There are three common tools for documenting information systems: 1. Data flow diagrams (DFDs) visually represent the flow of data between system processes, data stores, external entities, and destinations. DFDs use four basic symbols. 2. Flowcharts depict the steps in a process and use standard symbols to represent actions, data flows, and decisions. There are different types for different purposes. 3. Business process modeling notation (BPMN) diagrams show business processes through a set of graphical symbols. Documentation is important for accountants to understand system functions and evaluate internal controls.

1. Chapter 1
1. The Information System An
accountant’s perspective
• Information: - is data that have been
organized and processed to provide meaning
and improve the decision-making process. As a
rule, users make better decisions as the
quantity and quality of information increase.
Information allows users to take action to
resolve conflicts, reduce uncertainty, and make
decisions.

2. • Data:-are facts that are collected, recorded,
stored, and processed by an information system.
Businesses need to collect several kinds of data,
such as the activities that take place, the
resources affected by the activities, and the
people who participate in the activity. For
example, the business needs to collect data about
a sale (date, total amount), the resource sold
(good or service, quantity sold, unit price), and
the people who participated (customer,
salesperson).

3. • Quality of Information
• Regardless of physical form, useful information
has the following characteristics:
• Relevance- The contents of a report or document
must serve a purpose.
• Reports containing irrelevancies waste resources
and may be counterproductive to the user.
Irrelevancies detract attention from the true
message of the report and may result in incorrect
decisions or actions.

4. • Timeliness- The age of information is a
critical factor in determining its usefulness.
Information must be no older than the time
period of the action it supports.
• For example, if a manager makes
decisions daily to purchase inventory from
a supplier based on an inventory status
report, then the information in the report
should be no more than a day old.

5. • Accuracy- Information must be free from
material errors.
• Completeness- No piece of information
essential to a decision or task should be
missing.

6. • Summarization- Information should be
aggregate/ comprehensive in accordance
with the user’s needs.
• Lower-level managers tend to need
information that is highly detailed. As
information flows upward through the
organization to top management, it
becomes more summarized

7. • Feedback- is a form of output that is sent
back to the system as a source of data.
• Feedback may be internal or external and
is used to initiate or alter a process.

8. 1.2. The system environment
• Elements of a System- A system is a
group of two or more interrelated
components or subsystems that interact to
serve a common purpose.
Multiple Components
Relatedness
System versus Subsystem
Purpose

9. 1.5. The Evolution of
Information System Models
• The manual process model
• The Flat-File Model
• The Database Model
• The Resources, Events, and Agents
(REA) Model
• Enterprise Resource Planning Systems
• Accountant’s Role in the information
system

10. CHAPTER TWO
2. AN OVERVIEW OF
TRANSACTION PROCESSING
• 2.1. Transaction Cycles
• 2.2. Expenditure Cycle
• 2.3. Conversion Cycle
• 2.4. The Revenue Cycle

11. Accounting Records
• Manual Systems
• Journals
• Ledgers

12. CHAPTER 3
MANAGING DATA RESOURCES
• Data is vital organization resources that
need to be managed like other important
business assets.
File Organization Terms and Concepts

13. • Approaches to File Management
• Data Base Models
• Elements of the Database Environment

14. • Chapter Four
• 4. Introduction to system development
life cycle
• 4.1 Definition of System Development
Life Cycle
• System development life cycle is a
systematic process of developing or
acquiring a new system, design a system,
implementation and use of it system.

15. • System Analysis
• The information needed to purchase or
develop a new system is gathered.
• Requests for systems development are
prioritized to maximally utilize limited
development resources

16. • Steps in system analysis
• Initial Investigation
• Systems Survey
• Feasibility study
• Information needs and system
requirements
• System analysis report

17. • Chapter Five
• Conceptual Design
• The company decides how to meet user
needs. The first task is to identify and
evaluate appropriate design alternatives.
• Conceptual system design: A general
framework is developed for implementing
user requirements and solving problems
identified in the analysis phase.

18. • 4.1.2.1 Evaluate design alternatives
• There are many ways to design AIS, so the
design team must continually make design
decisions like:
– Should the company mail hard copy purchase
orders or use EDI?
– Should the company have a large centralized
mainframe and database, or distribute
computer power to stores?

