1. Reading review questions a. What is a data flow diagram? How are data flow diagrams used in accounting information systems? A data flow diagram is a graphical representation of an information system; it focuses on the flow of data, regardless of form, between business processes, external entities and databases. DFDs are used in accounting information systems to gain a shared understanding of how the AIS functions; they can also serve as the basis for database design. b. List and discuss the four symbols used in the development of data flow diagrams. Give an example of each symbol in an AIS context. Processes are symbolized with a circle; they are numbered and labeled with a verb phrase, such as “collect cash.” Data flows are symbolized with straight lines; they are labeled with noun phrases that describe the data they represent, such as “completed purchase order.” Data stores, or databases, are depicted with two parallel straight lines; their descriptors include items like “employee database.” Finally, external entities are symbolized with rectangles; they represent people / groups / organizations outside the system boundary, such as the IRS. c. What rules / conventions should accountants follow when creating DFDs? DFDs should be clear and easy to read. Data flows should be labeled with noun phrases, while processes are labeled with verb phrases. In addition, DFDs must be balanced; that is, items should not disappear or appear between levels. Additional DFD conventions are discussed in the chapter. d. Define the following terms as they relate to the material presented in this chapter: relational database, table, primary key, foreign key, field, record, query. A relational database is a collection of objects designed to collect data, analyze it and report information to decision makers. A table is the primary object in a relational database. Tables contain fields (columns) and records (rows), and should be normalized for efficiency and effectiveness. A primary key is a field in a table that uniquely identifies each record in the table, such as a transaction number. A foreign key is a primary key posted in another table; for example, a customer number would be a primary key in the customer table and a foreign key in the sales table. A query is a well-structured question designed to extract information from a database. Queries store instructions, not results; each time a query is run, it looks at the current data in the database. e. Respond to the questions for this chapter’s opening vignette. 6-1 © McGraw-Hill Companies, 2010 i. What is a “model-driven brainstorming session?” A brainstorming session is a meeting in which people throw out ideas as potential solutions for a problem. A model-driven brainstorming session, then, would be such a meeting where the discussion was informed by some type of model—like a flowchart or data flow diagram of an accounting system. ii. How could a data flow diagram be used for risk identification? As with flowcharts, identifying risks from a DFD takes practice. Since a DFD gives a picture of an information system, analysts could potentially spot weaknesses from it; from those weaknesses, they could talk about risks. Consider the DFD in Figure 6.2, where Process 1.0 is “Select preliminary classes.” What are the risks associated with that process? They might include lack of class availability and / or selecting classes without appropriate prerequisites. iii. In what other ways could a data flow diagram be used in accounting information systems? As noted in the Bradford article listed in the chapter references, DFDs are used in practice for at least four purposes: to describe business processes, to evaluate a current system, to design or change a system and to assess the internal control environment. 2. Reading review problem a. List the symbols included in data flow diagrams. Explain the meaning of each symbol. DFDs include four symbols. Rectangles represent external entities; circles represent processes. Databases are symbolized with a set of parallel lines. Arrows denote data flows. b. For each symbol, suggest two examples you would expect to find in Home Depot’s data flow diagram. i. External entities: banks, wire transfer payees. ii. Processes: Approve wire request; Calculate net cash position. iii. Databases: wire request database, general ledger. iv. Data flows: wire payment data, bank data. c. Explain the concepts of “leveling” and “balancing” as they relate to data flow diagrams. Data flow diagrams are prepared in levels, each depicting more detail about a specific process than the level before it. The context diagram shows the least detail, representing the entire process in a single circle. After the context diagram comes the Level Zero diagram. Processes in the Level Zero diagram can be decomposed in Level One diagrams (and so on). A leveled set of data flow diagrams is balanced if it preserves elements between the levels. 6-2 © McGraw-Hill Companies, 2010 3. Making choices and exercising judgment Bumble Beasley is a recently enrolled accounting major at your university. In a conversation about accounting information systems, he said: “I don’t know why we have to learn about flowcharts and data flow diagrams. One documentation technique should be enough; besides, both techniques give basically the same information if you know how to read them.” Do you agree or disagree with Bumble? Why? Learning both techniques is necessary since both are used in practice. In addition, the two do not necessarily provide the same information, even when accurately interpreted. For example, flowcharts may depict documents and areas of responsibility, whereas DFDs focus more on data and business processes. 