Systems Documentation Techniques in Accounting Information Systems

Systems Documentation Techniques

Introduction

Systems documentation is a critical aspect of accounting information systems, enabling accountants and auditors to understand, evaluate, and communicate how information flows within an organization. Effective documentation supports internal controls, compliance with regulations such as the Sarbanes-Oxley Act, and the development and modification of systems.

Why Document Systems?

Purpose and Importance

• Understanding Systems: Accountants must be able to read and interpret documentation to assess how systems operate and identify potential risks.

• Regulatory Compliance: The Sarbanes-Oxley Act (SOX) requires management to assess internal controls and auditors to evaluate these assessments.

• Systems Development: Documentation is essential for designing, implementing, and updating information systems.

Data Flow Diagrams (DFD)

Overview

Data Flow Diagrams are visual representations that focus on the movement of data within a system. They help in understanding processes, sources and destinations of data, and data stores.

• Processes: Activities that transform data.

• Sources and Destinations: Entities that send or receive data.

• Data Stores: Locations where data is held for future use.

DFDs can be created at both high (summary) and detailed levels to suit different documentation needs.

Basic Data Flow Diagram Elements

Element	Symbol	Explanation
Data Source/Destination	Rectangle	External entities that send or receive data
Process	Circle	Transformation of data
Data Store	Open-ended rectangle	Repository for data
Data Flow	Arrow	Movement of data between elements

Basic Guidelines for Creating a DFD

• Understand the system to be represented.

• Identify and group all basic elements.

• Name data elements with descriptive terms; use action verbs for processes (e.g., update, edit, prepare).

• Start with a high-level context diagram, then add detail as needed.

• Assign sequential numbers to processes for clarity.

• Edit and refine the DFD for readability.

Flowcharts

Overview

Flowcharts are diagrams that describe an information system by showing inputs, outputs, processing activities, data storage, data flows, and decision steps. They are particularly useful for illustrating control points and distinguishing between manual and automated processes.

• Inputs and Outputs: Data entering and leaving the system.

• Processing Activities: Steps that manipulate data.

• Data Storage: Where data is kept.

• Data Flows: Paths data takes through the system.

• Decision Steps: Points where choices are made.

Flowchart Symbols

Symbol	Name	Explanation
Parallelogram	Input/Output	Represents data entry or output
Rectangle	Process	Indicates a processing operation
Diamond	Decision	Represents a decision point
Open-ended rectangle	Data Store	Shows where data is stored
Arrow	Flow	Shows direction of data movement
Circle	Connector	Connects flowchart elements across pages
Additional info:	Other symbols	Refer to standard flowchart symbol tables for more details

Types of Flowcharts

• Document Flowchart: Shows the flow of documents and data, useful for evaluating internal controls.

• System Flowchart: Depicts the data processing cycle for a process.

• Program Flowchart: Illustrates the sequence of logic in a system process.

Guidelines for Drawing Flowcharts

• Understand the system being represented.

• Identify business processes, documents, data flows, and procedures.

• Organize the flowchart to read from top to bottom and left to right.

• Clearly label all symbols.

• Use page connectors if necessary.

• Edit and refine for clarity.

Business Process Diagrams (BPD)

Overview

Business Process Diagrams visually represent the activities within a business process. They use standardized notation (such as BPMN) to ensure all users can easily understand the process and can indicate which organizational unit performs each activity.

Business Process Diagram Basic Symbols

Symbol	Name	Explanation
Circle	Start/Begin	Indicates the start of a process
Bolded circle	End	Indicates the end of a process
Rectangle	Activity	Represents a process step
Diamond	Decision	Represents a decision point
Arrow	Flow	Shows direction of information
Dotted line	Annotation	Provides explanatory notes

Payroll Business Process Diagram Example

This example demonstrates how a payroll process can be mapped using a business process diagram, showing the activities performed by different organizational units (e.g., Employee, Payroll, Human Resources, Accounts Payable, Supervisor, Admin).

• Employee: Submits time worked and receives payment.

• Payroll: Processes payroll and prepares payment.

• Human Resources: Verifies employee data.

• Accounts Payable: Issues payment.

• Supervisor/Admin: Approves and reviews payroll.

Guidelines for Drawing Data Flow Diagrams

• Identify and understand the business process.

• Decide the level of detail required (summary or detailed DFD).

• Organize the diagram using sufficient rows to explain the process.

• Enter each business process on the diagram, showing where it begins and ends.

• Draw a rough sketch, refine, and finalize.

Key Terms

• Documentation

• Narrative Description

• Data Flow Diagram (DFD)

• Data Source

• Data Destination

• Data Flow

• Process

• Data Store

• Context Diagram

• Flowchart

• Document Flowchart

• Internal Control Flowchart

• System Flowchart

• Program Flowchart

• Business Process Diagram (BPD)

Summary

Systems documentation techniques such as Data Flow Diagrams, Flowcharts, and Business Process Diagrams are essential tools for accountants and auditors. They facilitate understanding, evaluation, and communication of information systems, support regulatory compliance, and aid in the development and modification of accounting systems.