(Part I)

Understand the roles of accountants, analysis teams,

and

steering committees in system studies;

Understand why system analysis must understand

the

strategic and operational goals of a company;

Be able to help plan and complete the analysis and

design

phases of a system study;

Be able to evaluate alternative system proposals and

make a

selection or choose to outsource;

Be familiar with the activities required to implement

and

maintain a large information system.

System Planning and Development

Accounting System Design and Development

predefined input3. Design

o Outputs of onereview

Systems development lifecycle

represents a

very structured and methodical way of

doing

development projects1. Investigation o Each of these2. Analysis stages has a

4. Implementation and output

5. Maintenance &

stage provide

input

for next stage

Their current system is inefficient

Two or more formally separate

accounting

systems need to be combined

The power of the Internet is causing many

firms to scramble to develop a web presence Etc.

Systems Planning and theInitial Investigation

When performing a systems study, the

participants should use a systems approach –

that is, a broad point of view.

A broad viewpoint will identify the goals top

management really desired and find the “real

problems” of the current AIS.

System approach to planning1) approaching organizational problems from a

broad

point of view

2) utilizing an interdisciplinary study team to

evaluate

an organization’s information systems

3) having the company’s steering committee

work

with the study team in all phases of work

Who might be chosen as study

team

members?

The use of an interdisciplinary study team

follows from the importance of a broad

viewpoint when performing a systems study.

The team can provide knowledge of

several

disciplines and serve as a team of

“specialists”.

The Steering Committee interfaces

between

the client company’s management and the

study team.

A steering committee requires that top

management focus on the study and

development, ensures that top management

will be involved, and helps ensure that the

newly designed system is one that the

company wants and needs.

Who might be chosen as study

team

members?◦ IT specialist

◦ Middle-level manager

◦ Operational supervisor

◦ Accountant

◦ Auditor

In a feasibility evaluation, the design

team

determines the practicality of alternative

proposals. Example of feasibility studies

◦ Financial

◦ Legal

◦ Schedule

◦ Technical

◦ Strategic

The first task of a systems study is to

perform a preliminary investigation of the

information system in question and to advise

the steering committee of its findings. An important part of this investigation is to

separate symptoms from causes.

The “deliverable” of this phase is

the

preliminary investigation report.

The operational feasibility of any

proposed

system attempts to answer the question:

“How consistent will the tasks and

procedures

of the new system be with those of the old

system?”

Operational feasibility is mostly a human

relations study because it is strongly oriented

toward “people problems.”

The technical feasibility of any proposed

system attempts to answer the question:

“What technical resources are required by

a

particular system?”

Hardware and software are two

components

of the question.

Need to also determine if

current employees possess the

technical skills.

Legal feasibility is largely concerned with

whether there will be any conflict between a

newly proposed system and the

organization’s legal obligations.

Revised systems should comply with

applicable federal and state statutes about

financial reporting and other contractual

obligations.

Schedule feasibility involves estimating

how

long it will take a new or revised system to

become operational and communicating this

information to the steering committee.

Projected costs and benefits are often

converted to their present values by using

capital budgeting techniques.

The benefits of a computerized data

processing system are often difficult to

quantify monetarily.

The costs are usually based on

accountant’s

estimates.

Economic feasibility focuses on projecting

which, if any, of the proposed computerized

systems are expected to be cost-effective.

The design team should perform a cost-

benefit analysis on each proposed system.

A cost-effective system is one whose

anticipated benefits are expected to exceed

its anticipated costs.

Systems Analysis

Phase 1: Understand the systems goals

Phase 2: Systems survey to acquire

sufficient information relating to

current

systems problems

Phase 3: Suggest possible solutions

to

solve the systems problems through

a

systems analysis report

The basic purpose of the Systems

Analysis

phase is to study a system in depth.

Cost awareness Relevant output

Simplified structure

Flexible structure

The company’s information systems

goals

can be investigated at three levels.◦ General System Goals

◦ Top Management Systems Goals

◦ Operating Management Systems Goals

Decision-making functions of operating

managers relate to well-defined and narrower

organizational areas than those of top

management.

Most of their decisions are for the

current

business year and information required is

generated internally.

Much of the information required by top

management is for long-range planning and

controlling functions.

Long-range planning requires

external

information.

The study team should ascertain whether

needs of top management are being satisfied

by company’s current information system.

Many people resist changes to their jobs.

The systems study should gain

cooperation

and support of employees or it will not be

effective.

