Chapter 3: FlowchartsAIS321R

FALL, 2018

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Introduction to Understanding Documentation

Documentation tools help accountants, auditors, and financial analysts by:◦Organizing very complicated systems into a form that can be more readily understood◦Help new accounting, audit, or financial analyst team members understand a pre-existing system◦Help team members evaluate internal controls

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FLOWCHARTSA flowchart is an analytical technique that describes some aspect of an information system in a clear, concise, and logical manner.

Flowcharts use a set of standard symbols to depict processing procedures and the flow of data.

Using a pictorial representation is easier to understand and explain versus a detailed narrative.

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FLOWCHARTSEvery shape on a flowchart depicts a unique operation, input, processing activity, or storage medium.

“Back in the day”, flowcharts were commonly drawn with templates.

Now, it is more common to use a software program such as MS Visio, Lucidchart.com, or smartdraw.com.◦ Microsoft and Power Point are also used◦ The software uses pre-drawn shapes, and the developer drags

the shapes into the drawing.

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FLOWCHARTSThere are four types of flowcharting symbols:◦Input/output symbols◦Processing symbols◦Storage symbols◦Flow and miscellaneous symbols

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Types of FlowchartsDocument◦ Illustrates the flow of documents through an organization◦ Useful for analyzing internal control procedures

System◦ Logical representation of system inputs, processes, and

outputs◦ Useful in systems analysis and design

Program◦ Represent the logical sequence of program logic

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DOCUMENT FLOWCHARTSA document flowchart shows the flow of documents and information among areas of responsibility in an organization.

These flowcharts trace a document (and its multiple parts, if applicable) from ‘cradle to grave’ and show:◦ Where a document comes from◦ Where it’s distributed◦ How it’s used◦ Its ultimate disposition◦ Everything that happens to it as it flows through the system

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DOCUMENT FLOWCHARTSInternal control flowcharts are document flowcharts used to evaluate the adequacy of internal controls, such as segregation of duties or internal checks.

They can reveal weaknesses or inefficiencies such as:◦ Inadequate communication flows◦ Unnecessarily complex document flows◦ Procedures that cause wasteful delays

Document flowcharts are also prepared in the system design process.

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SYSTEM FLOWCHARTSA system flowchart depicts the relationship among the inputs, processes, and outputs of an AIS.◦ The system flowchart begins by identifying the inputs to

the system.◦ Each input is followed by a process, i.e., the steps

performed on the data.◦ The process is followed by outputs—the resulting new

information.◦ In other words, it’s the same basic input – process –

output pattern that we saw in the document flowchart.

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Can you spot the input – process – output pattern?

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PROGRAM FLOWCHARTSProgram flowcharts illustrate the sequence of logical operations performed by a computer in executing a program.They also follow an input – process –output pattern.

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Document Flowcharts: Overall Logic

Input – Process – Output

Each process has >=1 input and >=1 output. ◦Never directly connect two processes -- an output from one process becomes the input to the other process. ◦Never directly connect 2 inputs, 2 outputs, or an input to an output – inputs must be transformed to outputs by processes

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Flowchart Symbols: Inputs/Outputs/Data

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Online Manual Device (E.g., Keyboard)

Single-Copy Document

Multiple-Copy Document

Data Stored on Disk

Data Stored on Magnetic Tape

Calculator or Register Tape

Data Stored in Paper-based File

Physical Object

Display

Flowchart Symbols: Processes

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Manual Process

Computerized Process

Flowcharts: Flow Lines

Flow lines are used to connect the symbols on the document flow chart.

A solid line indicates the flow of a document or object

A dotted or dashed symbol indicates a flow of information rather than the physical document

Some flowcharts also show communication flows such as by telephone modem or satellite

Arrows are used when the documents or information flow is not left-to-right or top-to-bottom

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Flowchart Symbols: Connectors

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1

1

On-page Connector (top indicates flow will continue at on-page connector 1; bottom indicates flow continues from on-page connector 1)

p.21

p.41

Off-page Connector (top indicates flow will continue at off-page connector 1 on page 4; bottom indicates flow continues from off-page connector 1 on page 2)

Areas of Responsibility, aka “swim lanes”

Areas of responsibility are displayed to enable the flowchart reader to clearly identify changes in responsibility as the documents flow through the system

They are represented on flowcharts as columns with labels

Judgment must be used in choosing the level of subdivision that one column should represent◦ Areas of responsibility may be: departments, sections within a department, or individual employees within a department.

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Flowchart Preparation Conventions

Left-to-right, Top-to-bottom

All documents must have an origin and termination (“cradle to grave” documentation)◦ Each copy of the document must flow to:◦ a permanent file symbol◦ a symbol denoting an exit from the system, or◦ an off-page connector

Keep flowcharts uncluttered!◦ Place responsibility areas with frequent interchange in adjacent columns◦ Enter narrative only within symbols◦ Avoid unnecessary explanation with narrative

Make sure progress of each document is clear. ◦ Diagram a document ◦ before and after each process ◦ entering or leaving a file ◦ entering or leaving a page or area of responsibility

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Show Document Leaving and Entering Areas of Responsibility

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Sales Credit

Customer Order

Approve Approved Order

Customer Order

From mail or salesperson

Allows each area to be read independently! Customer

Entered Order

File

N

Input-Process-Output RevisitedAssumption: Manual file symbol (triangle) is

considered to be both process and output

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Entered Order

N

Input-Process-Output revisited, an exception!Assumption: keyboard input + computer process = linked process

It is ok to have both of these symbols link with each other directly! In other words, we do not have to show the “input shape for order” going into the Update process because these are ‘linked’ processes. But, the Order document should show up as Output somewhere!

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Entered Order

N

Order Input

Display

Update Order M/F

Updating Tape Files “Old Technology”

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Data on magnetic tape is stored sequentially (like on a cassette tape) and computer must read each record until it gets to the one requested, unlike a CD (magnetic disk) that has an index that allows the computer to find the record we want immediately.

In order to efficiently update a tape file (i.e., avoid spinning the tape forwards and backwards) the transaction file must be sorted to be in the same sequence as the master file (the tape that we are updating).

Document and System Flowchart Summary

The Good◦ Flowcharts are relatively easy for

information customers and managers to understand

◦ Flowcharts help auditors understand business and systems controls

The Not-So-Good???◦ Flowcharts are tied to physical

information flows and system characteristics --- what happens if the procedures change?

◦ Flowcharts may be tied to outdated information technology, such as tapes

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Manually sort and file invoices

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Computer processing of transactions on magnetic tape to update a master file stored on disk

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Input of document to update a master file on disk

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Reading data from a disk file into the computer to be listed on a printed report

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Key data from source documents to magnetic tape

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Find the Errors

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Find the Errors

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Data Processing

N

Find the Errors

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