1. SYSTEMS TECHNIQUES AND DOCUMENTATION

2. Characterize the use of systems techniques by auditors and
Learning Objective 1
Characterize the use of systems
techniques by auditors and
systems development personnel.

3. Users of Systems Techniques
Systems techniques are tools.
Analysis
Design
Documentation
They are largely graphical (pictorial) in nature.

4. Use of Systems Techniques in Auditing
What are the two basic components
of an auditing engagement?
1. The interim audit
2. The financial
statement audit
Compliance testing
Substantive testing

5. Internal Control Evaluation
Auditors are typically concerned with the
flow of processing and distribution of
documents within an application system.
Auditors use charts to analyze the
distribution of documents in a system.

6. Compliance Testing Compliance testing requires an understanding
of the controls that are to be tested.
Auditors must have a basic understanding
of systems techniques.
– input-process-output (IPO)
– hierarchy plus input-process-output (HIPO)
– logical data flow diagrams (DFD)

7. Working Papers These are the records kept by an auditor
of the procedures and tests applied, the
information obtained, and conclusions
drawn during an audit engagement.
Required by professional standards

8. Working Papers What are some of the systems techniques
used by auditors to document and analyze
the content of working papers?
– internal control questionnaires
– analytic flowcharts
– system flowcharts
– branching and decision tables

9. Use of Systems Techniques in Systems Development
What are the three phases of a
systems development project?
1. Systems analysis
2. Systems design
3. Systems implementation

10. Systems Analysis Much of a systems analyst’s job involves
collecting and organizing facts.
Systems techniques examples:
Interviewing
Observations
Document reviews
Matrix

11. Systems Design A blueprint must be formulated for the complete system.
Input/output (matrix) analysis
Systems flowcharting
Data flow diagrams

12. Systems Implementation
Systems implementation involves the
actual carrying out of the design plan.
What systems techniques serve
as a documentation tool?
Program flowcharts
Decision tables

13. Describe the use of flowcharting techniques in the analysis of
Learning Objective 2
Describe the use of flowcharting
techniques in the analysis of
information processing systems.

14. Systems Techniques What is a flowchart?
A flowchart is a symbolic diagram
that shows the data flow and
sequence of operations in a system.

15. Basic Symbols
Input/output
Process
Flowline
Annotation

16. Specialized Input/Output Symbols
Punched
card
Punched
tape
Online
storage
Magnetic
disk
Magnetic
tape

17. Specialized Input/Output Symbols
Document
Communication
link
Manual
input
Offline
storage
Display

18. Specialized Process Symbols
Decision
Auxiliary
operation
Predefined
process
Merge
Preparation
Extract
Collate
Manual
operation
Sort

19. Additional Symbols Connector Transmittal tape Off-page connector
Parallel mode
Terminal

20. Symbol Use in Flowcharting
Symbols are used in a flowchart to
represent the functions of an
information or other type of system.
Normal direction of flow is from
left to right and top to bottom.
Open arrowheads should be used
on reverse-direction flowlines.

21. Symbol Usage Illustration
Normal Direction of Flow
Invoice
Review
and
approve
Approved
invoice

22. Symbol Usage Illustration
Reverse Flow Shown with Arrowheads
Approved
invoice
Review
and
approve
Invoice

23. Symbol Usage Illustration
Use of Connector Symbol
Approved
invoice A
Stores
Invoice A
Purchasing

24. Symbol Usage Illustration
Bidirectional Flow Shown with Arrowheads
Requisition
Prepare
purchase order
and update
vendor files
Vendor
files
Purchase
order

25. Define common systems techniques, such as HIPO charts, systems
Learning Objective 3
Define common systems techniques,
such as HIPO charts, systems
flowcharts, and logical
data flow diagrams.

26. IPO and HIPO Charts These charts are used primarily by
systems development personnel.
At the most general level of analysis,
only the basic input-process-output
relations in a system are of concern.
Additional processing detail is provided
by hierarchy plus input-process-output.