A Systems Survey’s objective is to enable

the

study team to obtain a complete

understanding of the company’s current

operational information system and

environment.

Of special importance is

identifying

strengths and weaknesses of the

current system.

The final procedure in systems analysis is

to

communicate the consultants’ systems

survey work in a Final Systems Analysis

Report.

Report should be submitted to

steering

committee.

The report should contain all

information needed by management

to make a sound decisionconcerning the proposed design.

Review of documentation Observation of the current system

Using questionnaires to determine user

and

perhaps customer satisfaction Review of internal control procedures

Conducting interviews with individual

system

participants

If the client’s steering committee reacts

positively toward the recommendations, the

organization moves forward with systems

design.

Prior to preparing a detailed design for

a

computerized information system, the

consultants should conduct a feasibility

evaluation.

Systems Design and Selection

Perform feasibility evaluation Prepare detailed systems design

Prepare systems specifications report

Submit systems specifications report to

computer vendors or internal IT department.

Select particular computer vendor proposal

or

develop application in-house.

Perform feasibility evaluation

Prepare detailed systems design

Prepare systems specification report

Buy MakeSubmit systems specification Submit systems specification

report to vendors report to internal IT department

Select particular Develop application vendor proposal inhouse

Control requirements

Processes Data Elements Data Structure Inputs Outputs Documentation Constraints Controls Reorganizations

The design team prepare a Detailed System

Design

for the general systems plan.

Detailed System Design includes specifying

outputs, processing procedures, and inputs for the

new system.

This becomes the “blueprint” for

creating or acquiring the new system.

From an accounting standpoint, one of the

most

important elements in a new system is .

Process design involves identifying the

processing procedures required to produce

the outputs.

Tools available to model processes are

ER diagrams, structure charts, system

flowcharts, data flow diagrams, program

flowcharts, and process maps.

Common to all of these design

methodologies is the idea of a structured,

top-down design.

An AIS should be designed to meet

users’

information needs; thus, output

specifications must by prepared first.

The design team should use data gathered

from the prior systems analysis work to help

decide what kinds of reports are needed.

Outputs should be classified according

to

functional area requesting them.

The Systems Specifications Report includes

detailed information about the system design

proposal.

After the steering committee approves

the

detailed design work, it now faces a

control requirement.

Team must identify and describe each

data

element in the systems design as well as

specify the way data items must be coded.

The design team must also determine

the

source for each data element.

Implementation

,

Follow-up and

Maintenance

The performance capability of each

proposed

system in relation to its cost.

The costs and benefits of each

proposed

system. The maintainability of each proposed system.

The compatibility of each

proposed system with existing

systems. Vendor Support

Prepare the Physical Site - accountants

are

concerned about incremental costs.

Determine the Functional Changes -

includes

analysis of job function changes and types of

data that will be processed and reported.

Select and Assign Personnel -

new

system may require added

personnel, job reengineering,or terminating employees.

Systems Implementation is often called the

“action” phase of a systems study because the

recommended changes from the prior analysis,

design, and development work are now putinto operation.

Convert Data Files - data files may have to

be

converted to newer, more useful formats. Acquire Computer Software

◦ Software acquired from an independent vendor

is

called canned software.◦ Hardware and software combined in one package

is

called a turnkey system. Test Computer Software - programs must

be

tested regardless of where they came from or

who wrote them.

Train Personnel - computer vendorpersonnel and implementation team can helptrain personnel.

Acquire and Install Computer Equipment –implementation team and computer vendor’semployees help to install the new computerequipment.

Establish Internal Controls - cost-effective general and applicationcontrols should be built intothe system.

The purpose of follow-up and maintenance

is

to monitor the new system and make sure

that it continues to satisfy the three levels of

organizational goals:◦ General systems goals

◦ Top management systems goals

◦ Operating management systems goals

Conversion - there are several

conversion

methods:◦ Direct conversion - the old system is immediately

discontinued when the new system is

implemented.

◦ Parallel conversion - both the new and old

system

operate simultaneously for a certain period of time.

◦ Modular conversion (or pilot conversion) -

consists

of testing and converting the new system one

module at a time.

Stair, R. and Reynolds G. (2006), Fundamentals ofInformation Systems, 3rd Edition, Thompson, USA

Bagranoff, N. and Simkin, M. and Strand, S.

(2008),

Core Concepts of Accounting Information Systems,10th Edition, John Wiley & Sons, New York

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