james a. hall - accounting information system chapter 14

Accounting Information Systems, 6th edition

James A. Hall

COPYRIGHT © 2009 South-Western, a division of Cengage Learning. Cengage Learning and South-Western

are trademarks used herein under license

Objectives for Chapter 14The sequence of events that constitutes the in-house

development phase of SDLCTools used to improve the success of systems construction

and delivery activities: CASE tools; PERT and Gantt chartsDistinction between structured and object-oriented design

approachesMulti-level DFDs in the design of business processesTypes of systems documentation and the purposes they

serveThe role of accountants in the construction and delivery of

systemsThe advantages and disadvantages of the commercial

software option

Systems Development Life Cycle

1. Systems Strategy - Assessment - Develop Strategic Plan

1. Systems Strategy - Assessment - Develop Strategic Plan

2. Project Initiation - Feasibility Study - Analysis - Conceptual Design - Cost/Benefit Analysis

2. Project Initiation - Feasibility Study - Analysis - Conceptual Design - Cost/Benefit Analysis

3. In-house Development - Construct - Deliver

3. In-house Development - Construct - Deliver

4. Commercial Packages - Configure - Test - Roll-out

4. Commercial Packages - Configure - Test - Roll-out

5. Maintenance & Support - User help desk - Configuration Management - Risk Management & Security

5. Maintenance & Support - User help desk - Configuration Management - Risk Management & Security

SSystemystem Interfaces, Architecture Interfaces, Architecture and Uand User ser RRequirementsequirements

BBusiness usiness RRequirementsequirements

High Priority Proposals undergo High Priority Proposals undergo Additional Study and DevelopmentAdditional Study and Development

FeedbackFeedback::User requests for New SystemsUser requests for New Systems

Selected System Proposals Selected System Proposals go forward for Detailed go forward for Detailed

DesignDesign

New and Revised New and Revised Systems Enter into Systems Enter into

ProductionProduction

Business Needs and Strategy

Legacy Situation

FeedbackFeedback::User requests for System User requests for System Improvements and SupportImprovements and Support

Overview of Phases 3, 4 and 5Phase 3 - In-House Development

appropriate when organizations have unique information needs

steps include: analyzing user needs designing processes and databases creating user views programming the applications testing and implementing the completed system

Overview of Phases 3, 4 and 5Phase 4 - Commercial Packages

when acceptable, most organizations will seek a pre-coded commercial software package

advantages: lower initial cost shorter implementation time better controls rigorous testing by the vendor

risks: must adequately meet end users’ needs compatible with existing systems

Overview of Phases 3, 4 and 5Phase 5 - Maintenance and Support

acquiring and implementing the latest software versions of commercial packages

making in-house modifications to existing systems to accommodate changing user needs

may be relatively trivial, such as modifying an application to produce a new report, or more extensive, such as programming new functionality into a system

Why Up to 25% of All Systems Projects FailPoorly specified systems requirements

communication problemstime pressures

Ineffective development techniquespaper, pencils, templates, erasers instead of

software tools, such as CASE

Lack of user involvement in systems development

PrototypingA technique for providing a preliminary working version of the system

Built quickly and relatively inexpensively with the intention it will be modified

End users work with the prototype and make suggestions for changes.A better understanding of the true

requirements of the system is achieved.

IdentifyConceptualUserSpecifications

DevelopPrototype

PresentPrototypeto Users

ObtainUserFeedback

ChangePrototypePer UserFeedback

DevelopPrototypeinto FinishedSystem

Discard Prototypeand DevelopSystem UnderTraditionalSDLC Procedures

Computer-Aided Software Engineering (CASE)

CASE technology involves the use of computer systems to build computer systems.

CASE tools are commercial software products consisting of highly integrated applications that support a wide range of SDLC activities.

