Participants in Systems

Development and Information

Systems Acquisition
 Systems Development and Program
Change Activities
• Participants in Systems
Development
• Why Are Accountants and
Auditors Involved with SDLC?
• How Are Accountants Involved
with the SDLC?
• Information Systems Acquisition
• In-House Development
• Commercial Systems
• The Systems Development Life Cycle
• Systems Planning—Phase I
• Systems Analysis—Phase II
• Conceptual Systems Design—Phase III
• System Evaluation and Selection—Phase IV
• Detailed Design—Phase V
• Application Programming and Testing—
Phase VI
• System Implementation—Phase VII
• Systems Maintenance—Phase VIII
• Controlling and Auditing the SDLC
• Controlling New Systems Development
• The Controlling Systems Maintenance
 Introduction
• Responsive, user-oriented information system
• Is one of the most valuable assets of the modern business organization.

• Advantages of a well-designed system:

• 1) increase productivity
• 2)reduce inventories
• 3) eliminate non-value-added activities
• 4) improve customer service and management decisions
• 5) coordinate activities throughout the organization.
 PARTICIPANTS IN SYSTEMS
DEVELOPMENT
• Four (4)broad groups of the participants:
• 1) Systems professionals
• Are systems analysts, systems engineers, and programmers.
• New System: is the product of their efforts.
• 2) End users
• include managers, operations personnel, accountants, and internal auditors.
• 3) Stakeholders
• include accountants, internal and external auditors, and the internal steering committee that
oversees systems development.
• 4) Accountants/auditors
• include internal auditors and IT auditors (exclude external auditors).
• SOX legislation prohibits external auditors from direct involvement in an audit client’s systems
development activities.
 Why Are Accountants and Auditors Involved
with SDLC?
Two (2) reasons
1) Creation of an IS entails
significant financial
transactions.
2) the nature (quality) of the
products that emerge from
the SDLC.
Accountants Involvement
•concerned with the integrity of this process that has financial
resource implications.
•experts in financial transactions (due to background, experience,
and training
•provide critical input into the system (such as controls, integrity,
timeliness, etc.)
•ensure that the systems employ proper accounting conventions
and rules and possess adequate controls.
•concerned with the quality of the process that produces AIS.
 How Are Accountants Involved with the
SDLC?
• Accountants are involved with SDLC in three (3) ways
• 1) As users.
• provide a clear picture of their problems and needs to the systems professionals.
• 2) As member of systems development team.
• Serve as consultant (for financial and non-financial transactions---even
beyond AIS applications)
• to provide advice or
• to determine if the proposed system constitutes an internal control risk.
• 3) As auditors.
• has a stake in all systems.
• should be involved early in their design, especially regarding their auditability,
security, and controls.
 INFORMATION SYSTEMS
ACQUISITION
• Two (2) ways the organizations acquire information systems:
• (1) Develop customized systems in-house
• (2) Purchase commercial systems from software vendors.
 INFORMATION SYSTEMS
ACQUISITION
• Two (2) ways the organizations acquire information systems:
• (1) Develop customized systems in-house
• require systems that are highly tuned to their unique operations.
• design their own information systems through formal systems development
activities
• requires maintaining a full-time systems staff of analysts and programmers
• SDLC has eight (8) phases
 INFORMATION SYSTEMS
ACQUISITION
• Two (2) ways the organizations acquire information systems:
• (2) Purchase commercial systems from software vendors.
• Management must choose commercial system based on the two factors:
• a) System  with unique features and attributes
• b) Vendor  that best serve the needs of the organization.
• Three (3) basic groups of Commercial software packages:
• Turnkey systems, Backbone systems, Vendor-supported systems
 INFORMATION SYSTEMS ACQUISITION
Commercial Systems - Trends in Commercial Software
• Four (4) factors have stimulated the growth of the commercial
software market:
• (1) the relatively low cost of general commercial software
• as compared to customized software;
• (2) the emergence of industry-specific vendors
• who target their software to the needs of particular types of businesses;
• (3) a growing demand from small businesses
• Can’t afford in-house systems’ development staff;
• (4) more appealing to larger organizations
• That are in the trend toward downsizing of organizational units and
• That are moving toward the distributed data processing environment,

Downsizing - Make (a company or organization) smaller by eliminating staff positions.

