Chapter 3

Systems Documentation Techniques

Learning Objectives:
Objective 1: Explain what documentation techniques
are, its importance, and uses by accountants.
Objective 2: Prepare and use data flow diagrams to
understand, evaluate, and document information
systems.
Objective 3: Prepare and use flowcharts to understand,
evaluate, and document information systems.
Objective 1: Explain what Documentation
Techniques Are, Its importance, and Uses by
Accountants:
1/1- What Documentation Techniques Are:
 Documentation explains how a system works.
 Popular means of documenting a system include:
1- Diagrams such as, (data flow diagrams, and business
process diagrams).
2- Flowcharts, and
3- Other graphical representations of data and information.
 These are supplemented by a narrative description of
the system, a written step-by-step explanation of
system components and interactions.
1/2- Importance of Documentation Techniques
(Tools):
 Documentation tools are important on the
following levels:
1- At a minimum, you must be able to read documentation to
determine how a system works.
2- You may need to evaluate documentation to:
** identify internal control strengths and weaknesses and
recommend improvements.
** determine if a proposed system meets the company’s
needs.
3- More skill is needed to prepare documentation that shows
how an existing or proposed system operates.
1/3 Uses of Documentation Techniques

 Accountants use documentation techniques extensively.

 Auditing standards require that independent auditors
understand the automated and manual internal control
procedures an entity uses.
 One good way to gain this understanding is to use:
 business process diagrams or flowcharts to document a system
because, such graphic portrayals more readily reveal internal
control weaknesses and strengths.
 The Sarbanes-Oxley Act (SOX) specifies that a company’s auditor
must evaluate management’s assessment of the company’s
internal control structures and attest to its accuracy.
 Documentation tools are also used extensively in the
systems development process.
 In addition, the team members who develop
information systems applications often change, and
documentation tools help the new team members get
up to speed quickly.
 Note that: Documentation is easier to prepare and
revise when a software package is used.
Objective 2: Prepare and use data flow diagrams
to understand, evaluate, and document
information systems
 Some of the main types of documentation
techniques are:
1- Data flow diagrams,
2- Flowcharts, and
3- Business process diagrams.
2/1- Data Flow Diagrams:
1- Data flow diagram concept:
- A data flow diagram (DFD) is a graphical description
of data sources, data flows, transformation
processes, data storage, and data destinations.
 In other words a data flow diagram graphically
describes the flow of data within an organization.
 It uses the four symbols shown in Figure 3-1, P. 78 to
represent its four basic elements.
Data flow diagram symbols:

Data sources and destinations

Data flows

Transformation processes

Data stores
2- The Basic elements of a data flow diagram
(DFD):
 A data flow diagram consists of four basic elements:
a- Data sources and destinations:
 A data source and a data destination are entities that send
or receive data that the system uses or produces.
 They are represented by squares.
Note: An entity can be both a source and a destination.
b- Data Flow:
 A data flow is the movement of data among processes, data
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 information is flowing. The
only exception is data flow between a process and a data store
because the data flow is usually obvious.
 Data flow is represented by an arrow.
 Notes: 1- If two or more data flows move together, a single line
is used. For example, a data flow (customer payment) consists of
a payment and remittance data.
 2- If the data flow separately, two lines are used. For example, we
can use two lines to represent customer inquires and customer
payment because customer inquires do not always accompany a
payment.
C- Transformation processes:

 Processes represent the transformation of data into

information.
 Processes are represented by circles.
 For example, figure 3-3, P.79 shows that process
payment splits the customer payment into:
 ** the remittance data, and
 ** the check, which is deposited in the bank.
 The update receivables process uses remittance and
accounts receivable data to update receivable records
and send receivables information to the credit
manager.
d- Data stores:
 A data store is a repository of data.
 A data store is represented by two horizontal lines.
 Note: DFDs do not show the physical storage medium (such as
a server or paper).
Subdividing The DFDs:
 DFDs are subdivided into successively:

1- The Lower levels DFDs:

- The lower level DFD provides ever-increasing amounts of
detail because:
** few systems can be fully diagrammed on one sheet or paper,
** users have differing needs, and
** a variety of levels can better satisfy differing
requirements.
2- The highest-levels DFDs:
- The highest level DFD is referred to as a context diagram because
it:
** provides the reader with a summary-level view of a
system.
** depicts a data processing system and the entities that
are the sources and destinations of system inputs and
outputs.
(See Figure 3-5, P. 80)
Objective 3: Prepare and Use Flowcharts to
Understand, Evaluate, and Document
Information Systems.
3/1- Flowchart Concept:
 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.
- Flowcharts are also used to analyze how to improve
business processes and document flows.
 Most flowcharts are drawn using a software
program.
3/2- Flowchart Symbols:
Flowcharts use a standard set of symbols to:
** describe pictorially the transaction processing
procedures a company uses, and
** describe the flow of data through a system.
 As shown in Figure 3-8, PP: 84-85, flowcharting
symbols are divided into four categories.
 1- Input/ Output Symbols:
 They show input to or output from a system.
 2- Processing Symbols:
 They show data processing, either electronically or by
hand.
 3- Storage Symbols:
 They show where data is stored.
4- Flow and Miscellaneous Symbols:
They indicate:
** the flow of data,
** where flowcharts begin or end,
** where decisions are made, and
** how to add explanatory notes to flowcharts.
3/3- Types of Flowcharts:

