Systems Documentation Techniques Chapter 3

INTRODUCTION Documentation includes the following types of tools: Narratives (written descriptions) Flowcharts Diagrams Other written material Explains how system works

INTRODUCTION Documentation covers the who, what, when, where, why, and how of: Data entry Processing Storage Information output System controls

INTRODUCTION This chapter, will focus on the following documentation tools: Data flow diagrams Flowcharts Business Process Diagrams

Why Document Systems? Accountants must be able to read documentation and understand how a system works (e.g., auditors need to assess risk) Sarbanes-Oxley Act (SOX) requires management to assess internal controls and auditors to evaluate the assessment Used for systems development and changes It has been said that a picture is worth a thousand words, and that certainly is true when it comes to an easy way to understand an organization’s information system. Documenting an information system requires great skill; however, the ability to understand and read a documentation can be quite intuitive. Although there are many methods used in business to document systems, the text uses the three most popular for accountants: data flow diagrams, systems flowcharts, and Business Process Modeling Notation (BPMN).

Data Flow Diagrams (DFD) Focuses on the data flows for: Processes Sources and destinations of the data Data stores DFD are visually simple, can be used to represent the same process at a high abstract or detailed level.

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 flows Appear as arrows Represent the flow of data between sources and destinations, processes, and data stores Labels should describe the information moving

DATA FLOW DIAGRAMS Processes Appear as circles Represent the transformation of data

DATA FLOW DIAGRAMS Data stores Appear as two horizontal lines Represent a temporary or permanent repository of data

Basic Data Flow Diagram Elements There are four basic elements to the data flow diagram: The square box symbol represents where the data is coming from (source) and where it ends up (destination). An example, from a revenue cycle perspective is that the customer would be a data source. 2. The arrows are symbols showing the directional flow of data from a source to either: a transformative process, data store, or data destination. The circle is a symbol that shows a transformative process. This can be at a high “context” level such as “process Revenue cycle”; or it could be at a more detailed level such as “sales order entry” 4. The two horizontal lines represent data storage In addition, you may see a triangle used in a DFD which would identify controls associated with the process.

DATA FLOW DIAGRAMS Example of a data flow diagram of the customer payment process from Figure 3-3 in your textbook. Accounts Receivable (H) (G) Customer Payment (B) Remittance Data (D) Receivables Information (I) 1.0 Process Payment (C) 2.0 Update A/R (F) Customer (A) Credit Manager (K) Deposit (E) Bank (J)

DATA FLOW DIAGRAMS Data sources and destinations are marked in red. Accounts Receivable (H) (G) Customer Payment (B) Remittance Data (D) Receivables Information (I) 1.0 Process Payment (C) 2.0 Update A/R (F) Customer (A) Credit Manager (K) Deposit (E) Bank (J)

DATA FLOW DIAGRAMS Data flows are shown in red. Accounts Receivable (H) (G) Customer Payment (B) Remittance Data (D) Receivables Information (I) 1.0 Process Payment (C) 2.0 Update A/R (F) Customer (A) Credit Manager (K) Deposit (E) Bank (J)

DATA FLOW DIAGRAMS Data flows should always be labeled. The exception is a data flow moving into or out of a data store. Accounts Receivable (H) (G) Customer Payment (B) Remittance Data (D) Receivables Information (I) 1.0 Process Payment (C) 2.0 Update A/R (F) Customer (A) Credit Manager (K) Deposit (E) Bank (J)

DATA FLOW DIAGRAMS If a data flow is two-way, use a bi- directional arrow. Update Receiv- ables General Ledger

DATA FLOW DIAGRAMS If two data elements flow together, then the use of one data flow line is appropriate. Process Payment Customer Cash Rec’d & Remittance Slip

DATA FLOW DIAGRAMS If the data elements do not always flow together, then multiple lines will be needed. Process Payment Customer Customer Inquiry Customer Payment

DATA FLOW DIAGRAMS The transformation processes are shown in red. Every process must have at least one data inflow and at least one data outflow. Why? Accounts Receivable (H) (G) Customer Payment (B) Remittance Data (D) Receivables Information (I) 1.0 Process Payment (C) 2.0 Update A/R (F) Customer (A) Credit Manager (K) Deposit (E) Bank (J)

DATA FLOW DIAGRAMS The data store is shown in red. Notice that the inflows and outflows to the data store are not labeled. Accounts Receivable (H) (G) Customer Payment (B) Remittance Data (D) Receivables Information (I) 1.0 Process Payment (C) 2.0 Update A/R (F) Customer (A) Credit Manager (K) Deposit (E) Bank (J)

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 One Process, no data stores

DATA FLOW DIAGRAMS Govt. Agencies Depart- ments Tax report & payment Time cards Payroll Processing System Employees Employee checks Payroll check New employee form Bank Employee change form Human Resources Payroll report Manage- ment This is the context diagram for the S&S payroll processing system (Figure 3-5 in your textbook).