Uses of CASE ToolsDefine user requirementsCreate physical databases from

conceptual user viewsProduce system design specifications Automatically generate program code Facilitate the maintenance of

programs created by both CASE and non-CASE techniques

CASE Spectrum of Support Tools for the SDLC

1

27

3

4

6

8

9

Purch

ase E

quipm

ent

Install and Test Equipment

Design Data Model Create Data Structures

5

Design Process

Code Programs Test

Prog

ram

s

Prepare

Doc

umen

tation

Convert Data Files

Test System

Train Personnel

Cut Over

to N

ew Syste

m

A = 3 Wee

ks

B = 4 Weeks

C = 4 Weeks

D = 2 Weeks

E = 5 Weeks

F = 5 Weeks G =

3 W

eeks

H = 3 W

eeks

I = 3 Weeks

J = 4 Weeks

L = 4 Week

s

K = 3 Weeks

Construct Phase Deliver Phase

Project Evaluation and Review Technique (PERT)

PERT charts show the relationship among key activities that constitute the construct and delivery process.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Project Week

Purchase Equipment

Design Data Model

Install and Test Equipment

Design Process

Code Programs

Test Programs

Create Data Structures

Prepare Documentation

Convert Data Files

Test System

Cut Over to New System

Train Personnel

Cur

rent

Poi

nt in

Tim

e

Budgeted

Actual

Gantt Chartrepresents time horizontally and activities vertically

Structured Design ApproachA disciplined way of designing

systems from the top downStarts with the “big picture” of the

proposed system and gradually decomposes it into greater detail so that it may be fully understood

Utilizes data flow diagrams (DFDs) and structure diagrams

Object-Oriented Design ApproachIt builds information systems from

reusable standard components or objects.

Once created, standard modules can be used in other systems with similar needs.

A library of modules can be created for future use.

Elements of the Object-Oriented ApproachObjects: equivalent to nouns

vendors, customers, inventory, etc.Attributes: equivalent to adjectives

part number, quantity on hand, etc.Operations: equivalent to verbs

review quantity on hand, reorder item

Part Number DescriptionQuantity on Hand Reorder Point Order Quantity

Inventory

Reduce ReviewQuantity

Reorder Replace

Attributes

Object

Operations

Classes and InstancesAn object class is a logical grouping of individual

objects that share the same attributes and operations.

An object instance is a single occurrence of an object within a class.

Inventory

Wheel Bearing Alternator Water Pump

ObjectClass

Instance

Inheritance

Inheritance means that each object instance inherits the attributes and operations of the class to which it belongs.

Object classes may also inherit from other object classes.

Systems DesignFollows a logical sequence of events:

model the business process and design conceptual views

design normalized database tables design physical user views (output and

input views)develop process modules specify system controlsperform system walkthroughs

Data ModelingFormalizes the data requirements of the

business process as a conceptual modelEntity-relationship diagram (ERD)

the primary tool for data modelingused to depict the entities or data objects in

the systemEach entity in an ERD is a candidate for

a conceptual user view that must be supported by the database.

NormalizationUser views in the data model must be

supported by normalized database tables.Normalization of database tables:

A process of organizing tables so that entities are represented unambiguously

Eliminates data redundancies and associated anomaliesDepends on the extent that the data requirements of all

users have been properly specified in the data modelREA modeling facilitates normalization by identifying

entities at their most fundamental levelsThe resulting databases will support multiple user views

Described in more detail in chapter 9

Physical User Views: Output Views

Output is the information produced by the system to support user tasks and decisions.

Output attributes:-relevant-summarization-except orientation

-timely-accurate-complete-concise

Output Reporting TechniquesDifferent users prefer different

styles of output… tables, matrices, charts, and graphs

…and modes of output hard copy vs. display screen.

Systems designers must identify these styles and provide output in the desired style.

Input views are used to capture the relevant facts in business processes and transactions (e.g., via REA model):ResourcesEventsAgents

Input may be either hard copy input documents or electronic input.

Physical User Views: Input Views

Designing Hard Copy InputItems to Consider:

How will the document be handled? How long will the form be stored and in

what type of environment?How many copies are required?What size form is necessary?

Non-standard form can cause printing and storage problems.

Designing Electronic Input Input may be from either hardcopy or electronic

Data Entry DevicesPoint-of-sale terminalsTouch screensMouseMagnetic ink character recognition

devicesOptical character recognition

devicesVoice and touch-tone recognition

devices

Designing Process Modules

Begins with the DFDs produced in the general design phase

First, decompose the existing DFDs to a degree of detail that will serve as the basis for creating structure diagrams