 INFORMATION SYSTEMS ACQUISITION
Commercial Systems - Types of Commercial Systems
• Three (3) basic groups of Commercial software packages:
• 1) Turnkey Systems - are completely finished and tested systems that
are ready for implementation.

• Three (3) examples of turnkey systems:

• a) General Accounting Systems
• b) Special-Purpose Systems
• c) Office Automation Systems
 INFORMATION SYSTEMS ACQUISITION
Commercial Systems - Types of Commercial Systems
• Three (3) basic groups of Commercial software packages:
• 1) Turnkey Systems

• Three (3) examples of turnkey systems:

• a) General Accounting Systems
• designed to serve a wide variety of user needs.
• designed in modules to provide as much flexibility as possible
• Typical modules include AP, AR, payroll processing, inventory control, GL, financial
reporting, and fixed asset.
 INFORMATION SYSTEMS ACQUISITION
Commercial Systems - Types of Commercial Systems
• Three (3) basic groups of Commercial software packages:
• 1) Turnkey Systems

• Three (3) examples of turnkey systems:

• b) Special-Purpose Systems
• target selected segments of the economy.
• have unique accounting procedures, rules, and conventions
• For example, the medical field, the banking industry, and government agencies
 INFORMATION SYSTEMS ACQUISITION
Commercial Systems - Types of Commercial Systems
• Three (3) basic groups of Commercial software packages:
• 1) Turnkey Systems

• Three (3) examples of turnkey systems:

• c) Office Automation Systems
• are computer systems that improve the productivity of office workers.
• Examples: word processing packages, DBMSs, spreadsheet programs, and desktop
publishing systems.
 INFORMATION SYSTEMS ACQUISITION
Commercial Systems - Types of Commercial Systems
• Three (3) basic groups of Commercial software packages:
• 2) Backbone Systems
• provide a basic system structure on which to build.
• come with all the primary processing modules programmed.
• System such as ERP offers a vast array of modules for dealing with almost
every conceivable business process.
 INFORMATION SYSTEMS ACQUISITION
Commercial Systems - Types of Commercial Systems
• Three (3) basic groups of Commercial software packages:
• 3) Vendor-Supported Systems
• are hybrids of custom systems and commercial software.
• are popular in the health care and legal services industries.
INFORMATION SYSTEMS ACQUISITION
Commercial Systems - Advantages
Advantages of Commercial Systems Disadvantages of Custom Systems
• Implementation Time • Implementation Time
• can be implemented almost immediately once a
need is recognized. The user does not have to
• often take a long time to develop---
wait. months or even years
• Cost • may experience long periods of
• cost of commercial software is spread across unsatisfied need.
many users, the unit cost is reduced
• Cost
• Reliability
• Most reputable commercial software packages
• A single user must wholly absorb in-
are thoroughly tested before their release to the house development costs.
consumer market---Beta version.
• is less likely to have errors than an equivalent in-
• Reliability.
house system. • have more errors
INFORMATION SYSTEMS ACQUISITION
Commercial Systems – Disadvantages
Disadvantages of Commercial Systems
• Independence
• makes the firm dependent on the vendor for
maintenance.
• risk that the vendor will cease to support the
system or even go out of business.
• The need for customized systems
• If user’s needs are unique and complex, and
commercially available software is either too
general or too inflexible.
• Maintenance
• If the user’s needs change, it may be difficult or
even impossible to modify commercial software.
Advantages of In-house Development
• Independence
• has its own people to maintain the
system
• The need for customized systems
• the ability to produce applications to
exact specifications.
• Maintenance
• provides users with proprietary
applications that can be economically
maintained.