2. Accounting Information Systems, 1st Edition
IT Governance
Accounting Information Systems, 1st Edition

3. Study Objectives
An overview of IT governance and its role in strategic management
An overview of the system development life cycle (SDLC)
The elements of the systems planning phase of the SDLC
The elements of the systems analysis phase of the SDLC
The elements of the systems design phase of the SDLC
The elements of the systems implementation phase of the SDLC
The elements of the operation and maintenance phase of the SDLC
The critical importance of IT governance in an organization
Ethical considerations related to IT governance
1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements?
Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases).
Forward-looking Information
Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image).
Timeliness (no real time financial information)

4. Introduction to IT Governance
How does a company decide,
which IT systems are appropriate?
which accounting software package to buy?
when it has outgrown its accounting software or when to upgrade the software?
whether to use IT systems to sell products on the web?
whether to establish a data warehouse for analyzing data such as sales trends?
whether to use ERP systems or customer relationship management (CRM) software?
SO 1 An overview of IT governance and its role in strategic management

5. Introduction to IT Governance
IT systems must be strategically managed.
Strategic management is the process of
determining the strategic vision for the organization,
developing the long-term objectives,
creating the strategies that will achieve the vision and objectives, and
implementing those strategies.
SO 1 An overview of IT governance and its role in strategic management

6. Introduction to IT Governance
Proper management, control, and use of IT systems is IT governance. IT Governance is defined as:
[A] structure of relationships and processes to direct and control the enterprise in order to achieve the enterprise’s goals by adding value while balancing risk versus return over IT and its processes. IT governance provides the structure that links IT processes, IT resources and information to enterprise strategies and objectives.
SO 1 An overview of IT governance and its role in strategic management

7. Introduction to IT Governance
Management must focus on the following activities:
aligning IT strategy with the business strategy
cascading strategy and goals down into the enterprise
providing organizational structures that facilitate the implementation of strategy and goals
insisting that an IT control framework be adopted and implemented
measuring IT’s performance
SO 1 An overview of IT governance and its role in strategic management

8. Introduction to IT Governance
The board and top management must ensure that the organization has processes to accomplish the following:
Continually evaluate the match of strategic goals to the IT systems in use.
Identify changes or improvements to the IT system.
Prioritize the necessary changes to IT systems.
Develop the plan to design and implement those IT changes that are of high priority.
Implement and maintain the IT systems.
Continually loop back to step 1.
SO 1 An overview of IT governance and its role in strategic management

9. Introduction to IT Governance
Company should have an
IT governance committee and
a formal process to select, design, and implement IT systems (system development life cycle, or SDLC).
SO 1 An overview of IT governance and its role in strategic management

10. Introduction to IT Governance
Concept Check
IT governance includes all but which of the following responsibilities?
a. Aligning It strategy with the business strategy.
b. Writing programming code for IT systems.
c. Insisting that an IT control framework be adopted and implemented.
d. Measuring IT’s performance.
SO 1 An overview of IT governance and its role in strategic management

11. An Overview of SDLC
The systems development life cycle (SDLC) is a systematic process to manage the acquisition, design, implementation, and use of IT systems.
Operation and Maintenance
Exhibit 6-1
An Overview of the Systems Development Life Cycle
System Planning
System Implementation
System Analysis
System Design
SO 2 An overview of the system development life cycle (SDLC)

12. An Overview of SDLC
Exhibit 6-2
Process Map of the System Development Life Cycle (SDLC)
SO 2 An overview of the system development life cycle (SDLC)

13. Elements of Systems Planning Phase of SDLC
IT governance committee must monitor the IT system through feedback about network utilization, security breaches, and reports on the operation of the system.
IT governance committee should consider:
the assessment of IT systems and their match to strategic organizational objectives, and
the feasibility of each of the requested modifications or upgrades.
SO 3 The elements of the systems planning phase of the SDLC