4. Field exercises Because the field exercises involve original research and will vary significantly from student to student, I’m not including any suggested solutions to them. If your students produce particularly outstanding responses and you’d like to send them to me, I’ll post them on the book’s web site. Let me know if this lack of suggested responses to field exercises is a major inconvenience for you. 5. Data flow diagram creation a. The Geek Squad (www.geeksquad.com) offers a variety of telephone, in-office and in-home computer services. When a call for assistance comes into their 800 number, the Geek Squad determines its geographical origin and routes the call to an agent in the area. The agent confers with the customer by phone, determining the nature of the problem and the type of service desired. The agent will also find out if the customer has previously done business with Geek Squad. The agent will respond to the customer’s request and report the problem’s resolution to the corporate office. The corporate office bills the customer and collects payment; a fixed fee is remitted to the local agent based on the type and nature of the service call. Point your web browser to the Geek Squad web site to get more information about their operations. Then, prepare a Context Diagram, Level Zero Diagram and one Level One Diagram for Geek Squad. 6-3 © McGraw-Hill Companies, 2010 Geek Squad Context Diagram Local agent Geographic information Fixed fee Sales / collection process Resolution data Service request Billing informatio n Customer Payment Geek Squad Level Zero Diagram Fixed fee Local agent Geographic information 1.0 Route call. Resolution data 2.0 Bill client. Service request Billing info 3.0 Collect payment Payment Customer 6-4 © McGraw-Hill Companies, 2010 Geek Squad Level One Diagram 1.2 Select office. Geographic data Local agent Origin data 1.1 Determine origin. Service request Customer b. Every year, the Institute of Management Accountants sponsors a student case competition to help students build their technical, analytical and communication skills. In the student case competition, the IMA solicits cases from accounting faculty; an IMA committee chooses the best case and publishes it in an issue of Strategic Finance. Teams of students prepare videotaped responses to the case and submit them to the IMA. The videotaped presentations are evaluated, and team with the best presentation in each geographic region presents their case “in person” to a panel of judges at the IMA annual meeting. The team with the best presentation receives an award; all teams presenting at the annual meeting receive an engraved plaque with the members’ names on it. The IMA maintains a database of case topics and authors; it also keeps a record of the name and university affiliation of all teams submitting videotapes as well as the status of those submissions. (For more information about the IMA student case competition, point your web browser to www.imanet.org.) Consider the preceding narrative, and prepare a leveled set of data flow diagrams (Context, Level Zero and Level One). 6-5 © McGraw-Hill Companies, 2010 IMA case competition Context diagram Awards Student teams Accounting faculty Case responses Published case Case ideas Case competition system Regional results National results Judging panel IMA student case competition Level Zero diagram 1.0 Solicit ideas Cal for ideas Judging panel Accounting faculty National results Awards Case ideas Selected case 2.0 Select & publish case Student teams Case database Published case Case responses 3.0 Receive & sort responses Regional results Sorted responses 4.0 Select regional winners. Regional results 5.0 Conduct national competitio n 6-6 © McGraw-Hill Companies, 2010 IMA case competition Level One diagram Published case Case responses c. 3.1 Receive responses Copied tapes 3.2 Sort by region Sorted responses Consider the narratives presented in Chapter 5 for Cori’s Catering Service and University Bookstore. Use those narratives to prepare a leveled set of data flow diagrams. Cori’s Catering Service Context diagram Client Order Estimate Contract Sales / collection process Catering order Cash 6-7 © McGraw-Hill Companies, 2010 Cash Catering order 5.0 Collect payment. Client Order Initial estimate 1.0 Receive order. Signed contract Revised estimate Contract Final order 2.0 Prepare estimate. 4.0 Deliver order. Final contract Final estimate 3.0 Prepare contract. Cori’s Catering Service Level Zero diagram Cori’s Catering Service Level One diagram Client Final order Initial estimate 2.1 Verify initial amounts & prices. Revised estimate 2.2 Finalize amounts & prices. Final estimate 6-8 © McGraw-Hill Companies, 2010 University Bookstore Context diagram Departmental representative Book requisition form Purchase order Publisher Books Textbook ordering system Invoice Payment University Bookstore Level Zero diagram Payment Departmental representative Invoice Book requisition form 4.0 Pay invoice. Publishers Books 1.0 Consolidate requisitions. Purchase orders Copied purchase orders Receiving report Consolidated requisitions 2.0 Prepare purchase orders. 3.0 Prepare receiving report. 6-9 © McGraw-Hill Companies, 2010 University Bookstore Level One diagram Copied purchase orders Invoice 4.1 Match documents Receiving report Matched documents Payment 4.2 Pay invoice. 