Structure diagrams provide the blueprints for writing the actual program modules

Data Flow Diagrams (DFDs)Used to represent multiple levels of detail

Can represent system physically or logicallyDecompose high-level DFDs into more

detailed lower-level DFDsContext-level DFDs represent an

overview of the business activities and the primary transactions processed by the system. Do not include detailed definitions of data

files and specific procedures

Lower-Level DFD for an AP Process

The Modular Approach

Each module performs a single task.Correctly designed modules possess

two attributes:loosely coupled - low amounts of

exchange of data between modulesstrongly cohesive - small number of

tasks performed in each module

Designing System ControlsThe last step in the detailed design phaseNeed to consider:

computer processing controlsdata base controlsmanual controls over input to and output from

the systemoperational environment controls

Allows the design team to review, modify, and evaluate controls with a system-wide perspective that did not exist when each module was being designed independently

Systems WalkthroughUsually performed by the

development teamEnsure that design is free from

conceptual errors that could become programmed into the final system

Some firms use a quality assurance (QA) group to perform this task. An independent group of programmers,

analysts, users, and internal auditors

Program Application SoftwareIf the organization intends to develop

software in-house, then a programming language must be selected:procedural languages or 3GLs COBOLevent-driven languages Visual Basicobject-oriented languages Java

The Modular Approach to Programming

Promotes programming efficiency modules can be both programmed and

tested independentlyPromotes maintenance efficiency

small modules are easier to analyze and change

Promotes greater control modules are less likely to contain

material errors of fraudulent logic

Deliver the System:TestingPrograms must be thoroughly tested

before being implemented. All logic procedures should be tested.

Test individual modules with test data containing both “good” and “bad” data.

After testing individual modules, the entire system should tested as a whole.

Describes how the system works Documentation should be provided for:

designers and programmers - comment lines in programs, system flowcharts, and program flowcharts

operator documentation - run manualsuser documentation - instructions on how to

use the system, tutorials, and help featuresaccountants and auditors - all of the above

as well as document flowcharts

Deliver the System:Documenting

The transfer of data from its current form to the format or medium required by the new system

Control risks with the following procedures:validation – inspect old database before

conversionreconciliation – reconcile the new converted

database against the originalbackup - keep copies of the original files

against discrepancies in the converted data

Deliver the System:Converting the Databases

Three data conversion cutover approaches:Cold turkey - switch to the new system all at

once and simultaneously terminate the old systemriskiest approach

Phased - modules are implemented in a piecemeal fashionreduces risk of a devastating failure

Parallel operation - the old system and new system are run simultaneously for awhilesafest, yet costliest, approach

Deliver the System:Converting the Databases

Objective: measure the success of the new system.do after initial problems have been addressed

Assess:system design adequacyaccuracy of time, cost, and benefit estimates

Provides feedback to improve future systems development projects, including changes to the current system

Deliver the System:Post-Implementation Review

Deliver the System:The Role of Accountants

Most system failures are due to poor design and improper implementation.

Accountants should provide their expertise to help avoid inadequate systems by:providing technical expertise for financial

reporting requirementsspecifying documentation standards for

auditing purposesverifying control adequacy in accordance

with SAS 78

The Purchase of Commercial Systems Packages

Four factors have stimulated the growth of commercial software:relatively low costprevalence of industry-specific vendorsgrowing demand by small businessestrend toward downsizing and

distributed data processing

Trends in Commercial Packages

Turnkey systems - completely finished and tested systems ready for implementation

Backbone systems - provide a basic system structure on which to build.

Vendor-supported systems - customized and maintained by a vendor for a customer

ERP systems - difficult to classify since they have characteristic of all of the above.See chapter 11 for more details on ERP systems

Pros and Cons of Commercial Packages

Advantages:decreased implementation timedecreased costreduced probability of program errors

Disadvantages:dependent on the vendor for maintenanceless flexibility in systemgreater difficulty in modifying the system as

needs change over time

Four Steps in Choosing a Commercial Package

1. Analyze needs and develop detailed specifications of the system requirements.

2. Send out the request for proposals to all prospective vendors to serve as a comparative basis for initial screening.

3. Gather the facts about each vendor’s system using multiple sources and techniques.

4. Analyze the findings and make a final selection.

Maintenance and SupportApproximately 80% of the life and costs of

SDLCCan be outsourced or done in-house resourcesEnd user support is a critical aspect of

maintenance that can be facilitated by:knowledge management - method for gathering,

organizing, refining, and disseminating user inputgroup memory - method for collecting user input

for maintenance and support

The Iceberg Effect