14. Elements of Systems Planning Phase of SDLC
Exhibit 6-3
System Planning Process Map
SO 3 The elements of the systems planning phase of the SDLC

15. Elements of Systems Planning Phase of SDLC
Feasibility Study
IT governance committee should evaluate the feasibility of each competing proposal.
Four feasibility aspects
Technical
Operational
Economic
Schedule feasibility
SO 3 The elements of the systems planning phase of the SDLC

16. Elements of Systems Planning Phase of SDLC
Planning and Oversight of Proposed Changes
IT governance committee must decide which of the changes can be undertaken at the current time.
Next phases of the SDLC:
1. Formally announce the project.
2. Assign the project team that will begin the next phase, the systems analysis.
3. Budget the funds necessary to complete the SDLC.
4. Continue oversight and management of the project team and proposed IT changes.
SO 3 The elements of the systems planning phase of the SDLC

17. Elements of Systems Planning Phase of SDLC
Concept Check
Which of the following feasibility aspects is an evaluation of whether the technology exists to meet the need identified in the proposed change to the IT system?
a. Technical feasibility.
b. Operational feasibility.
c. Economic feasibility.
d. Schedule feasibility.
SO 3 The elements of the systems planning phase of the SDLC

18. Elements of Systems Planning Phase of SDLC
Concept Check
The purpose of the feasibility study is to assist in?
a. Selecting software.
b. Designing internal controls.
c. Designing reports for the IT system.
d. Prioritizing IT requested changes.
SO 3 The elements of the systems planning phase of the SDLC

19. Elements of Systems Analysis Phase of SDLC
Exhibit 6-4
System Analysis Process Map
Preliminary Investigation
The purpose of the preliminary investigation is to determine whether the problem or deficiency in the current system really exists.
“go” or “no-go” decision
SO 4 The elements of the systems analysis phase of the SDLC

20. System Survey Elements of Systems Analysis Phase of SDLC
A systems survey requires collecting data about the current system, including the following:
Inputs
Outputs
Processes
Controls
Data storage
Transaction volumes
Errors
SO 4 The elements of the systems analysis phase of the SDLC

21. Determination of User Requirements
Elements of Systems Analysis Phase of SDLC
Determination of User Requirements
To gain a complete understanding of the system under study, the project team should not only observe and review documentation, but also seek the opinions and thoughts of those who use the system.
Interviews
Questionnaires
SO 4 The elements of the systems analysis phase of the SDLC

22. Analysis of the System Survey
Elements of Systems Analysis Phase of SDLC
Analysis of the System Survey
Analysis phase is the critical-thinking stage.
In many cases, the analysis phase may lead to business process reengineering (BPR).
“ fundamental rethinking and radical redesign of business processes to bring about dramatic improvements” in performance.
SO 4 The elements of the systems analysis phase of the SDLC

23. System Analysis Report
Elements of Systems Analysis Phase of SDLC
System Analysis Report
The report to inform the IT governance committee of the results of the systems survey, user needs determination, and BPR.
SO 4 The elements of the systems analysis phase of the SDLC

24. Concept Check Elements of Systems Analysis Phase of SDLC
Which phase of the system development life cycle includes determining user needs of the IT system?
a. Systems planning.
b. Systems analysis.
c. Systems design.
d. Systems implementation.
SO 4 The elements of the systems analysis phase of the SDLC

25. Elements of Systems Design Phase of SDLC
Purchased Software
Exhibit 6-5
System Design Process Map for Purchased Software
SO 5 The elements of the systems design phase of the SDLC

26. Elements of Systems Design Phase of SDLC
When evaluating each proposal, the IT governance committee should consider:
1. Price of software or software modules
2. Match of system and user needs to features of the software
3. Technical, operational, economic, and schedule feasibility
4. Technical support provided by the vendor
5. Reputation and reliability of the vendor
6. Usability and user friendliness of the software
7. Testimonials from other customers
SO 5 The elements of the systems design phase of the SDLC