6. Critiquing database tables Bumble Beasley attempted to design a database to capture data about inventory purchases. He thought it would be easier to create one table with all the data, rather than separate tables for different data items. The table he created contained the following fields: 6-10 © McGraw-Hill Companies, 2010 Vendor phone Purchasing agent ID Vendor ID Purchasing agent home address Inventory description Cost per item Vendor area code Invoice total (number of items X cost per item) Vendor state Vendor address Vendor city Purchasing agent last name Transaction date Vendor ZIP Payment terms (e.g., 2 / 10, n / 30) Inventory ID Purchasing agent first name Transaction number Quantity purchased a. Is Bumble’s database table in normal form? Discuss. The table is not in normal form. Because it contains so much data, it will have both repeating groups and redundancies. In addition, the table violates 3NF by containing fields unrelated to its primary key. And, the table contains derivable data (invoice total) which should be calculated through a query. b. How many normalized database tables would be required for the data? The database would need five normalized tables for the data: vendor, inventory, purchasing agent, purchases and purchases / inventory (a junction table). c. Group the data into the required number of normalized database tables. Specify a primary key for each table. Vendor table: Vendor ID, vendor address, vendor city, vendor state, vendor ZIP, vendor area code, vendor phone Inventory table: Inventory ID, inventory description (Note: this table could also include “cost per item,” if the amount was relatively stable. It might also include a “vendor id” field for the primary supplier.) Purchasing agent table: Purchasing agent ID, purchasing agent last name, purchasing agent first name, purchasing agent home address (Note: the home address field should be broken up into its separate components.) Purchases table: Transaction number, [purchasing agent ID], [vendor ID], transaction date Purchases / inventory table: Transaction number, inventory ID, cost per item, quantity purchased 7. Creating database tables (Your instructor may want you to use Access or some other relational database software to complete this problem.) a. Create at least two database tables for each Level One data flow diagram you created in Problem 5. iv. Geek Squad 6-11 © McGraw-Hill Companies, 2010 1. Customer table: Customer number, last name, first name, address, city, state, zip, area code, phone, date of first call 2. Intake table: Transaction number, [customer number], [referral office code], intake date, resolution details v. IMA student case competition 1. Receive response table: Response code, date received, school name, regional code 2. Regional judges table: Judge ID, judge last name, judge first name, school name, school address, regional code vi. Cori’s Catering Service 1. Client table: Client code, client last name, client first name, client address, city, state, zip, area code, phone, date of first order 2. Order table: Order #, [client code], order date, initial estimate, final estimate vii. University bookstore 1. Receiving table: Receiving report #, date, employee code, [publisher] 2. Receiving / item table: [Receiving report #], item code, quantity received b. In most states, the Department of Motor Vehicles keeps records of individual driver’s licenses and vehicle license plates. Create two database tables that capture relevant information for the DMV; information in the driver’s license table would include, but not be limited to, an individual’s name, license number and birth date. Information in the vehicle license plate table would include, but not be limited to, the license plate number and information about the vehicle itself. What foreign key(s) would you use to link the two tables together? viii. Driver’s license table: License number, driver first name, driver last name, driver date of birth, driver restrictions, date of first issuance, license type, address, city, state, zip ix. License plate table: License plate number, vehicle ID, manufacturer, model, year, color, [license number] c. Robert Half International (www.roberthalf.net) pairs up potential employees with companies seeking accountants and other financial information professionals. Their web site states: “With 325 offices and 55 years of experience, Robert Half is the world's first and largest specialized financial recruiting firm, placing quality candidates at all levels.” Point your web browser to the company’s web site, and click the link for Robert Half United States. What information does Robert Half collect on new job seekers? Organize that information into a database table. Applicant identification number, date applied, applicant last name, applicant first name, applicant address, 6-12 © McGraw-Hill Companies, 2010 city, state, zip, area code, phone number, e-mail address, highest college degree earned, major, university, professional certifications & licenses, software competencies. 8. Crossword puzzle 1 P 2 P R 3 F O U R I 4 L 5 O M C I 6 V E R B F 7 V C O N T E X T E R S I S V 8 L E M E X A E 9 D A T A S T O R E E R 10 N O U N A L Created with EclipseCrossword — www.eclipsecrossword.com 9. Terminology Please match each item on the left with the most appropriate item on the right. 1. g 6. e 2. c 7. i 3. f 8. h 4. d 9. j 5. b 10. a 6-13 © McGraw-Hill Companies, 2010 10. Multiple choice questions 11. 1. b. 6. a 2. a 7. c 3. d 8. a 4. a 9. c 5. b 10. b Statement evaluation 1. b A context diagram will include data stores if indicated by the particular case. 2. b Although “downwardly compatible,” normal forms aren’t necessarily “upwardly compatible.” In other words, a 3NF table is, by definition, also in 1NF and 2NF. A 2NF table maybe in 3NF, but not necessarily. 3. b A salesperson may be an external entity, depending upon how the system boundary is defined. 4. b Which documentation tool is “better” depends upon the task at hand. 5. b If the form is appropriately designed, it can be used to look up information in a table. 6. a 7. a 8. a 9. a 10. c 6-14 © McGraw-Hill Companies, 2010