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Chapter 5

Chapter 5 _ Systems Development and Program Change Activities.docx

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Financial Accounting

Chapter 5 – Systems Development and Program Change Activities Overview:  Identify stages of SDLC (systems development life cycle)  Common problems that lead to failure in the systems development  Understand strategic system planning  Accountants role in SDLC  Structured and object-oriented approaches to system design  Cost-benefit analysis of proposed information systems  Pros/cons of commercial software option and discuss decision-making process  System walkthrough  System documentation and their purpose Participants in systems development  Systems professionals – those who build the program  End users – whom the system is built for  Stakeholders – within/outside of organization who have an interest but are not end users  Accountants/auditors – addresses controls, accounting/auditing issues Why are accountants/auditors involved?  Significant financial information and transactions  Nature of the products that emerge from the SDLC, quality of accounting information Info systems acquisitions  In-house development – require systems that are highly unique  Commercial systems – low costs, industry-specific vendors, businesses are too small to in-house, downsizing of organizations o Turnkey systems: finished and tested systems that are ready for implementation  General accounting systems (i.e. Simply Accounting) – purchase modules that meet their specific needs (i.e. AR module)  Special-purpose systems – target selected segments of the economy (i.e. medicine) that have unique accounting procedures and rules  Office automation system (Microsoft office) o Backbone systems: provide basic system with all primary processing modules programmed o Vendor-supported systems: hybrids of custom and commercial systems. The system themselves are custom but the development service is commercially available  client is dependent on the vendor for custom programming and maintenance  Pros of custom o Short implementation time, low cost, reliable  Cons of custom o Independence, the need for custom, and maintenance dependence SDLC (Systems Development Life Cycle)  8 steps: o Plan  Linking projects to objectives of the company  Strategic systems planning involves the allocation of systems resources at the macro level (i.e. resource budgeting)  Why?  A plan is better than no plan  Reduces crisis component in systems development  Provides authorization control for SDLC  Cost management  Project planning is to allocate resources to individual applications within the framework of the strategic plan  Project proposal provides basis for deciding whether to proceed with the project first and connects plan to objectives  Project schedule budgets times and costs for all stages  Auditor’s role  Examine the systems planning phase o Analyze  First survey the current system, then what the user’s needs are  Survey o Determine what can be salvaged o Cons: stuck thinking too much about current system, limits creativity o Pros: determine what should be kept, helps understands current/new system, determining the root problem  Gather information o Data sources, users, data stores, processes, data flows, controls, transaction volumes, error rates, resource costs, bottleneck/redundant operations  How to gather information o Observe, task participation, personal interviews, and reviewing key documents (i.e. org charts, job descriptions, budgets, forecasts)  Auditor’s role o Auditor’s need to express their needs (i.e. logs, audit trails) o Design concept  Purpose is to provide several alternatives, to avoid posing preconceived constr
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