Accounting systems design & evaluation

9434SB

8 April 2002

Exercises

• TB Chapter 4 – Questions 4, 11 and 13

• ACCA Paper 5, Dec 1998 Question 1:– Describe 3 advantages to Caet Textiles of

outsourcing the IT functions

This lecture

• System analysis and selection criteria– Approaches & documentation

– Vendor selection criteria

– Application software

– Hardware selection criteria

– software selection criteria

– Security requirements

– Quality standards

– Commercial vs non-profit organisations

System analysis

• System analysis is the methodical investigation of a problem and the identification and ranking of alternative solutions to the problem.

• Structured system analysis will lead to the generation of a specification for a new accounting information system

Objectives of system analysis

• Define the problem precisely• Devise alternative design solutions• Develop logical specifications for the selected

design• Develop the physical requirements for the selected

design• Define budget for the next two system

development phases ie. Design and implementation

Steps involved in system analysis

Preliminary survey System

DesignImplementation& conversion

Operation &maintenance

Feasibility study

System analysis

Preliminary surveys

• Scope will include:– Data flows within the system and across

interfaces– Effectiveness of the existing system– Efficiency of the existing system– Internal controls

Approaches

• Documentation review– Organisational– Individual– Processing

• Interviews• Data modeling• Process modeling• Questionnaire

Typical contents of a system analysis document

1. Executive summary2. System analysis

summary3. User requirements

for the new systema. Operating

requirementsb. Information

requirementsc. Control requirements

4. Logical specifications for the new system

a. Data flow diagrams and narrative describing the new logical system

b. Summary of improvements brought about by new logical design

Typical contents of a system analysis document

5. Description of future physical system

a. DFDs, flowcharts, and narrative

b. Summary of cost/benefit improvements

6. New system constraints

a. Hardware and software constraints

b. Interface constraints

c. Contractual and legal requirements

7. Design phase budget and schedule

8. Physical requirements

a. Workload and volume

b. Response time

c. Functional layouts of computer inquiry screens and reports

d. System growth

Typical contents of a system analysis document

9. Recommendations 10. Approvals

11. Attachments

a. Approved feasibility document

b. Analysis memos, summaries, tables, graphs

c. Cost/effectiveness schedules.

Application software

• Bespoke solution is a software system developed specifically to fulfill a defined business requirement for a specific organisation

• A software package is a generalised software solution usually developed by a software house for sale to an unrestricted business community

• Advantages of commercial applications– Cost savings– Time savings– Guaranteed quality– Ongoing maintenance and upgrade

Application system (cont’d)

• Risks of using application systems– Reliance on an external supplier– Lack of competitive edge– Failure of the business to adapt to the package

Vendor selection

• Age

• R&D capability

• Financial positions

• Number of technical and non-technical staff

• Release status

• Industry specific template

• Quality Assurance

Hardware selection criteria

• Performance– Benchmarking

• Adaptability– Expandability– Compatibility

• Vendor support• Availability• Cost

– One off (eg. License, lease, installation)– Ongoing (eg. maintenance)

Steps in software selection

• Review the requirements

• Identify available packages

• Narrow the choices

• Perform a detailed comparison

• Talk to users

• Conduct benchmark tests

• Select a package

Software selection criteria

• Functionality– General (eg. report writing, Web-enablement, Use of

Chinese)– Specific (modular) capability

• Technical capability– Security and control– Scalability– Architecture flexibility– Customisation– Integration– Programming language integration ability

Software selection criteria (cont’d)

• Support capability– Site support (# of staff and site)– Technical support (Breadth and depth)– Standard documentation– Patch program– Training programs

• Vendor capability• Reference sites

Security requirements

• Structured methodology and detailed documentation– Detailed specification for inputs, outputs, processes,

programs and stored data– Planned, tested, controlled and approved conversion to the

new system

• Secure operating environment to restrict unauthorised access

• Segregation of duties within the Information System Function

• Contingency plan for increases in required capacity and losses of usable resources

Quality Standards

• Quality assurance (QA) addresses the prevention and detection of errors, especially defects in software that may occur during the system development process.

• Directed at:– Detecting errors– Testing developed systems to eliminate defects

• Sources of guidance for QA include:– ISO 9003– Capability Maturity Model

Commercial vs non-profit organisations

Commercial Non-Profit

Accounting standards

Accrual accounting Cash accounting

Or Fund accounting

Industry templates Manufacturing, Retail, Service

Government, Education, Medical

Focus Focus on ROA, ROI and share price driven

Focus on receipts and outgoings against budget

Basis in designing business processes

Efficiency and speed

Public accountability

In summary

• System analysis and selection (Notes 6:4 –7): – Approaches (Notes 6:8-11)– Application software (Notes 6:12-3;

ACCA Jun 99 Q 1)– Vendor selection criteria (Notes 6:14)– Hardware selection criteria (Notes 6:15; Boockholdt pg 193-

5)– Software selection criteria (Notes 6:16-8)– Security requirements (Notes 6:19)– Quality standards (Notes 6:20; Gelinas, pg 532-4)– Commercial vs non-profit organisations (Notes 6:21, TB 6.2)

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