Accounting Information Systems: Essential Concepts and Applications

Fourth Edition by Wilkinson, Cerullo, Raval, and Wong-On-Wing

Chapter 14: Systems Development

Slides Authored by Somnath Bhattacharya, Ph.D. Florida Atlantic University

Interaction of Systems Development with Accounting

1) Assigning both the controller and the information systems manager to the steering committee

2) Assigning accountants to systems project teams

3) Assigning persons who are knowledgeable in both accounting and information technology to serve as coordinators between the accounting and information systems functions 4) Establishing an internal audit group, staffed by accountants and systems-oriented auditors 5) Establishing data control groups within accounting departments

Approaches to Systems Development

Top-Down versus Bottom-up In-House versus Outsourcing Re-engineering Prototyping

Objectives of Strategic Systems Planning

Integrate the information system development with the firms overall planning processes Ensure orderly development of systems projects, making efficient use of available resources Recognize changing priorities and newly arising conditions as well as increasing informational demands Incorporate improvements in information technology as they become relevant to the firms needs and promise greater benefits than the cost outlays

Survey of the Present System

Scope Data Types and Sources Behavioral Issues
Communicate openly with the persons to be affected by the system project Encourage participation by the affected persons throughout the survey Emphasize the positive aspects of the project and explain that the resulting system can better meet the users needs Reduce the fears of employees and managers by establishing and publicizing fair personnel policies

A Checklist for Analyzing Information Systems - I

Are tasks and responsibilities clearly defined and assigned? Are tasks and responsibilities distributed effectively among employees and organizational units? Are the policies and procedures understood and followed? Does the productivity of the clerical employees appear to be satisfactorily high? Do the various organizational units cooperate and coordinate well in maintaining smooth flows of data?
Figure 14-8

A Checklist for Analyzing Information Systems - II

Does each product achieve its intended objective? Are redundant processing operations being performed? How necessary is the result accomplished by each operation? Do unnecessary delays occur in obtaining and/or processing data? Do any operations cause bottlenecks in the flow of data? Are the number of errors that occur in each operation minimized?
Figure 14-8 Continued

A Checklist for Analyzing Information Systems - III

Are physical operations adequately planned and controlled? Is the capacity of the information system sufficient to handle the average volumes of data without large backlogs? Are the peak volumes of data handled adequately? How easily does the system adapt to exceptional occurrences and growth in use? How necessary is each document? Is each document suitably designed for efficient use?
Figure 14-8 Continued

A Checklist for Analyzing Information Systems - IV

Are all copies of documents necessary? Can reports be prepared easily from the files and documents? Does unnecessary duplication occur in files, records, and reports? Are files easily accessible and kept up-to-date? Are sound performance standards developed and kept up-to-date? Is data processing equipment being used effectively? Is the system of internal control adequate? Do the informal flows of data and information harmonize with the formal flows?
Figure 14-8 Continued

A List of Information Systems Capabilities

Efficient and hence economical operations Adequate capacity for expected growth Timeliness in responding to inquiries and providing reports Reliability of system hardware and software Accurate, up-to-date, and relevant information Security of the data and system facilities Flexibility and adaptability to changes and new demands Simplicity, and hence user-friendliness
Figure 14-9

One-time Costs for a New or Improved Computer-based Information System - I

System Design Costs
Detailed design Programming

System Installation and Conversion Costs

System and program testing File conversion Retraining of displaced employees Training of newly hired analysts, programmers, and operators Inefficiencies caused by learning new equipment and procedures
Figure 14-15

One-time Costs for a New or Improved Computer-based Information System - II

System Site Preparation Costs
Construction of wiring and piping systems Construction of electrical power supply Construction of air-conditioning system Construction of sprinkler system Construction of other miscellaneous facilities, such as false flooring, file storage vault, and special lighting

Figure 14-15 Continued

One-time Costs for a New or Improved Computer-based Information System - III

System Hardware Costs
Central processing unit Additional processors Secondary storage devices Input-output devices Data communications equipment Terminals Peripheral equipment, such as key-to-disk devices Transportation of equipment

Figure 14-15 Continued

One-time Costs for a New or Improved Computer-based Information System - IV

System Software Costs
Operating system, utility routines, compilers Data communications software Application program packages Data management software packages Decision model software packages Outside computer time-sharing rentals

Figure 14-15 Continued

Recurring Costs Related to a ComputerBased Information System - I

Computer Operations Costs
Salaries for computer supervisors, operators, technicians, data-entry clerks, librarians, security guards, and others Supplies, including forms, paper, ribbons, and tape Utilities, including power, water, and telephone Rentals of computer hardware Software purchases and upgrades Communications equipment and services Backup equipment and services
Figure 14-16

Recurring Costs Related to a ComputerBased Information System - II

Information System Maintenance Costs
Salaries for systems analysts, programmers, repair technicians, and others Replacement parts and upgrades Printing costs for documentation