19. Preparing design
specification
• Once a design alternative has been
selected, the project team develops the
conceptual design specifications for the
following elements: Output, Data storage,
Input and Processing procedures and
operations

20. • 4.2 system development planning
• Each of systems development project
requires a plan, and each phase of each
development plan must also be planned.
Systems development planning is an
important step for a number of key reasons:
• Consistency, Efficiency, Cutting edge,
Lower costs and Adaptability

21. 4.3 Behavioral aspects of
change
• Aggression: behaviors that are intended to
produce errors with the new system, or
weaken the effectiveness of the new
system
• Projection: blame the new system for
everything that goes wrong
• Avoidance: ignore the new system in hopes
that it will eventually go away

22. • 4.4 Who Is Involved in the SDLC?
• Information Systems Steering Committee:
Executive level, plans and oversees IS
function; facilitates coordination with
integration of systems activities
• Project Development Team: Plan and
monitor project progress
• Programmers: Write and test programs
according to analysts specifications

23. • Systems Analysts: Determine information
needs, prepare specifications for
programmers
• Management: Get users involved in the
process, provide support for development
projects, align projects to meet
organizations strategic needs
• Users: Communicate needs to system
developers, help design and test to ensure
complete and accurate processing of data

24. CHAPTER six:
System Development and
Documentation Tools &
Techniques

25. Documentation
• Documentation explains how a system
works, including the who, what, when,
where, why, and how of:
–data entry
–data processing
–data storage
–information output
–system controls

26. Why Document Systems?
• Accountants must be able to read
documentation and understand how a
system works.
• Accounting Acts requires management to
assess internal controls and auditors to
evaluate the assessment
• Used for systems development and
changes

27. 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).

28. Documentation Tools
• Documentation tools are important on the
following levels:
– you must be able to read documentation to
determine how a system works.
– You may need to evaluate documentation to
identify internal control strengths &
weaknesses & recommend improvements.
– More skill is needed to prepare
documentation that shows how an existing
or proposed system operates.

29. Documentation Tools
• There are three common systems
documentation tools
–Data flow diagram (DFD)
–Flowchart
• Document flowchart
• System flowchart
• Program flowchart
–Business Process diagrams

30. 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.
• It uses four symbols to represent four
basic elements:

31. Data flow diagram (DFD)
There are four basic symbols to the data flow diagram:
1.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.
3.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

32. DFD

33. Basic Data Flow Diagram
Elements

34. Data Flow Diagram of Customer Payment Process

35. DFD
• A data source and a data destination are
entities that send or receive data that the
system uses or produces.
• An entity can be both a source and a
destination.
• They are represented by squares.

36. DFD
• A data flow is the movement of data among
processes, stores, sources, and destinations.
• Data that pass between data stores and a
source or destination must go through a data
transformation process.
• Data flows are labeled to show what data is
flowing.
• If two or more data flows move together, a
single line is used.
• If the data flow separately, two lines are used.

37. Splitting Customer Payments and Inquiries

38. DFD
• Processes represent the transformation of
data.
• A data store is a repository of data.
• DFDs do not show the physical storage
medium (such as a server or paper) used to
store the data.
• Data stores are represented by horizontal
lines, with the name of the file written
inside the lines.

39. Subdividing the DFD
• DFDs are subdivided into successively
lower levels to provide ever-increasing
amounts of detail, because few systems
can be fully diagrammed on one sheet of
paper.
• Also, users have differing needs, and a
variety of levels can better satisfy differing
requirements.

40. Subdividing the DFD
• The highest-level DFD is referred to as a
context diagram because it provides the
reader with a summary-level view of a
system.
• It depicts a data processing system & the
entities that are the sources and
destinations of system inputs and outputs.

41. Context Diagram for S&S Payroll Processing

42. Lower - Level DFD
• Ayele used the narrative description of S&S’s
payroll processing procedures to decompose the
context diagram into successively lower levels,
each with more detail.
• The narrative describes five data processing
activities:
– Updating the employee/payroll master file
– Handling employee compensation
– Generating management reports
– Paying taxes
– Posting entries to the general ledger

43. • Ayele exploded his context diagram and
created the Level 0 DFD
• Notice that some data inputs and outputs
have been excluded from this DFD.
• For example, in process 2.0, the data
inflows and outflows that are not related to
an external entity or to another process are
not depicted (tax tables and payroll
register).

44. Level 0 DFD for S&S Payroll Processing

45. • Ayele exploded process 2.0 (pay
employees) to create a Level 1 DFD.
• The following figure provides more detail
about the data processes involved in
paying employees, and it includes the tax
rates table and the payroll register data
flow omitted from the above figure.

46. Level 1 DFD for Process 2.0 in S&S Payroll Processing

47. Basic Guidelines for creating a DFD
• Understand the system that
you are trying to represent.
• A DFD is a simple
representation meaning
that you need to consider
what is relevant and what
needs to be included.
• Start with a high level to
show how data flows
between outside entities &
inside the system.
• Use additional DFD’s at the
detailed level to show how
data flows within the
system.
• Identify and group all the
basic elements of the DFD.
• Name data elements with
descriptive names, use
action verbs for processes
(e.g., update, edit, prepare,
validate, etc.).
• Give each process a
sequential number to help
the reader navigate from
the abstract to the detailed
levels.
• Edit/Review/Refine your
DFD to make it easy to read
and understand.

