SYSTEMS TECHNIQUES AND DOCUMENTATION
CAREFUL STUDY OF THIS CHAPTER WILL ENABLE
YOU TO:
1. CHARACTERIZE THE USE OF SYSTEMS
TECHNIQUES BY AUDITORS AND SYSTEMS
DEVELOPMENT PERSONNEL
2. DESCRIBE THE USE OF FLOWCHARTING
TECHNIQUES IN THE ANALYSIS OF INFORMATION
PROCESSING SYSTEMS
3. DEFINE COMMON SYSTEMS TECHNIQUES, SUCH AS
HIPO CHARTS, SYSTEMS FLOWCHARTS, AND LOGICAL
DATA FLOW DIAGRAMS
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SYSTEMS TECHNIQUES ARE TOOLS USED IN THE
ANALYSIS, DESIGN AND DOCUMENTATION OF
SYSTEMS
THEY ARE PICTORIAL = PICTURES
THEY ARE USED BY:
INTERNAL AUDITORS
EXTERNAL AUDITORS
SYSTEMS PERSONNEL WHO DEVELOP NEW
SYSTEMS
ACCOUNTANTS WHO DO SYSTEMS WORK AS
CONSULTANTS OR INTERNALLY FOR THE
COMPANY THEY WORK FOR
USE OF SYSTEM TECHNIQUES IN AUDITING
INTERIM AUDIT=WHERE WE ASCERTAIN THE
INTERNAL CONTROL STRUCTURE AND DECIDE THE
DEGREE TO WHICH WE INTEND TO RELY ON
INTERNAL CONTROLS TO RESTRICT SUBSTANTIVE
TESTING--USE COMPLIANCE TESTS
THEN FINANCIAL STATEMENT AUDIT=DIRECT
VERIFICATION OF ACCOUNT BALANCES--USE
SUBSTANTIVE TESTS
1. INTERNAL CONTROL EVALUATION
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AUDITORS CONCERNED WITH FLOW OF PROCESSING
AND DISTRIBUTION OF DOCUMENTS.
USE TECHNIQUES THAT STRUCTURE THE SYSTEM
UNDER REVIEW WITH RESPECT TO DOCUMENT
DISTRIBUTION AND SEGREGATION OF DUTIES
AMONG PERSONNEL.
THESE CHARTS ARE ORGANIZED IN COLUMNS TO
INDICATE THIS
2. COMPLIANCE TESTING
REQUIRES AN UNDERSTANDING OF THE CONTROLS
WHICH ARE TO BE TESTED
TO DO THIS PLANNING THE AUDITOR MUST BE ABLE
TO READ THE CHARTS THAT CURRENTLY EXIST THAT
DEPICT THE SYSTEM AND HOW IT WORKS
3. WORKING PAPERS
RECORDS KEPT BY THE AUDITOR OF THE
PROCEDURES AND TESTS APPLIED, THE
INFORMATION OBTAINED, AND CONCLUSIONS
DRAWN DURING THE AUDIT ENGAGEMENT
REQUIRED BY THE STANDARDS
USED AS PRINCIPAL RECORD OF WORK DONE
USED IN COURTS
USE OF SYSTEM TECHNIQUES IN SYSTEM
DEVELOPMENT
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CONSISTS OF 3 BASIC PHASES
1. SYSTEM ANALYSIS
FORMULATING AND EVALUATING SOLUTIONS TO
PROBLEMS-INVOLVES EXTENSIVE GATHERING AND
ORGANIZING OF FACTS-GETTING AN OVERALL VIEW
OF THE SYSTEM-DONE BY SYSTEM ANALYST
SYSTEM TECHNIQUES ARE FORMAL WAY TO
ORGANIZE FACTS
2. SYSTEM DESIGN
PROCESS OF SPECIFYING THE DETAILS OF SOLUTION
SPECIFIED BY THE SYSTEM ANALYSIS
EVALUATES EFFECTIVENESS AND EFFICIENCY OF
ALTERNATIVE SOLUTIONS
3. SYSTEM IMPLEMENTATION
PLACING REVISED OR NEWLY DESIGNED
PROCEDURES AND METHODS INTO OPERATION
INCLUDES TESTING THE SOLUTION PRIOR TO
IMPLEMENTATION, DOCUMENTING THE SOLUTION,
REVIEWING THE SYSTEM WHEN IT ACTUALLY BEGINS
OPERATION--INCLUDES SELECTING AND TRAINING
PERSONNEL, INSTALLING NEW COMPUTER
EQUIPMENT, WRITING AND TESTING COMPUTER
PROGRAMS, DOCUMENTING THE NEW SYSTEM
THE SYSTEM TECHNIQUES
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1. FLOWCHARTS
MOST COMMON SYSTEM TECHNIQUE
A FLOWCHART IS A SYMBOLIC DIAGRAM THAT
SHOWS THE DATA FLOW AND SEQUENCE OF
OPERATIONS IN A SYSTEM
COMMUNICATION DEVICE BETWEEN ACCOUNTANTS
AND SYSTEMS PERSONNEL
KNOW KNOW KNOW THE FLOWCHARTING SYMBOLS
KNOW DEFINITIONS OF THESE SYMBOLS
NORMAL DIRECTION FOR THE FLOWCHART IS LEFT
TO RIGHT AND TOP TO BOTTOM
A FLOWCHART IS A PICTURE OF THE ACCOUNTING
INFORMATION SYSTEM
DOCUMENTING THE SYSTEM
1. CREATING AUDIT TRAIL
2. WORKING FROM THE FINANCIAL STATEMENTS
TO THE DOCUMENTS (THE TRANSACTIONS) AND
VICE VERSA
WANT TO SHOW HOW THE SYSTEM WORKS
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1. DOCUMENTING THE PROCEDURES
