CHAPTER 3

SYSTEMS DOCUMENTATION TECHNIQUES

Learning Objectives:
1. Prepare and use data flow diagrams to understand, evaluate, and
document information systems.
2. Prepare and use flowcharts to understand, evaluate, and document
information systems.
Questions to be addressed in this chapter include:
1. What is the purpose of documentation?
2. Why do accountants need to understand documentation?
3. What documentation techniques are used in accounting systems?
4. What are data flow diagrams and flowcharts?

How are they alike and different?

How are they prepared?

Introduction
Techniques used to document a system
Narratives, flowcharts, diagrams, and other written materials that
explain how a system works.
Documentation tools are important on one or more of the following
levels:
1. At minimum, you must be able to read documentation to
determine how the system works.
2. You may be required to evaluate internal control systems
documentation to identify control strengths and weaknesses
and recommend improvements. Alternatively, you may have to
evaluate the documentation for a proposed system to
determine if the system meets the companys needs.
3. The greatest amount of skill is needed to prepare
documentation. If you are a member of a team that is
developing a new system, then you must prepare documentation
to show how both the existing and the proposed systems
operate.
This chapter discusses the following documentation tools:
1. Data flow diagram is a graphical description of the
source and destination of data that shows data flow

Page 1 of 5

within an organization, the processes performed on the

data, and how data are stored.
2. Document flowchart is a graphical description of the flow
of documents and information between departments or areas
of responsibility within an organization.
3. System flowchart is a graphical description of the
relationship among the input, processing, and output in
an information system.
4. Program flowchart is a graphical description of the
sequence of logical operations that a computer performs
as it executes a program.

Data Flow Diagrams

A data flow diagram (DFD) graphically describes the flow of data
within an organization.
Elements in a Data Flow Diagram
Four Basic Elements:
1.

Data sources and destinations

2.

Data flows

3.

Transformation processes

4.

Data stores

Data flow diagram symbols shown in Figure 3-1 on page 64:

Data sources and destinations

Data flows
Transformation processes
Data stores
Figure 3-2 on page 64 shows the basic data flow diagram elements.
Data Sources and Destinations
Data sources and data destinations are represented by squares, as
illustrated by items A (customer), J (bank), and K (credit
manager) in Figure 3-3 on page 65.
A data flow represents the flow of data among processes, data
stores, and data sources and destinations.

Page 2 of 5

Processes represent the transformation of data. Figure 3-3 shows

that process payment (c) takes the customer payment and splits it
in to the remittance data and the deposit (which includes the
checks and deposit slip created within process payment).
A data store is a temporary or permanent repository of data.
Subdividing the Data Flow Diagram
The highest-level data flow diagram is referred to as a context
diagram. A context diagram provides the reader with a summarylevel view of the system.
Focus 3-1 on Page 55 Guidelines for Drawing a Data Flow Diagram
1. Understand the system.
2. Ignore certain aspects of the system.
Ignore all control processes and control actions.
3. Determine system boundaries.
4. Develop a context diagram.
5. Identify data flows.
6. Group data flows.
7. Identify transformation processes.
8. Group transformation processes.
9. Identify all files or data stores.
10.

Identify all data sources and destinations.

11.

Name all data flow diagram elements,

12.

Subdivide the data flow diagram.

13.

Give each process a sequential number.

14.

Repeat the process.

15.

Prepare a final copy.

Flowcharts
A flowchart is an analytical technique used to describe some
aspect of an information system in a clear, concise, and logical
manner. Flowcharts use a standard set of symbols to describe
pictorially the transaction processing procedures a company uses
and the flow of data through a system.

Page 3 of 5

The Sarbanes-Oxley Act requires companies to document their

business processes and internal controls.
1. Input/output symbols. Input/output symbols represent
devices or media that provide input to or record output
from processing operations.
2. Processing symbols. Processing symbols either show what
type of device is used to process data or indicate when
processing is performed manually.
3. Storage symbols. Storage symbols represent the device
used to store data that the system is not currently
using.
4. Flow and miscellaneous symbols. Flow and miscellaneous
symbols indicate the flow of data and goods. They also
represent such operations as where flowcharts begin or
end, where decisions are made, and when to add
explanatory notes to flowcharts.
Figure 3-8 on page 56 contains common flowcharting symbols.
Focus 3-2 on page 60 provides the following guidelines for
preparing flowcharts:
1
2
3

5
6
7
8

9
10

Understand a system before

flowcharting it.
Identify the entities to be
flowcharted.
When several entities such as
departments or functions are
involved, divide the flowchart
into columns.
Flowchart only the normal flow
of operations.

11

Design the flowchart so that

flow proceeds from top to
bottom and from left to right.
Give the flowchart a clear
beginning and ending.
Use the standard flowcharting
symbols.
Clearly label all symbols.
Write a description of the
input, process, or output
inside the symbol.
When using multiple documents,
place document numbers in the
top right-hand corner.
Each manual processing symbol
should have an input and an
output.

15

12

Use on-page connectors to avoid excess

flow lines.
Use arrowhead on all flow lines.

13

If a flowchart cannot fit on a single

page, clearly label the pages.

14

Show documents or reports first in the

column in which they are created then
show them again in another column in
which the documents are being
processed.
Show all data entered into or retrieved
from a computer file.

16
17
18

Draw a line from a document to a file

to indicate that it is being filed.
Draw a rough sketch of the flowchart as
a first effort.
Redesign the flowchart to avoid
clutter.

19

Verify the flowcharts accuracy.

20

Draw a final copy of the flowchart.

Page 4 of 5

Document Flowcharts
A document flowchart illustrates the flow of documents and
information among areas of responsibility within an
organization.
Document flowcharts that describe and evaluate
internal controls are often referred to as internal
control flowcharts.
The document flowchart for the S&S payroll process, as
described in Table 3-2 on page 68, is now shown in
Figure 3-9 on pages 74 and 75.
Note that there are four areas of
responsibility; payroll, accounts payable,
management, and general ledger.
Note that the solid lines represent the document
or processing flow whereas the dashed lines
represent the data or information flow.
System Flowcharts
System flowcharts depict the relationship among the input,
processing, and output of an Accounting Information System.
Program Flowcharts
A program flowchart illustrates the sequence of logical operations
performed by a computer in executing a program.
Some of the computer programs are COBOL (Common Business
Language), FORTRAN, RPG from the old days. COBOL is still being
used. Now, there is C Plus Plus and Java.

Page 5 of 5