48. 1.Understand the system that you are trying to
represent: if you don’t understand the system that
you are trying to visually represent, no one else will
understand what you created. Ways to help you
understand are to actually observe the process
taking place, interview and ask questions, and try to
do a walkthrough of a transaction to understand how
the data flows, where it generates from, what
activities occur within the process, and who else
uses this information. It is also good to identify the
source documents used as you may have seen in the
chapter. Figure 3-5, for example, identifies the source
document on top of the data flow arrow.
2.Only relevant data elements should be included
in the data flow diagram.

49. 3. Starting with a level of abstraction, generally
drawing a context DFD that shows the data flowing
between outside entities (e.g., customer) and
inside the organization allows for a simple big
picture of the process. Using a hierarchy to “drill
down” into the details (e.g., sales invoice process)
can show more information. By creating a
hierarchy of levels of detail allows the reader of the
DFD to either just get the overall big picture of a
process, or really get the details of a process. It
would be difficult and messy creating information
overload if there was no organization of the DFD
making the DFD too cluttered to read.

50. 4. Identify and group the data flows. If for example, the
data flows together they are in one arrow, when it
separates out then use multiple arrows. An example of
this would be a sales order, some orders may be
approved and continue to move through the process
whereas others may not be approved and would flow
back to the customer. Similarly, identify and group
transformation processes, data stores, data sources, and
destinations.
5. By being descriptive it helps the reader understand the
process better.
6. Giving a process a sequential number helps provide an
information trail to the reader of the DFD as they move
from abstract to detailed versions of the process.
7. As with anything, refining your draft and receiving
feedback help provide for a clear understanding as to
what you intend the reader will understand from your DFD

51. Flowcharts
• A flowchart is a pictorial, analytical
technique used to describe some aspect
of an information system in a clear,
concise, and logical manner.
• Flowcharts record how business
processes are performed and how
documents flow through the organization.
• They are also used to analyze how to
improve business processes and
document flows.

52. Flowcharting symbols
• Divided into four categories:
–Input/output symbols
–Processing symbols
–Storage symbols
–Flow and miscellaneous symbols

53. Flowcharts Symbols

55. Types of Flowcharts
• Document flowcharts:
– developed to illustrate the flow of documents and
data among areas of responsibility within an
organization.
– They trace a document showing where each
document originates, its distribution, its purpose,
its disposition, and everything that happens as it
flows through the system.
– A special type of flowchart, called an internal
control flowchart is used to describe, analyze, and
evaluate internal controls.

56. Document Flowchart of Payroll Processing at S&S

57. Document Flowchart of Payroll Processing at S&S

58. Types of Flowcharts
• System flowchart:
–depicts the relationships among system
input, processing, storage, and output.
–The sales processing flowchart in the
following figure represents Ayele’s
proposal to capture sales data using
state-of-the-art sales terminals.
–The terminals will capture and edit the
sales data and print a customer receipt.

59. System Flowchart of Sales Processing at S&S

60. System flowchart:
• The terminals periodically send all sales
data to corporate headquarters so that the
accounts receivable, inventory, and
sales/marketing databases and the
general ledger can be updated.
• Management and other users can access
the files at any time by using an inquiry
processing system.

61. Types of Flowcharts
• Program flowchart:
– Illustrates the sequence of logical operations
performed by a computer in executing a program.
– The relationship between system & program
flowcharts is shown in the following figure.
– System flowcharts are used to describe data
flows and procedures within an AIS.
– A program flowchart describes the specific logic
used to perform a process shown on a system
flowchart.

62. Relationship Between System and Program Flowcharts

63. Guidelines for Drawing Flowcharts
• Understand the system you are trying to
represent.
• 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.

64. 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

65. Business Process Diagram Basic Symbols

66. Payroll Business Process Diagram Example

67. • 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.

68. Assignment 1
• When a customer make payment, a cashier
processes their payment by preparing
receipt. A copy of the receipt is sent to the
accountant. The cash and the deposit slip is
sent to Dashen Bank for deposit. The
accountant updates customer records ,
prepares and send a credit report to the
credit manager.

69. Required
1. Understand the system
2. Develop a context diagram
3. Develop a subsequent level of DFD

70. Assignment 2
• When a customer make an online credit
sales order, a program checks their credit
limit. If the order is with in limit, it checks its
availability. If the order exceeds limit it
displays a pop-up message that reads
“order exceed limit. Settle your balance and
reorder”. If the item is available it fills order.
If not available, it displays a pop-up message
that reads “Back order after 15 days”.

71. Required
1. Understand the System
2. Develop a program flow chart