DATA FLOW DIAGRAMS Depart- ments Employees Employee paychecks Human Resources New employee form Time cards 1.0 Update Empl. Payroll file 2.0 Pay Employ- ees Employee Change form Payroll check Bank This diagram shows the next level of detail for the context diagram in Figure 3-5. Payroll Disburse- ment data 3.0 Prepare reports 5.0 Update Gen. Ledger Employee/ Payroll file Payroll tax disb. voucher Payroll report 4.0 Pay taxes General Ledger Notice that each process in the DFD is numbered sequentially. Manage- ment Tax report & payment Govt. Agencies

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

DATA FLOW DIAGRAMS The data flow diagram focuses on the logical flow of data. Flowcharts place greater emphasis on physical details.

Flowcharts Describe an information system showing: Inputs and Outputs Information activities (processing data) Data storage Data flows Decision steps Key strengths of flowcharts are that they can easily capture control via decision points, show manual vs. automated processes.

FLOWCHARTS Flowcharts use a set of standard symbols to depict processing procedures and the flow of data through a system Using a pictorial representation is often easier to understand and explain versus a detailed narrative.

Flowchart Symbol Categories Input/Output Processing Storage Miscellaneous

Flow Chart Symbol Categories (cont’d) A Some will use horizontal line in file symbol to indicate permanent storage

Types of Flowcharts Document: shows the flow of documents and data for a process, useful in evaluating internal controls System: depicts the data processing cycle for a process Program: illustrates the sequence of logic in the system process

DOCUMENT FLOWCHARTS A document flowchart shows the flow of documents and data among areas of responsibility in an organization. These flowcharts trace a document from cradle to grave and show: Where a document comes from Where it’s distributed How it’s used It’s ultimate disposition Everything that happens as it flows through the system

DOCUMENT FLOWCHARTS Internal control flowcharts are document flowcharts used to evaluate the adequacy of internal controls, such as segregation of duties or internal checks. They can reveal weaknesses or inefficiencies such as: Inadequate communication flows Unnecessarily complex document flows Procedures that cause wasteful delays

Document Flowchart

Document Flowchart (cont’d)

Guidelines for Drawing Flowcharts Understand the system you are trying to represent. Identify entity to be flowcharted, (e.g., dept., function Identify business processes, documents, data flows, and data processing procedures. Organize the flowchart so as it reads from top to bottom and left to right. Name elements descriptively. Edit/Review/Refine to make it easy to read and understand.

GUIDELINES FOR PREPARING FLOWCHARTS Use separate columns for the activity of each entity. Example: If there are three different departments or functions that “do” things in the narrative, there would be three columns on the flowchart.

What are the entities in this flowchart?

GUIDELINES FOR PREPARING FLOWCHARTS Flowchart the normal course of operations, and identify exceptions with annotations. Use standard flowcharting symbols, and draw with a template or computer. Clearly label all symbols. Use annotations if necessary to provide adequate explanation.

GUIDELINES FOR PREPARING FLOWCHARTS Give the flowchart a clear beginning and ending. Show where each document originated and its final disposition.

Identifies where input is coming from

Inputs

Process

Output to storage

Input for next process

Process

Output

GUIDELINES FOR PREPARING FLOWCHARTS Every manual/computer process should have at least one input and at least one output. Show all data entered into or retrieved from a computer file as passing through a process first. Do not show process symbols for: Forwarding a document to another entity Filing a document

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.

off-page connectors on this flowchart?

Document Flowchart (cont’d)

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. The process is followed by outputs—the resulting new information.

System Flowchart

Another Example System Flowchart

PROGRAM FLOWCHARTS Program flowcharts illustrate the sequence of logical operations performed by a computer in executing a program. They also follow an input—process— output pattern.

Note that the program flowchart details the logic of processes performed by the computer.

This flowchart becomes the programmer’s blueprint for writing the actual computer program.

systems flowchart program flowchart

Business Process Diagrams Is a visual way to represent the activities in a business process Intent is that all business users can easily understand the process from a standard notation (BPMN: Business Process Modeling Notation) Can show the organizational unit performing the activity Like DFD’s depicts what happens, but now how i.e., what technology

Business Process Diagram Basic Symbols

Payroll Business Process Diagram Example Note that a major difference between the data flow diagrams and flowcharts compared to the business process diagram is that the business process diagram can distinguish the department or location that the activity takes place. These rows—such as New Employee, Human Resources, Payroll, and so on—in the above figure are called swim lanes.