2 Compliance vs Substantive Testing Compliance Testingconfirmsassesseschecksthe continuity of operation of internal controls (IC)
3 Compliance vs Substantive Testing verifiesfinancial 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 FlowchartsSystems FlowchartsProgram FlowchartsData Flow Diagrams
7 Document FlowchartsFlowcharts 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.
9 Systems Flowcharta pictorial or graphical representation of the overall flow of work, documents, and operations in a systemsystems flowcharts are used by both auditors and systems development personnel
10 System FlowchartsThey 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.
13 Flowchart Symbols (C) On-page Connectors (D) Off-page Connectors (A) 1Indicates the flow will continueat the on-page connector #1Indicates where the flow continuesfrom the on-page connector #1(D)Off-pageConnectorsp.41p.2on page 2:on page 4:to page 4connector #1from page 2(A)Enter/ExitSystemToCustomerFromBank(B)Start(or end)Process(G)Calculator/RegisterTape(F)Decision(E)Annotation(H)PhysicalObject(I)FlowLines(J)CommunicationLink
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 objectA 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-bottomSome 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 unclutteredplace areas with frequent interchange in adjacent columnsenter narrative only in symbolsMake sure progress of a document is clear. Diagram a documentLeft-to-right, Top-to-bottomAll documents must have an origin and terminationindicate origin by darkening one corner of the symboleach copy of the document must flow toa permanent file symbola symbol denoting an exit from the system, or
21 Preparation Conventions an off-page connectora document destruction symbol (small black box)“cradle to grave” documentationbefore and after each processentering or leaving a fileentering or leaving a page or area of responsibilityMake 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.
27 Data Flow Diagram Symbols ProcessCircles 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 SinksRectangles (or squares) represent data (inflow) sources and (information outflow) sinksThe 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 StoresTwo 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 linesData Flow LinesData 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 IncorrectNo 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.CorrectIncorrectCorrectEdit
35 Constraints: Data Store NoData 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.YesNoYesNoYes
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.CorrectIncorrectCustomer
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.)NoYesANoBAYesA
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 DiagramThe 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 DiagramThe 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 EventsCustomersManagementReports0 Events Driven SystemInvestors and CreditorsInternalDepartmentsFinancial StatementsInternal Events
43 Level Zero DFD Example Order Bill Payments 3.0 Process Payments CustomerOrdersDesired InformationOrderShipping Request2.0 Deliveries toCustomersDecisionMakersBillCustomersAccounts ReceivablePaymentsDesired Information3.0 ProcessPayments
44 Level One - Record Event Data External event: Record Sale of MerchandisePrepareSales Invoice1.1Review Customer Credit1.2Sales Invoice DataRecordSalesEvent Data1.3Approved Sales Invoice DataSale Event Data
45 Version 1 Example Data Flow Diagram Example Flowchart Factory SupervisorAccountingPayroll Clerk12NTimecardsReviewtimeARecordwagesEmployeeEarningsRecordsA= alphabeticFactorysupervisorReviewtimecardsRecordweeklywagesTimeReviewed time cardsEmployee EarningsRecordsTime card file(alpha)
46 Analytic Flowchartcharts 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 dutiesinterfaces between entities are emphasizedinterfaces are important control points in a system