27. Description: Calculate
IPO Chart
Payroll job record
Payroll master file
Accumulate hours
worked
Find correct pay rate
Compute gross pay
Gross pay records
Error messages
Author: Mr. Foxx
Chart Number: 3.1
System: Payroll
Description: Calculate
Gross Pay
Date: 6/9/0X
Input
Process
Output

28. HIPO Illustration Payroll system Data preparation Processing Review
1.0
Data preparation
2.0
Processing
3.0
Review
4.0

29. Each numbered module would be detailed in an IPO chart.
HIPO Illustration
3.1
3.2
Calculate
gross pay
Calculate
net pay
Accumulate
hours worked
3.11
Find correct
pay rate
3.12
Compute
gross pay
3.13
Each numbered module would be detailed in an IPO chart.

30. Systems and Program Flowcharts
A systems flowchart identifies the overall
or broad flow of operations in a system.
A program flowchart (block flowchart)
is more detailed concerning
individual processing functions.

31. Logical Data Flow Diagram Symbols
Name
Symbol
Meaning
Terminator
Represents sources and
destinations of data
Process
Task or function
being done
Data store
A repository of data
Data flow
Communication
channel

32. Data Flow Diagram Timekeeping Process payroll data Employees
Paychecks
Payroll Data
Payroll
data
Payroll
details

33. Data Flow Diagram Expanded
Employee
data
Current
status
Timekeeping
Payroll
data
Verify
payroll P1
Valid
payroll data
Data
valid

34. Data Flow Diagram Expanded
Employee
data
Net pay and
deductions
Calculate
pay P2
Data to
process
Employees
Paychecks
Valid
payroll data

35. Data Flow Diagram Expanded Further
Update
employee
files
Net pay and
deductions
Process
payroll
journal
Current
amounts
Journal
data
Details
Employees
Paychecks
Compute
net pay

36. Analytic, Document, and Forms Distribution Flowcharts
An analytic flowchart is similar
to a systems flowchart in level
of detail and technique.
A document flowchart is similar to an
analytic flowchart but contains less
detail about the processing functions
of each entity shown on the chart.

37. Analytic, Document, and Forms Distribution Flowcharts
The forms distribution chart illustrates
the distribution of multiple copy
forms with an organization.
Purchase
Receive

38. Analytic Flowchart Purchasing Suppliers Approve vendor list Select
vendors
Prepare
quotation
requests
Requests
for
quotation
Requests
for
quotation
Quotations

39. Analytic Flowchart Purchasing Suppliers Quotations Select bid
Prepare
purchase
order
Purchase
order
Purchase
order

40. Vice President Manufacturing
Document Flowchart
Accounts
Payable
Purchasing Agent
Receiving
Stores
Controller
Vice President Manufacturing 2
Purchase
requisition 1
order 3 4 5
To Vendor

41. Forms Distribution Chart
Purchasing
Inventory
Payables
Production
Accounting
Purchase
order copy 2 3 4 5 1

42. Analytical Flowcharting Illustration
Planning the Flowchart:
Symbol selection
System analysis
Drawing the flowchart
Sandwich rule
Use of connector symbol
Entity-column relations

43. Narrative Techniques Narrative techniques are useful in the
fact-finding stage of system analysis.
What are some examples of narrative techniques?
Open-ended and closed-ended questionnaires
Document reviews

44. Resource Utilization Analysis
Work measurement involves four basic steps.
1. Identify the tasks.
2. Obtain time estimates for performing the tasks.
3. Adjust these time estimates.
4. Analyze requirements based on these data.

45. Resource Utilization Analysis
Work Measurement:
(Average time/unit + Idle time/unit)
× Average volume = Total task time
Total time available ÷ Total task time
= Capacity utilization

46. Decision Analysis Techniques
Branching Table:
Decision to be made
Conditions that can occur
Path to be followed for each condition

47. Branching Table Format
Code
equal to
Go to
Inconnector
reference 1 2 3 4

48. Decision Table Format N If: Then: Table Title Rules Condition stub
Action stub 1 2 3 … N
If:
Then:
Table Title
Rules
Condition entry
Action entry

49. Decision Table for Processing Labor Distribution
Line 1 2 3 10 11 12 13 14
Condition action Rule 
15 Regular hours
15 Overtime hours
15 Shift bonus hours
Regular dollars
Overtime dollars
Shift dollars
Error no shift or OT
Nest record Y × – N 4 5 6 7 8 If
Then
Go to – F (Function); R (Rule, same table); T (Table)

50. QUESTIONS ???