Accounting systems design & evaluation

9434SB

12 April 2002

Exercises

• TB Chapter 4 – Question 12• Additional question:

– During the Systems Development Life Cycle, the analyst usually participates in a stage where user requirements are identified and defined. This normally begins at the end of the Feasibility Study and culminates in a Requirements Specification document. During this investigation the analyst might conduct fact-finding interviews, distribute and analyse questionnaires, analyse existing documents and construct system prototypes.Briefly explain each of the following, emphasising their contribution to the requirements analysis processes:

• Fact-finding interviews• Questionnaires• Prototypes• Analysis of existing documents

This lecture

• System flowcharts– Standard symbols, types of flowchart & general principles

• Other system tools– Data flow diagram– Context diagram– Decision table

• Functions/activities, input forms/ source documents and output reports for each subsystem– General ledger (GL)

• Journal vouchers• Financial reporting

Why documenting systems

• Understand the current system and processes for future design

• Gain confirmation, ownership and confidence from users

• Understanding the system problems is essential for solving them

System inputs and outputs

• Source documents - Mechanism for input of data into the information system and as a record of each item of data or transaction entered into the system

• Processes• Reports

– Information objectives of the AIS

– Include internal and external reports for management decision and external requirements

Documentation for systems

• Flow charts– System flow charts– Program flow charts– Document flow charts

• Data flow diagrams (DFD)– Context diagrams– Logical DFD– Physical DFD

• Decision tables

Data flow standard symbols

Hard copy document

Manual input

Input/ output (any mediumor data)

Input/Output

Computer processing

Manual operation

Off-line keying

Screen display

Non-computer processing

Processing

Multiple documents

Data flow standard symbols (cont’d)

Document or processflow

Communications link

Flow and additional

Magnetic tape

On-line storage

Off-line storage

DecisionMagnetic disc

Storage

Annotation

Flowcharting rules

• Use of standard flowcharting symbols (drawn manually or with a flow charting template or standard flowcharting packages)

• Direction is from top to bottom and from left to right

• Sandwich ruleInput

documentOutput

documentComputer

processPriorProcessing

Flowcharting rules (cont’d)

• Specific labels are written inside the symbol

• Added comments are included in using annotation symbols

• Multiple copies of documents are shown as overlapping. Each document copy is numbered in the top right corner and the same number stays with the copy

Types of flowchart

System flowcharts

(Illu 4-5)

• Relate to the relationships between the processes in the system configuration

• Shows relationship between inputs, processes and outputs

Program flowcharts

(Illu 4-6)

• Relate to the logic and processing steps of a computer program

Document flowcharts

(Illu 4-7)

• Relate to creation, flow and destinations of documents within a system and the procedures performed on them, with a emphasizes on the flow of documents between functional units.

Why flowcharting?

• Saves time and cost

• Adds value to organisation

• Easily understood

• Uses universal rules and symbols

• Provides audit trails of accounting transactions (auditors can follow the flow of documents and data through the system)

Data flow diagrams

• Generally represents the movement of data within an organisation

• Used to document current systems and to plan and design new systems

• Symbols used:

Entity Process Data store Data flow

Types of DFD

• Context diagram (Gelinas Fig 3.2)– Highest level DFD providing the reader with a summary

level view of the scope of the system

• Logical (Gelinas Fig 3.4)– Shows the conceptual flow of data without any reference

to the physical components of the system– Often used to develop new or modified information

systems

• Physical (Gelinas Fig 3.3)– Depict a system’s relevant internal and external entities

and the flow of data between them

Decision tables

• Summarise outcomes of complex decisions and provide a tabular presentation of the logic in a program flow chart

• Provide a way to examine, describe and document decisions using a table consisting of four quadrants:– Describe the conditions– Identify possible decision alternatives– Indicate which actions should be performed– Describe actions

• Examples: Illu 4-12

General ledger transaction cycles

• Objectives: collate data and organise it into information that will assist management to meet the requirements of internal and external stakeholders.

• GL information is organised through the chart of account (CoA)

General ledger systems

• Journal entry system: post to the GL transactions that are not processed by other applications– High volume transactions

– Low volume transaction

– Closing entries

• Financial reporting system: close the GL to produce financial statements and performance reports. The application is executed when the company needs to generate the financial reports

General ledger activities

• Activities include:– Updating general ledger– Posting adjusting entries– Preparing financial statements that consolidate

the results of an organisations– Producing management repots

General ledger process flow

• Journal voucher system : Illustration 20-23

• Financial reporting system: Illustration 20-24

• Relationship with other subsidiary ledgers (Fig 14.5 Gelinas)

General ledger (cont’d)

• Inputs– Manual journals

(sample journal vouchers Illu. 20-13)

– Automatic posting from subsidiary ledgers to GL control account

• Outputs– Financial statements (Illu. 20-

16, 20-17 and 20-18)– Performance reports– GL control report (Illu. 20-14)– GL master file (Illu 20-19)– GL batch summary file (Illu 20-

20– GL transaction register (Illu. 20-

15)– Detailed posting file (Illu 20-21)– Standard posting file (Illu 20-22)

In summary

• Documentation of current system (ACCA Paper 5 Dec 98 Question 5)

• System flowcharts (TB: 3.1 to 3.4, Boockholdt pg 84 – 89, 91)

• Other system tools– Data flow diagram (TB: 3.7 to 3.8, Gelinas pg 68-72)– Decision table (TB 3.6, Boockholdt pg 93, 94, 96)

• Functions/activities, input forms/ source documents and output reports for each subsystem– General ledger (GL) (TB: 6.3, notes: )

• Journal vouchers ( Boockholdt pg 723-733)• Financial reporting (Gelinas p 506)

Exercises

• There are various system tools used in documenting systems. – Describe these tools and describe the circumstances

under which they are most useful

– Distinguish between system flow charts and program flow charts

– Compare the use of DFDs to the use of flowcharts

– Explain the difference between a context diagram, a logical DFD and a physical DFD