CHAPTER 5

Systems Development and

Documentation Techniques
 INTRODUCTION
• Questions to be addressed in this chapter
include:
– What is the purpose of documentation?
– Why do accountants need to understand
documentation?
– What documentation techniques are used
in accounting systems?
– What are data flow diagrams and
flowcharts?
 INTRODUCTION
• Documentation includes the following types
of tools:
– Narratives (written descriptions)
– Flowcharts
– Diagrams
– Other written material
 INTRODUCTION
• Documentation covers who, what,
when, where, why, and how of:
– Data entry
– Processing
– Storage
– Information output
– System controls
 INTRODUCTION
• How do accountants use documentation?
– At a minimum, they have to read documentation to
understand how a system works.
– They may need to evaluate the strengths and
weaknesses of an entity’s internal controls. E.g. auditors
– They may Organize very complicated systems into a
form that can be more readily understood
– Helping new team members understand a pre-existing
system
– They may prepare documentation for different purpose.
So that, Accountants should know about documentation
techniques.
 INTRODUCTION
There are two of the most common
documentation tools:
– Data flow diagrams
• Graphical descriptions of the
sources and destinations of data.
They show:
– Where data comes from
– How it flows
– The processes performed on it
– Where it goes
 INTRODUCTION
There are two of the most common documentation
tools:
– Data flow diagrams
– Flowcharts
• Include three types:
– Document flowcharts describe the flow of documents and
information between departments or units.
– System flowcharts describe the relationship between inputs,
processing, and outputs for a system.
– Program flowcharts describe the sequence of logical
operations performed in a computer program.
 INTRODUCTION
• Which method should you use—flowcharts
or DFDs?
62.5% of AIS professionals use DFDs.
97.6% use flowcharts.
Both can be prepared relatively simply
using available software.
Both are tested on professional exams.
You need to know them both.
 DATA FLOW DIAGRAMS
• A data flow diagram (DFD) graphically
describes the flow of data within an
organization. It is used to:
Document existing systems
Plan and design new systems
 DATA FLOW DIAGRAMS
• Example of a data flow
diagram of the Accounts
customer payment Receivable
process

Customer 1.0 Remittance 2.0 Receivables

Customer payment Process data Update Information Credit
Payment A/R Manager

Deposit

Bank
 DATA FLOW DIAGRAMS
• A data flow diagram consists of four basic
elements:
– Data sources and destinations
– Data flows
– Transformation processes
– Data stores
 DATA FLOW DIAGRAMS
• A data flow diagram consists of four basic
elements:
– Data sources and destinations
– Data flows
– Transformation processes
– Data stores
 DATA FLOW DIAGRAMS
• Data sources and destinations
– Appear as squares
– Represent organizations or individuals that send or
receive data used or produced by the system
• An item can be both a source and a destination
 DATA FLOW DIAGRAMS
• Data sources and destinations
are marked in red.
Accounts
• Can you tell which are sources Receivable
and which are destinations?

Customer 1.0 Remittance 2.0 Receivables

Customer payment Process data Update Information Credit
Payment A/R Manager

Deposit

Bank
 DATA FLOW DIAGRAMS
• A data flow diagram consists of four basic
elements:
– Data sources and destinations
– Data flows
– Transformation processes
– Data stores
 DATA FLOW DIAGRAMS
• Data flows
– Appear as arrows
– Represent the flow of data between sources
and destinations, processes, and data stores
 DATA FLOW DIAGRAMS
• Data flows are shown in red.
• Does it appear that a data
Accounts
flow can be two-way?
Receivable
• If so, how is it handled?

Customer Remittance Receivables

1.0 2.0
Customer payment data Information Credit
Process Update
Payment A/R Manager

Deposit

Bank
 DATA FLOW DIAGRAMS
• As you probably see from the previous slides, if a
data flow is two-way, use a bi-directional arrow.

Update
General
Receiv-
Ledger
ables
 DATA FLOW DIAGRAMS
• If two data elements flow together, then the
use of one data flow line is appropriate.

Cash Rec’t & Remittance Slip

Process
Customer
Payment
 DATA FLOW DIAGRAMS
• If the data elements do not always flow
together, then multiple lines will be needed.

Customer Inquiry Process

Customer Payment
Customer Payment
 DATA FLOW DIAGRAMS
• A data flow diagram consists of four basic
elements:
– Data sources and destinations
– Data flows
– Transformation processes
– Data stores
 DATA FLOW DIAGRAMS
• Processes
– Appear as circles
– Represent the transformation of data
 DATA FLOW DIAGRAMS
• The transformation
processes are shown in red.
• Every process must have at Accounts
Receivable
least one data inflow and at
least one data outflow.
Customer 1.0 Remittance 2.0 Receivables
Customer payment Process data Update Information Credit
Payment A/R Manager

Deposit

Bank
 DATA FLOW DIAGRAMS
• Data stores
– Appear as two horizontal lines
– Represent a temporary or permanent
repository of data
 DATA FLOW DIAGRAMS
• The data store is shown in
red.
• Notice that the inflows and Accounts
Receivable
outflows to the data store
are not labeled.