 Flowcharts include the following types:

1- Document flowcharts.
2- System flowcharts.
3- Program flowcharts.
1- Document Flowcharts:
a- Document flowchart Concept:
 A document flowchart illustrates the flow of

documents and data among areas of responsibility

within an organization.
 They trace a document from its cradle to its
grave, showing:
 ** where each document originates,
 ** its distribution,
 ** its purpose,
 ** its disposition, and
 ** everything that happens as it flows through

the system.
b- Uses of document flowcharts:
1- A special type of flowchart, called an internal control
flowchart is used to describe, analyze, and evaluate internal
controls.
2- They are used to identify system weaknesses or inefficiencies,
such as:
 ** inadequate communication flows,

 ** insufficient segregation of duties.

 ** unnecessary complexity in document flows, or

 ** procedures responsible for causing wasteful delays.

2- System Flowcharts:

a- system flowchart Concept

 A system flowchart depicts the relationships among

system input, processing, storage , and output.

b- Uses of system flowcharts
 System flowcharts are used to:

** describe data flows and procedures within an AIS.

** provide an overview of how each business process
works.
3- Program flowcharts:
 A program flowchart:

** illustrates the sequence of logical operations

performed by a computer in executing a program.
** describes the specific logic used to perform a process
shown on a system flowchart.
3/3- Business Process Diagrams:

 A business process diagram (BPDs) is a visual way to

describe the different steps or activities in a business
process.
 For example, there are many activities in the revenue

cycle. Among them are:

** receiving an order,
** checking customer credit,
** verifying inventory availability, and
** confirming customer order acceptance.
 All of these activities can be shown on a BPD to give
the reader an easily understood pictorial view of what
takes place in a business process.
 - While BPDs can describe interactions within an
entity as well as between entities, the BPDs in the
textbook do not document the activities performed
by external parties.
 - Thus, a DPD for the revenue cycle will only describe
the function performed by the selling company.
Preparing System Flowcharts

Case 1:
Draw a system flowchart to illustrate the process
of updating accounts payable master file by
credit purchasing transactions.
 The system includes the following steps:

1- On a daily base the credit purchase

transactions are collected and entered into the
computer using a keyboard.
2- The computer edits and stores (saves)
purchase transaction data on a magnetic tape

( purchase transaction file).

3- The computer sorts purchase transactions
by supplier number.
4- At the end of each day, the accounts
payable master file is updated using
purchase transaction file. Two printed
outputs from this process are:
a- a report listing erroneous transactions.
b- a past-due supplier balances report.
Case 2:

Draw a system flowchart to illustrate the

process of updating the inventory master
file. The system includes the following
steps:
1- On a daily base the inventory transactions
are collected and entered into the computer
using a keyboard.
2- The computer edits and stores (saves)
inventory transaction data on a magnetic
disk (inventory transaction file).
3- The computer sorts inventory transactions
by inventory item number.
4- The daily sorted inventory transaction file
is merged with a weekly inventory
transaction file.
5- At the end of each week, the inventory
master file is updated using the merged
weekly transaction file. Two printed
outputs from this process are:
a- a report listing erroneous transactions.
b- an inventory status report.
Case 3:
 Draw a system flowchart to illustrate the

process of updating accounts receivable

master file by credit sales.
The system includes the following steps:
1- On a daily base the credit sales
transactions are collected and entered
into the computer using a keyboard.
2- The computer edits and stores (saves)
sales transaction data on a magnetic
disk ( sales transaction file).
3- The computer sorts sales transactions.
4- At the end of each day, the accounts
receivable master file is updated using sales
transaction file. Two outputs from this
process are:
a- a printed report listing erroneous
transactions,
b- a past-due customer balances report
displayed on a screen.
Case 4:

Draw a system flowchart to illustrate the

process of updating the inventory
master file by weekly sales. The system
includes the following steps:
1- On a daily base the sales transactions are
collected and entered into the computer
using a keyboard.
2- The computer edits and stores (saves)
sales transactions on a magnetic disk (sales
transaction file).
3- The computer sorts sales transactions.
4- The daily sorted transaction file is merged
with a weekly sales transaction file.
5- At the end of each week, the inventory
master file is updated using merged
weekly sales transaction file. Two outputs
from this process are:
a- a printed report listing erroneous
transactions.
b- an inventory status report displayed on a
screen.
Case 5:

 Draw a system flowchart to illustrate the

process of updating the payroll master file.
 The system includes the following steps:

1- On a monthly base job time tickets are

collected and entered into the computer
using a keyboard.
2- The computer edits and stores (saves)
job time tickets data on a magnetic disk
(Job time transaction file).
3- The computer sorts job time data by job
number.
4- At the end of each month, the payroll master
file is updated using job time transaction file.
Three outputs from this process are:
a- a printed report listing erroneous
transactions.
b- a printed list of employees’ monthly salaries.
c- a salary analyses report by job displayed on
a screen.
End of Chapter Three