CHAPTER 3

The Systems Development

Processes
 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?
• How are they alike and different?
• How are they prepared?
 INTRODUCTION

• Documentation includes the following

types of tools:
– Narratives (written descriptions)
– Flowcharts
– Diagrams
– Other written material
 INTRODUCTION

• Documentation covers the 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.
• Requires heavy reliance on documentation
– They may peruse documentation to determine if a
proposed system meets the needs of its users.
– They may prepare documentation to:
• Demonstrate how a proposed system would work
• Demonstrate their understanding of a system of internal
controls
 INTRODUCTION

• In this chapter, we discuss 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

• In this chapter, we discuss 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

• Documentation tools help accountants by:

– Organizing very complicated systems into a
form that can be more readily understood.
– Helping new team members understand a
pre-existing system.
 INTRODUCTION

• Which method should you use—flowcharts

or DFDs?
– 62.5% of IS professionals use DFDs
– 97.6% use flowcharts
– Both can be prepared relatively simply using
available software
– Both are tested on professional exams
– CONCLUSION: 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
• There is no black-and-white approach to
developing a DFD.
 DATA FLOW DIAGRAMS
• Example of a data flow
diagram of the customer
payment process from Accounts
Figure 3-3 in your Receivable
textbook.

Customer Remittance Receivables

payment 1.0 2.0
data Information Credit
Customer Process Update
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 Receivable
sources and which are
destinations?

Customer Remittance Receivables

payment 1.0 2.0
data Information Credit
Customer Process Update
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
flow can be two-way? Accounts
• If so, how is it handled? Receivable

Customer Remittance Receivables

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

Deposit

Bank
 DATA FLOW DIAGRAMS
• Data flows should always be
labeled.
• The exception is a data flow Accounts
moving into or out of a data Receivable
store.
• What symbol is the data store?

Customer Remittance Receivables

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

Deposit

Bank
 DATA FLOW DIAGRAMS

• As you probably surmised 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’d & 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 least
Accounts
one data inflow and at least one
Receivable
data outflow. Why?
• What do you notice about how the
processes are labeled?

Customer Remittance Receivables

payment 1.0 2.0
data Information Credit
Customer Process Update
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
outflows to the data store are Accounts
not labeled. Receivable

Customer Remittance Receivables

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

Deposit

Bank
 DATA FLOW DIAGRAMS

• Data dictionary:
– Data flows and data stores are typically
collections of data elements.
– EXAMPLE: A data flow labeled student
information might contain elements such as
student name, date of birth, ID number,
address, phone number, and major.
– The data dictionary contains a description of
all data elements, data stores, and data flows
in a system.
 DATA FLOW DIAGRAMS

• The highest level of DFD is called a

context diagram.
– It provides a summary-level view of the
system.
– It depicts a data processing system and the
external entities that are:
• Sources of its input
• Destinations of its output
 DATA FLOW DIAGRAMS
Govt.
Depart- ent Agencies
y m
ments Tim pa
ec t &
ar d por
s x re
Ta

Employee checks
Payroll Employees
Processing
orm
System Pa y
e f roll
ye che
plo for
m ck
em ge
Ne
w an Pa
ch yr Bank
y ee ol
Human plo lr
ep
Em
Resources or
t

Manage-
ment
 DATA FLOW DIAGRAMS
Govt.
Depart- ent Agencies
y m
ments Tim pa
ec t &
ar d por
s x re
Ta

Employee checks
Payroll Employees
Processing
orm
System Pa y
e f roll
ye che
plo for
m ck
em ge
Ne
w an Pa
ch yr Bank
y ee ol
Human plo lr
ep
Em
Resources or
t

• What information comes into this Manage-

process, and from where? ment
 DATA FLOW DIAGRAMS
Govt.
Depart- ent Agencies
y m
ments Tim pa
ec t &
ar d por
s x re
Ta

Employee checks
Payroll Employees
Processing
orm
System Pa y
e f roll
ye che
plo for
m ck
em ge
Ne
w an Pa
ch yr Bank
y ee ol
Human plo lr
ep
Em
Resources or
t

