1. Chapter 2
Systems Techniques and Documentation

2. Compliance vs Substantive Testing
Compliance Testing
confirms
assesses
checks
the continuity of operation of internal controls (IC)

3. Compliance vs Substantive Testing
verifies
financial statements

4. Types of Flowcharts IPO and HIPO Systems and Program
Analytic and Document

5. IPO and HIPO primarily narrative in nature
used primarily by systems development personnel

6. Commonly Used Flowcharts
Document Flowcharts
Systems Flowcharts
Program Flowcharts
Data Flow Diagrams

7. Document Flowcharts
Flowcharts are pictorial representations of transaction processing systems that portray flows of some type.
A Document Flowchart emphasizes the hardcopy inputs and outputs and their flows through organizational units.
Auditors and accountants may use document flowcharts when analyzing a current system for weaknesses in controls and reports.

8. A Sample Document Flowchart
Requesting Department
Central Supplies Department A
Goods Requisition
Form 1 2 1
Goods Requisition
Form A
File

9. Systems Flowchart
a pictorial or graphical representation of the overall flow of work, documents, and operations in a system
systems flowcharts are used by both auditors and systems development personnel

10. System Flowcharts
They use symbols that are industry conventions standardized by the American National Standards Institute (ANSI).
Flowcharting symbols are grouped as input-output symbols, processing symbols, storage symbols, data and information flow symbols, and miscellaneous symbols.

11. Flowchart Symbols: Documents
Invoice
(A)
Single
Document 1 2 3 4
Shipping
Receipt
(B)
Overlapping symbols-
same document
Sales
Invoice 4
(C)
Two overlapping
symbols - same document
Sales
Order 3
Invoice 2
(D)
Two overlapping symbols -
different documents

12. Flowchart Symbols (A) On-line Manual Device (B) Terminal Display (C)
I/O
(Input/Output)
(D)
Manual
Process
(E)
On-line
Computer
Process
(I)
Disk
Storage
Permanent
File
(G)
Off-line
Paper
Temporary N A
(F)
Off-line or
Noncomputer
Process
(H)
On-line
Data
Storage
(J)
Magnetic
Tape
Storage

13. Flowchart Symbols (C) On-page Connectors (D) Off-page Connectors (A)1
Indicates the flow will continue
at the on-page connector #1
Indicates where the flow continues
from the on-page connector #1
(D)
Off-page
Connectors
p.4 1
p.2
on page 2:
on page 4:
to page 4
connector #1
from page 2
(A)
Enter/Exit
System To
Customer
From
Bank
(B)
Start
(or end)
Process
(G)
Calculator/
Register
Tape
(F)
Decision
(E)
Annotation
(H)
Physical
Object
(I)
Flow
Lines
(J)
Communication
Link

14. Systems Flowcharting Guidelines
Sketch a flowchart before designing the final draft.
Use annotated descriptions and comments in flowcharts for clarification.
Within a file symbol, (a) may be placed to show alphabetic storage or documents, (c) for chronological, and (n) for numeric.

15. Systems Flowcharting Guidelines
Flowcharts should read from top to bottom and left to right.
Use appropriate symbols; the variety should be limited for clarity.
Sandwich rule - a process symbol should always be found between an input and an output symbol.
Use connectors to avoid crossed lines and cluttered flowcharts.

16. Flowchart Element : Flow Lines
Flow lines are used to connect the symbols on the document flow chart.
A solid line indicates the flow of a document or object
A dotted or dashed symbol indicates a flow of information rather than the physical document

17. Flowchart Element : Flow Lines
Arrows are used when the documents or information flow is not left-to-right or top-to-bottom
Some flowcharts also show communication flows such as by telephone modem or satellite

18. Flowcharting Element: Area of Responsibility
Areas of responsibility are displayed to enable the flowchart reader to clearly identify changes in responsibility as the documents flow through the system.
They are represented on flowcharts by segmenting and labeling columns.

19. Flowcharting Element: Area of Responsibility
Areas of responsibility may be departments, sections within a department, or individual employees within a department.
Judgment must be used in choosing the level of subdivision that one column should represent.

20. Preparation Conventions
Keep flowcharts uncluttered
place areas with frequent interchange in adjacent columns
enter narrative only in symbols
Make sure progress of a document is clear. Diagram a document
Left-to-right, Top-to-bottom
All documents must have an origin and termination
indicate origin by darkening one corner of the symbol
each copy of the document must flow to
a permanent file symbol
a symbol denoting an exit from the system, or

21. Preparation Conventions
an off-page connector
a document destruction symbol (small black box)
“cradle to grave” documentation
before and after each process
entering or leaving a file
entering or leaving a page or area of responsibility
Make sure the flowchart is complete

22. Program Flowchart a flowchart indicating detailed processing functions
program flowcharts are used primarily by systems development personnel

23. Logical Data Flow Diagrams
Shows the system’s processes and the flows of data into and out of the processes, i.e., provides a logical view of the system.
Represents what tasks the system is doing, without emphasis on how, where, or by whom the tasks are being performed.
Appropriate for a macro-view of the system.

24. Data Flow Diagrams (DFD)
Data flow diagramming symbols are used for a variety of system analysis purposes, including graphically displaying the logical flows of data through a process.
Unlike flowcharts which represent the physical components of an information system, data flow diagrams can provide a more conceptual, nonphysical display of the movement of data through a system.

25. Data Flow Diagrams (DFD)
Data flow diagrams disregard such things as organizational units, the computer on which the data are processed, and the media on which the data are stored.
The movement of data across offices or departments within a particular system environment are not represented.