Customer 1.0 Remittance 2.0 Receivables

Customer payment Process data Update Information Credit
Payment A/R Manager

Deposit

Bank
 DATA FLOW DIAGRAMS
• The data flow diagram focuses on the
logical flow of data.
• Next, we will discuss flowcharts, which
place greater emphasis on physical
details.
 FLOWCHARTS
• A flowchart is an analytical technique that
describes some aspect of an information
system in a clear, concise, and logical manner.
• Flowcharts use a set of standard symbols to
depict processing procedures and the flow of
data.
• Flow charts can be:
A. Documentation flow chart
B. System flow chart
C. Program flow chart
 A. DOCUMENT FLOWCHARTS
• A document flowchart shows the flow of documents and
information among areas of responsibility in an
organization.

• These flowcharts shows:

– Where a document comes from
– Where it’s distributed
– How it’s used
– It’s ultimate disposition
– Everything that happens as it flows through the system
 DOCUMENT FLOWCHARTS
E.G. Internal control flowcharts are document
flowcharts used to evaluate the adequacy of internal
controls, such as segregation of duties or internal
checks.
• They can reveal weaknesses or inefficiencies such
as:
– Inadequate communication flows
– Unnecessarily complex document flows
– Procedures that cause wasteful delays
 E.G Registrar’s Office document flow chart
Enrollment Sort
Students
Forms Forms

Update Sorted
A
Student Enrollment
Records Forms

Sorted Prepare
Enrollment Class
Forms Lists

Here’s a
flowchart Class Sorted
Enrollment
Lists
that goes Forms
with the
story Faculty Administrator
 FLOWCHARTS VS. DFDs

• Now that we’ve examined both flowcharts and

DFDs, it may be useful to discuss the
differences again.
• DFDs place a heavy emphasis on the logical
aspects of a system.
• Flowcharts place more emphasis on the
physical characteristics of the system.
• An example may be useful.
 FLOWCHARTS VS. DFDs

• EXAMPLE: The registrar’s office of a small

college receives paper enrollment forms from
students. They sort these records
alphabetically and then update the student
record file to show the new classes. They also
prepare class lists from the same data. The
sorted enrollment forms are forwarded to the
administrative office for billing purposes.
Class lists are mailed to faculty members.
 Here’s a
Students DFD that
Enrollment
goes with
Forms
the story.
1.0
Update Student
Student Records
Records
Enrollment
Forms

2.0
Prepare Administrators
Enrollment
Class Lists Forms

Class
Lists

Faculty
 Registrar’s Office

Students Enrollment Sort

Students
Forms Forms
Enrollment
Forms

1.0 Update Sorted

A
Update Student Student Enrollment
Student Records Records Forms
Records
Enrollment
Forms
Sorted Prepare
Enrollment Class
Forms Lists
2.0
Prepare Enrollment
Administrators Here’s a
Class Lists Forms
flowchar Class Sorted
Class t that Lists Enrollment
Lists Forms
goes
Faculty with the Administrators
story Faculty
 FLOWCHARTS VS. DFDs

• Now let’s change the story so that

students enter enrollment data online.
The registrar’s office sends a tape
file(soft copy) of the enrollment data to
the administrative office and continues
to send paper class lists to faculty.
 Original DFD Here’s the
revised DFD.
Students Students
How has it
Enrollment Enrollment changed?
Forms Data

1.0 1.0
Update Student Update Student
Student Records Student Records
Records Records
Enrollment Enrollment
Forms Data

2.0 2.0
Prepare Administrators Prepare Administrators
Enrollment Enrollment
Class Lists Forms Class Lists Data

Class Class
Lists Lists

Faculty Faculty
 Registrar’s Office Registrar’s Office

Enrollment Sort Enrollment

Students Forms Student
Forms Data
s

Update Sorted Update

A Enrollment
Student Enrollment Student
Data
Records Forms Records

Sorted Prepare
Enrollment Class Administrator Prepare
Forms Lists Student Class
Records Lists
Sorted
Class
Enrollment Here’s the revised Class
Lists
Forms Lists
flowchart. How
Faculty Administers has it changed?
Faculty
Original
Flowchart
 FLOWCHARTS VS. DFDs

• Moral of the Story: Changes in the physical

characteristics of the process do affect the
flowchart but have little or no impact on the
DFD.
• The DFD focuses more on the logic.
• When deciding which tool to employ,
consider the information needs of those who
will view it.
 B. 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.
• These inputs can be:
– New data
– Data stored for future use
– Both
 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.
• If the process is performed by a
computer, the computer program
would be depicted in a program
flowchart.
 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.
• The output may be:
– Stored for later use
– Displayed on a screen
– Printed on paper
– An input to the next process
 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

operations performed by a computer in
executing a program.
• They also follow an input – process – output
pattern.
• This is more specific than system flow chart.
End chapter 5 and …