AND THE PROCESSES
2. HOW TO DO THIS?
ASK THE CLIENT WHAT THEY THINK THEY ARE
DOING NOW
UPDATE EXISTING DOCUMENTATION
3. AFTER WE DIAGRAM THE SYSTEM
WE CAN TEST THE SYSTEM!!
EVALUATE THE RISK OF ERRORS
INTERNAL CONTROLS
LACK OF INTERNAL CONTROLS (MLC)
A. DOCUMENT FLOWCHARTS
depict the flow of paper
arranged in columnar form - each column correspond to an
organizational unit
why?
most common symbol is the .......................
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connecting lines show the movement of information and the
distribution of copies of the same document
depict only one aspect of the system
ignore data capture,
editing
aggregation
which is shown on which flowchart?
more useful when accounting systems were primarily paper
driven
1. The flowchart must be able to trace all important forms and
documents from origin to final disposition.
2. It is useful to supplement the flowchart with copies of
accounting documents for audit analysis and review and for
audit trail evaluation.
3. The flowchart must clearly indicate what decisions are and
what action is to be taken.
4. It is important to highlight audit trail in the flowchart.
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B. SYSTEMS FLOWCHARTS
IDENTIFIES THE OVERALL, BROAD FLOW OF
OPERATIONS IN A SYSTEM.
SHOWS WHERE INPUTS ORIGINATE,
SEQUENCE AND MODE (MANUAL OR
MACHINE) OF PROCESSING,
AND DISPOSITION OF OUTPUTS.
FOCUS ON MEDIA AND PROCESSING FUNCTIONS
RATHER THAN DETAILED LOGIC OF THE SYSTEM.
show flow of data
and role of computer programs
in the processing of accounting information
C. PROGRAM FLOWCHARTS
MORE DETAILED CONCERNING INDIVIDUAL
PROCESSING FUNCTIONS AND PROGRAMMING LOGIC.
CAN PROVIDE DETAIL FOR PROCESSING FUNCTIONS
DEPICTED IN A SYSTEMS FLOWCHART OR USED
ALONE
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USED TO AID IN CODING THE SYSTEM FOR COMPUTER
PROCESSING
2. DATA FLOW DIAGRAMS
USED BY SYSTEMS ANALYST TO DOCUMENT THE
LOGICAL DESIGN OF A SYSTEM TO SATISFY THE
USERS= REQUEST
HELPS TO DOCUMENT THE USER/SYSTEM ANALYST
INTERFACE
ENSURES THAT THE ANALYST HAS UNDERSTOOD THE
USER=S REQUEST BY PROVIDING THE USER WITH THE
ANALYST=S CONCEPTION OF THE USER=S PROBLEM
SYSTEM ANALYST OFTEN ACTS AS THE
COMMUNICATION LINK BETWEEN THE USER OF THE
COMPUTER SYSTEM AND THE PROGRAMMERS WHO
ACTUALLY CODE AND DESIGN THE SYSTEM
4 SYMBOLS TO THE DFD
TERMINATOR
PROCESS
DATA STORE
DATA FLOW
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Similar to the four basic flowcharting symbols
DESIGN OF THE DFD EMPHASIZES:
1. LOGICAL RATHER THAN PHYSICAL DESIGN
2. ANALYSIS OF DATA FLOWS
ANSWERS TRADITIONAL CRITICISM OF FLOWCHARTS
THAT FLOWCHARTING SYMBOLS FOCUS ON DATA
PROCESSING OPERATIONS AND PHYSICAL MEDIA
EXPLOSION AND EXPANSION PROCESS-- OCCURS
WHEN SUCESSIVE DIAGRAMS ARE USED TO
ILLUSTRATE DETAILS OF THE PRECEDING DIAGRAM
DFD CONCENTRATES ON STORES OF DATA AND
DECISION LOGIC
THIS MAKES IT EASIER FOR THE SYSTEM ANALYST
TO IDENTIFY STORES OF DATA NEEDED FOR A
PARTICULAR APPLICATION
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