• What information is produced by this Manage-

process, and where does it go? ment
 DATA FLOW DIAGRAMS
Depart-
ments Employees
Employee
New employee Time paychecks
Human form cards
Resources
1.0
Employee Update 2.0 Payroll
Change Empl. Pay check
Payroll Employ- Bank
form
file ees
Payroll
Disburse-
3.0 ment data 5.0
Notice that Prepare Employee/
Payroll file Update
reports
each process Gen.
Ledger
in the DFD is Payroll tax
disb. voucher
numbered Payroll
report
sequentially. 4.0 General
Ledger
Pay
Tax report
Manage- taxes
& payment
ment Govt.
Agencies
 DATA FLOW DIAGRAMS
Depart-
ments Employees
Employee
New employee Time paychecks
Human form cards
Resources
1.0
Update 2.0
Employee Pay Payroll
Empl.
change check
form
Payroll Employ- Bank
File ees
Suppose we Payroll
exploded Process 3.0
Disburse-
ment data 5.0
2.0 (Pay Prepare Employee/ Update
Employees) in the Reports Payroll File Gen.
next level. The Ledger
Payroll tax
sub-processes disb. voucher
Payroll
would be report
General
numbered 2.1, 2.2, 4.0
Pay Ledger
2.3, etc. Tax report
Manage- Taxes
& payment
ment Govt.
Agencies
 DATA FLOW DIAGRAMS

• Keep the following in mind as you develop your

DFD:
– Remember to ignore control activities, such as error
correction processes.
– Some data inputs and outputs will not appear on the
first level of the DFD but appear as the processes are
exploded into greater levels of detail.
 DATA FLOW DIAGRAMS

• The data flow diagram focuses on the logical

flow of data.
• Next, let us 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.
 FLOWCHARTS

• There are four types of flowcharting

symbols:
– Input/output symbols
Input/output symbols indicate the
type of device or media that provides
input to or records output from a
process.
 FLOWCHARTS

• There are four types of flowcharting

symbols:
– Input/output symbols
– Processing symbols
Processing symbols indicate the type
of device used to process the data or
whether the data is processed
manually.
 FLOWCHARTS

• There are four types of flowcharting

symbols:
– Input/output symbols
– Processing symbols
– Storage symbols
Storage symbols indicate the type of
device used to store data while the
system is not using it.
 FLOWCHARTS

• There are four types of flowcharting

symbols: • Flow and miscellaneous symbols may
indicate:
– Input/output –symbols
The flow of data and goods
– Processing symbols
– The beginning or end of the flowchart
– The location of a decision
– Storage symbols
– An explanatory note
– Flow and miscellaneous symbols
 INPUT/OUTPUT SYMBOLS

• Document Symbol
– Represents a document or report that is
prepared by hand or printed by a computer.
 INPUT/OUTPUT SYMBOLS
3
2
1

• Multiple Copies of One Document

– Indicates multiple copies of a paper document
or report.
– The document copies should be numbered in
the upper, right-hand corner.
 INPUT/OUTPUT SYMBOLS

• Input/Output; Journal/Ledger
– Can represent any input or output on a
program flowchart.
– Also represents accounting journals or
ledgers in a document flowchart.
 INPUT/OUTPUT SYMBOLS

• Display
– Represents information displayed by an
online output device such as a terminal,
monitor, or screen.
 INPUT/OUTPUT SYMBOLS

• Online Keying
– Represents data entry by an online device
such as a terminal or personal computer.
 INPUT/OUTPUT SYMBOLS

• Terminal or Personal Computer

– Combines the display and online keying
symbols to represent terminals and personal
computers.
 INPUT/OUTPUT SYMBOLS

• Transmittal Tape
– Represents manually prepared control totals,
which are to be compared to computer totals
for control purposes.
Return to Menu Processing Symbols Skip Symbols
 PROCESSING SYMBOLS

• Computer Processing
– Represents a process performed by a
computer, which usually results in a change in
data or information.
 PROCESSING SYMBOLS

• Manual Operation
– Represents a processing operation that is
performed manually.
 PROCESSING SYMBOLS

• Auxiliary Operation
– Represents a processing operation carried
out by a device other than a computer, e.g.,
an optical character scanner.
 PROCESSING SYMBOLS

• Off-line Keying Operation

– Represents an operation that uses an off-line
keying device, such as a cash register or
keying to a disk.
Return to Menu Storage Symbols Skip Symbols
 STORAGE SYMBOLS

• Magnetic Disk/Drive
– Represents data stored on a magnetic disk or
drive.
 STORAGE SYMBOLS

