowcharting IllustrationAnalytical Flowcharting Illustration
Symbol selectionSymbol selection System analysisSystem analysis
Drawing the flowchartDrawing the flowchart Sandwich ruleSandwich rule
Use of connector symbolUse of connector symbol Entity-column relationsEntity-column relations

43. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 43
Narrative TechniquesNarrative Techniques
Narrative techniques are useful in theNarrative techniques are useful in the
fact-finding stage of system analysis.fact-finding stage of system analysis.
What are some examples of narrative techniques?What are some examples of narrative techniques?
Open-ended and closed-ended questionnairesOpen-ended and closed-ended questionnaires
Document reviewsDocument reviews

44. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 44
Resource Utilization AnalysisResource Utilization Analysis
Work measurement involves four basic steps.Work measurement involves four basic steps.
1. Identify the tasks.1. Identify the tasks.
2. Obtain time estimates for performing the tasks.2. Obtain time estimates for performing the tasks.
3. Adjust these time estimates.3. Adjust these time estimates.
4. Analyze requirements based on these data.4. Analyze requirements based on these data.

45. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 45
Resource Utilization AnalysisResource Utilization Analysis
(Average time/unit + Idle time/unit)(Average time/unit + Idle time/unit)
×× Average volume = Total task timeAverage volume = Total task time
Total time available ÷ Total task timeTotal time available ÷ Total task time
= Capacity utilization= Capacity utilization

46. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 46
Decision Analysis TechniquesDecision Analysis Techniques
Decision to be madeDecision to be made
Conditions that can occurConditions that can occur
Path to be followed for each conditionPath to be followed for each condition

47. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 47
Branching Table FormatBranching Table Format
CodeCode
equal toequal to
Go toGo to
InconnectorInconnector
referencereference
11 22 33
InconnectorInconnector
referencereference
44

48. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 48
Decision Table FormatDecision Table Format
Condition stubCondition stub
Action stubAction stub
11 22 33 …… NN
If:If:
Then:Then:
Table TitleTable Title RulesRules
Condition entryCondition entry
Action entryAction entry

49. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 49
Decision Table forDecision Table for
Processing Labor DistributionProcessing Labor Distribution
LineLine
11
22
33
1010
1111
1212
1313
1414
Condition action RuleCondition action Rule
15 Regular hours15 Regular hours
15 Overtime hours15 Overtime hours
15 Shift bonus hours15 Shift bonus hours
Regular dollarsRegular dollars
Overtime dollarsOvertime dollars
Shift dollarsShift dollars
Error no shift or OTError no shift or OT
Nest recordNest record
11
YY
YY
YY
××
××
××
××
22
––
––
NN
××
××
××
33
––
NN
YY
××
××
××
44
––
––
NN
××
××
55
NN
YY
YY
××
××
66
––
NN
××
××
77
NN
YY
××
××
88
NN
IfIf
ThenThen
Go to – F (Function); R (Rule, same table); T (Table)Go to – F (Function); R (Rule, same table); T (Table)

50. © 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 2 – 50
End of ChapterEnd of Chapter
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