ACCT 5310 Systems Ch. 3

Narrative

A written description of a business process.

Business Process Diagram (BPD)

Graphical description of the steps/activities in a business process and who performs them. Focuses on activities, not documents.

Data Flow Diagram (DFD)

Graphical description of data sources (who produces) and destinations (who receives), data flows, transformation processes, and data storage.

Flowchart

Graphical documentation tool. Three types: document, system, and program flowcharts.

Document Flowchart

Graphical description of the flow of documents and information between departments or areas of responsibility. The most common type; can be used to document internal controls. Reads left to right, top to bottom.

System Flowchart

Graphical description of the relationship among the input, processing, storage, and output in an information system.

Program Flowchart

Graphical description of the sequence of logical operations a computer performs as it executes a program.

DFD: Data sources and destinations

People and organizations that send data to and receive data from the system.

DFD: Data flows

The flow of data through the system.

DFD: Transformation processes

Processes that transform data from inputs to outputs.

DFD: Data stores

Storage of data.

DFD: Internal control symbol

Marks a related internal control; controls are numbered and explained in an accompanying table.

Context (Summary) Level DFD

Summary-level view of a system: a single transformation process representing all processes, plus all internal and external entities that interact with it.

Level 0 DFD

Breaks the process into its major functions (one bubble per primary step). Processes are numbered sequentially (e.g., 1.0, 2.0), use action verbs, and have no more than 7 bubbles.

Level 1 DFD

Shows greater detail of a Level 0 process using one meaningful decimal place (x.1, x.2). Includes only necessary elements.

Swim lane

A column (with a label) in a flowchart representing an area of responsibility/department; shows who does each activity.

Four categories of flowchart symbols

Input/Output symbols; Processing symbols; Storage symbols; Flow and Miscellaneous symbols.

Solid arrow (flowchart)

"Document or Processing Flow": shows direction of document/material flow. Normal flow is down and to the right.

Dotted arrow (flowchart)

Used in this course to represent information flows (e.g., preparing paychecks uses the employee file and tax tables).

Terminal

Flowchart symbol every flowchart must start with. Follow the INPUT → PROCESSING → OUTPUT pattern.

BPD vs. Document Flowchart

PCAOB AS 5, Paragraph 34

Auditor must understand the flow of transactions (initiated, authorized, processed, recorded), identify points where a material misstatement could arise, and identify management's controls over misstatements and unauthorized use/disposition of assets.

Why learn systems documentation?

Systems/process development and improvement; auditing (understanding the system and internal controls is required for risk assessment; SOX internal control reports).

SOX internal control requirement

Management must assess internal controls; auditors evaluate and attest to management's assessment (Internal Control report in public company annual reports).