Information System Administration Costs

Salaries of systems management, data-base administrator, internal auditors, secretaries, and others Insurance Taxes Space and building occupancy costs
Figure 14-16 Continued

Typical Conceptual Design Specifications - I

System Components
Output

Features
Name Purpose Distribution to users Contents General format Frequency or trigger Timeliness Output medium

Figure 14-17

Typical Conceptual Design Specifications - II

System Components
Data base

Features
File or table name

File or table type

File size Contents of record or table

Record or table layout

File organization method Storage medium Data characteristics Updating frequency
Figure 14-17 Continued

Data structure

Typical Conceptual Design Specifications - III

System Components
Data processing

Features
Sequence of steps or runs Processing modes, cycles, volumes

Modes of data communication

Processing capabilities at each physical location
Figure 14-17 Continued

Typical Conceptual Design Specifications - IV

System Components
Data input

Features
Name

Purpose
Source Method of collecting data

Volume (peak and average)

Contents (data elements)

General format
Data entry method
Figure 14-17 Continued

Typical Conceptual Design Specifications - V

System Components
Control and security

Features
Type

Purpose
Specific system components affected

method of correcting error or establishing security

Figure 14-17 Continued

Systems Acquisition Options

Purchasing versus leasing Single vendors versus multiple vendors In-house system versus outsourcing computing services In-house software development versus commercial software packages Types of commercial software
General accounting systems Turnkey software systems

Advantages of Commercial Software

Products available without lengthy developmental periods Soundly designed and well-tested and thus efficient and reliable Reasonable pricing

Limitations of Commercial Software

Generalized in nature Acquiring firm is dependent on the software vendor for support and maintenance and upgrades

The Sequence in Designing System Components

Design Controls & Security Measures

Design Information Outputs

Design data base

Design Data Processing Operations

Design Data Inputs

Figure 14-19

A List of Design Principles

Foster system objectives Incorporate reasonable tradeoffs Focus on functional requirements Serve multiple purposes Relate to users concerns Provide a tailored product Integrate system modules and components Avoid design excesses Apply sound methodology
Figure 14-20

System Justification & Selection in the Systems Development Life Cycle

Determination of Design Feasibility Systems Planning
Solicitation of Hardware and Software Proposals

Systems Analysis

Evaluation of System Proposals

Systems Design Systems Justification & Selection

Selection of System Hardware and Software

Systems Operations Figure 14-21

A List of Resource Specifications - I

Systems Design Specifications
Output Data-base Processing Input Control & security

Figure 14-22

A List of Resource Specifications - II

Hardware Specifications
Processor speeds and capabilities Secondary storage capacities and access capabilities Input-output speeds and capabilities Compatibility features Modularity features Error detection and correction techniques Data communication capabilities Special features, such as multiprogramming and virtual storage maximum allowable downtime as a percentage of total time

Figure 14-22 Continued

A List of Resource Specifications - III

Software Specifications
Programming languages and compilers Utility packages Application packages Operating system capabilities Data management packages Programming assistance Training programs Test facilities and time available Backup facilities Maintenance assistance

System Support Specifications

Figure 14-22 Continued

Techniques for Proposal Evaluation

The benchmark problem technique Simulation model technique Weighted-Rating analysis technique

Systems Implementation: Preliminary Actions

Establish implementation plans and controls
Gantt chart Network diagrams

Recognize behavioral concerns Review the organization of the project team Complete arrangement for selected system resources

Implementation Activities - I
Personnel selection and training Physical site preparation Detailed system design
Output design Database design Input design Processing design Controls design

Implementation Activities - II
Application software development
Coding Structured programming

Software testing
Desk checking String testing

System testing
Acceptance testing

Implementation Activities - III

Standards development
System components Performance Documentation

Documentation File conversion

Implementation Activities - IV
System conversion: cutover
Direct conversion approach Parallel operation approach Modular conversion approach Phased conversion approach

User signoff

Systems Operations
Fine tuning Post-implementation evaluation
To assess the degree to which the objectives of the system project have been met To spot any additional modifications that might be needed in the newly designed system To evaluate the project teams performance, both in terms of a quality product and adherence to the project schedule and work plan To serve as the basis for improving future systems developments and accuracy of cost and benefit estimates

A Framework Pertaining to the Control of System-Related Resources

Measurement of Resource Usage * Personnel Time Reporting Systems * Computer-oriented Monitoring Systems * Effectiveness Monitoring Systems

Chargeback Systems * Chargeback Rates * Usage Measurements by Department Task Project Computer System Cost accounting & control reports

Performance Evaluation Systems * Personnel performance by Clerks & Operators Systems professionals Systems managers * Equipment performance * Information system performance Efficiency Effectiveness Performance reports

Figure 14-27

Accounting Information Systems: Essential Concepts and Applications

Fourth Edition by Wilkinson, Cerullo, Raval, and Wong-On-Wing

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