• Magnetic Tape
– Represents data stored on a magnetic tape.
– Sometimes represents transaction files.
 STORAGE SYMBOLS

• File
– Represents a file of documents that are manually
stored and retrieved.
– Letter indicates the ordering sequence:
• A = Alphabetic order
• D = Date order
• N = Numeric order

Return to Menu Flow/Misc. Symbols Skip Symbols

 FLOW AND MISCELLANEOUS
SYMBOLS

• Document or Processing Flow

– Represents the direction of processing or
document flow.
– Normal flow is top to bottom and left to right.
 FLOW AND MISCELLANEOUS
SYMBOLS

• Data/Information Flow
– Represents the direction of data/information
flow.
– Often used to show data being copied from
one document to another.
 FLOW AND MISCELLANEOUS
SYMBOLS

• Communication Link
– Represents the transmission of data from one
location to another via communication lines.
 FLOW AND MISCELLANEOUS
SYMBOLS

• On-page connector
– Connects processing from one location to
another on the same page.
– Used to avoid crisscrossing lines.
 FLOW AND MISCELLANEOUS
SYMBOLS

• Off-page Connector
– Connects the processing flow between two
different pages.
– Signals the exit from one page and the
corresponding entrance on another page.
 FLOW AND MISCELLANEOUS
SYMBOLS

• Terminal
– Represents the beginning, end, or a point of
interruption in a process or program.
– Also used to indicate an external party.
 FLOW AND MISCELLANEOUS
SYMBOLS

• Decision
– Represents a decision-making step.
– Used in a program flowchart to show
branching to alternate paths.
 FLOW AND MISCELLANEOUS
SYMBOLS

• Annotation
– Provides for the addition of descriptive
comments or explanatory notes as
clarification.

Return to Menu Continue

Identifies where input is coming from
Inputs
Process
Output to
storage
Input for
next
process
Process
Output
Forwarding
a document
 Filing
a document
 GUIDELINES FOR PREPARING
FLOWCHARTS
– Do not connect two documents except
when forwarding to another column.
• When a document is forwarded, show it in
both locations.
 Show forwarded
document in both
locations
 GUIDELINES FOR PREPARING
FLOWCHARTS
– When using multiple copies of a
document, place document numbers in
the upper, right-hand corner.
What happens to the
document numbers
as the documents
move to other
locations?
 GUIDELINES FOR PREPARING
FLOWCHARTS
– Show on-page connectors and label
them clearly to avoid excess flow lines.
 GUIDELINES FOR PREPARING
FLOWCHARTS
– Use off-page connectors if the flow goes
to another page.
Are there other off-
page connectors on
this 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.
• 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 logic of 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 output may be:
– The system flowchart –begins by identifying the
Stored for later use
inputs to the system. – Displayed on a screen
– Each input is followed– by a process,
Printed on paper i.e., the
– An input to the next process
steps performed on the data.
– The process is followed by outputs—the
resulting new information.
 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 bursar’s office for billing
purposes. Class lists are mailed to faculty
members.
 Here’s a DFD
Students
that goes
with the
Enrollment
story.
Forms

1.0
Update Student
Student Records
Records

Enrollment
Forms

2.0
Prepare Bursar
Enrollment
Class Lists
Forms

Class
Lists

Faculty
 Registrar’s Office

Students Enrollment Sort

Students
Forms Forms

Enrollment
Forms

Update Sorted
1.0 A Enrollment
Student
Update Student Forms
Records
Student Records
Records

Enrollment Sorted
Forms Prepare
Enrollment Class
Forms Lists
2.0
Prepare
Enrollment
Bursar Here’s a
Class Lists
Forms flowchart Sorted
Class
Class
that goes Lists
Enrollment
Forms
Lists with the
story
Faculty
Faculty Bursar
 QUIZ QUESTION

• How is playing the piano like making DFDs

and flowcharts?
– You can’t learn to do it by just watching
someone else.
– You can’t learn to do it by just looking at
examples.
– Your first attempts are clumsy.
– Practice leads to improvement and maybe
even perfection.
 SUMMARY

• We’ve learned about graphical forms of

documentation, particularly:
– Data flow diagrams
– Flowcharts
• We’ve learned why these tools are
important to accountants and how they are
employed.
• We’ve learned basic guidelines for
creating data flow diagrams and
flowcharts.
End of Chapter 3
We made it
thanks for All!