27. Elements of Systems Design Phase of SDLC
In-House Design
Exhibit 6-6
System Design Process Map for In-House Design
SO 5 The elements of the systems design phase of the SDLC

28. Conceptual Design Elements of Systems Design Phase of SDLC
Involves identifying the alternative conceptual design approaches to systems that will meet the needs identified in the system analysis phase.
SO 5 The elements of the systems design phase of the SDLC

29. Evaluation and Selection
Elements of Systems Design Phase of SDLC
Evaluation and Selection
Feasibility assessments are:
Technical feasibility
Operational feasibility
Economic feasibility
Schedule feasibility
In most cases, the cost–benefit analysis is the most important of the four tests.
SO 5 The elements of the systems design phase of the SDLC

30. Detailed Design Elements of Systems Design Phase of SDLC
The purpose of the detailed design phase is to create the entire set of specifications necessary to build and implement the system.
The various parts of the system that must be designed are the
outputs,
inputs,
Processes,
data storage, and
internal controls.
SO 5 The elements of the systems design phase of the SDLC

31. Concept Check Elements of Systems Design Phase of SDLC
A request for proposal (RFP) is used during the?
a. Phase-in period.
b. Purchase of software.
c. Feasibility study.
d. In-house design.
SO 5 The elements of the systems design phase of the SDLC

32. Elements of Systems Implementation Phase
Exhibit 6-7
Implementation and Operation Process Map
Parallel
Direct cutover
Phase-in
Pilot
SO 6 The elements of the systems implementation phase of the SDLC

33. Concept Check Elements of Systems Implementation Phase
Which of the following steps within the systems implementation phase could not occur concurrently with other steps, but would occur at the end?
a. Employee training.
b. Data conversion.
c. Software programming.
d. Post-implementation review.
SO 6 The elements of the systems implementation phase of the SDLC

34. Concept Check Elements of Systems Implementation Phase
Each of the following are methods for implementing a new application system except
a. Direct cutover conversion.
b. parallel conversion.
c. Pilot conversion.
d. Test method conversion.
SO 6 The elements of the systems implementation phase of the SDLC

35. Elements of the Operation and Maintenance Phase
Management should receive regular reports regarding the performance of the IT system.
Examples of reports are:
IT performance
IT load usage and excess capacity
Downtime of IT systems
Maintenance hours on IT systems
IT security and number of security breaches or problems
IT customer satisfaction, from both internal and external customers.
SO 7 The elements of the operation and maintenance phase of the SDLC

36. Concept Check Elements of the Operation and Maintenance Phase
The use of the SDLC for IT system changes is important for several reasons. Which of the following is not a part of the purposes of the SDLC processes?
a. As a part of strategic management of the organization.
b. As part of the internal control structure of the organization.
c. As part of the audit of an IT system.
d. As partial fulfillment of management’s ethical obligations.
SO 7 The elements of the operation and maintenance phase of the SDLC

37. Critical Importance of IT Governance
Three major purposes are served by the continual and proper use of the IT governance committee and the SDLC:
1. The strategic management process of the organization
2. The internal control structure of the organization
3. The fulfillment of ethical obligations
SO 8 The critical importance of IT governance in an organization

38. Ethical Considerations Related to IT Governance
Management has an ethical obligation to maintain a set of processes and procedures that assure accurate and complete records and protection of assets.
Employees should not subvert the process.
Consultants have at least four ethical obligations:
Bid the engagement fairly, and completely disclose the terms of potential cost increases.
Bill time accurately to the client.
Do not oversell unnecessary services or systems.
Do not disclose confidential or proprietary information.
SO 9 Ethical considerations related to IT governance

39. Concept Check Ethical Considerations Related to IT Governance
Confidentiality of information is an ethical consideration for which of the following party or parties?
a. Management.
b. Employees.
c. Consultants.
d. All of the above.
SO 9 Ethical considerations related to IT governance

40. Copyright
Copyright © 2008 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.