26. Data Flow Diagram Symbols
Process
(B)
Data inflow sources,
information outflow destinations
(C)
Data store
(D)
Data flow lines

27. Data Flow Diagram Symbols
Process
Circles are used to represent processes that take data inflows and transform them to information outflows.
The circle contains two labels.
The first label is a process number (explained later) and the second is a process name.
Some use rectangular boxes with rounded corners.
(A)
Process

28. Data Flow Diagram Symbols
Data Sources and Sinks
Rectangles (or squares) represent data (inflow) sources and (information outflow) sinks
The rectangle is labeled with the name of the data source or sink/destination (e.g. Customer, Vendors, Government Agency).
The sources and sinks play an important role in the data flow diagram.
(B)
Data inflow sources,
information outflow destinations

29. Data Flow Diagram Symbols
The sources and sinks are agents external to (i.e. outside the scope of) the system represented on the diagram.
They delineate the boundaries of the system.

30. Data Flow Diagram Symbols
Data Stores
Two parallel straight lines are used to display a store or collection of data.
Some people refer to data stores as data at rest.
A description of the data store contents is entered on the symbol.
Data stores are used anytime it is necessary to store the output from a process before sending it on to the next process.
Inventory
(C)
Data store

31. Data Flow Diagram Symbols
Some use a rectangular box that is open at one end.

32. Data Flow Diagram Symbols
Data flow lines
Data Flow Lines
Data flow lines display the route of data inflow and information outflow.
They can be straight or curved lines.
The data flow is generally labeled with the name of the data (e.g. a customer order, a bill, a financial analysis) and the arrow indicates the direction of the data flow.

33. Constraints: General Rules
All processes should have unique names. If two data flow lines (or data stores) have the same label, they should both refer to the exact same data flow (or data store).
The inputs to a process should differ from the outputs of a process.
Any single DFD should not have more than about seven processes.

34. Constraints: Process Rules
Incorrect
No process can have only outputs. (This would imply that the process is making information from nothing.) If an object has only outputs, then it must be a source.
No process can have only inputs. (This is referred to as a “black hole”.) If an object has only inputs, then it must be a sink.
A process has a verb phrase label.
Correct
Incorrect
Correct
Edit

35. Constraints: Data StoreNo
Data cannot move directly from one data store to another data store. Data must be moved by a process.
Data cannot move directly from an outside source to a data store. Data must be moved by a process that receives data from the source and places the data in the data store.
Data cannot move directly to an outside sink from a data store. Data must be moved by a process.
Yes No
Yes No
Yes

36. Constraints: Data Store
A data store has a noun phrase label.
CUSTOMER

37. Constraints: Source/Sink
Data cannot move directly from a source to a sink. It must be moved by a process if the data are of any concern to the system. If data flows directly from a source to a sink (and does not involved processing) then it is outside the scope of the system and is not shown on the system data flow diagram DFD.
A source/sink has a noun phrase label.
Correct
Incorrect
Customer

38. Constraints: Data Flow
A data flow has only one direction between symbols. It may flow in both directions between a process and a data store to show a read before an update. To effectively show a read before an update, draw two separate arrows because the two steps (reading and updating) occur at separate times.
A fork in a data flow means that exactly the same data goes from a common location to two or more different processes, data stores, or sources/sinks. (This usually indicates different copies of the same data going to different locations.) No
Yes A No B A
Yes A

39. Constraints: Data Flow
. A join in a data flow means that exactly the same data comes from any of two or more different processes, data stores, or sources/sinks, to a common location.
A data flow cannot go directly back to the same process it leaves. There must be at least one other process that handles the data flow, produces some other data flow, and returns the original data flow to the originating process.
A data flow to a data store means update (i.e., delete, add, or change).
A data flow from a data store means retrieve or use.
A data flow has a noun phrase label. More than one data flow noun phrase can appear on a single arrow as long as all of the flows on the same arrow move together as one package.

40. Context Diagram
The highest level of data flow diagrams is the context diagram.
A single system is represented on a context diagram and it provides the scope of the system being represented identified in a process symbol in the center of the diagram labeled with a 0.
The context diagram shows one process (representing the entire system) and the sources/sinks that represent the boundaries of the system.

41. Context Diagram
The data flow lines into the process represent the input data to the system (provided by sources) and the data flow lines from the process represent the output information from the system (going to the sinks).

42. Context Level Diagram Events Driven System
External Events
Customers
Management
Reports
0 Events Driven System
Investors and Creditors
Internal
Departments
Financial Statements
Internal Events

43. Level Zero DFD Example Order Bill Payments 3.0 Process Payments
Customer
Orders
Desired Information
Order
Shipping Request
2.0 Deliveries to
Customers
Decision
Makers
Bill
Customers
Accounts Receivable
Payments
Desired Information
3.0 Process
Payments

44. Level One - Record Event Data
External event: Record Sale of Merchandise
Prepare
Sales Invoice
1.1
Review Customer Credit
1.2
Sales Invoice Data
Record
Sales
Event Data
1.3
Approved Sales Invoice Data
Sale Event Data

45. Version 1 Example Data Flow Diagram Example Flowchart Factory
Supervisor
Accounting
Payroll Clerk 1 2 N
Time
cards
Review
time A
Record
wages
Employee
Earnings
Records
A= alphabetic
Factory
supervisor
Review
time
cards
Record
weekly
wages
Time
Reviewed time cards
Employee Earnings
Records
Time card file
(alpha)

46. Analytic Flowchart
charts the flow of documents and processing between different entities - which are represented by separate columns in the flowchart.
Examples of analytic flowcharts

47. Analytic flowcharts and Internal Control Analysis
the grouping of functions facilitates analysis of segregation of duties
interfaces between entities are emphasized
interfaces are important control points in a system