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Chapter
10-1
Chapter 10
Developing and Implementing Effective
Accounting Information Systems
Introduction
The System Development Life Cycle: An
Introduction
Systems Planning
Systems Analysis
Detailed Systems Design
Implementation, Follow-up, and Maintenance
Chapter
10-2
An Introduction
IT governance is the process of ensuring that it is
effective,
efficient, and
strategic.
A comprehensive IT strategy
requires careful systems study and
should prioritize the acquisition or development of
various information systems
Chapter
10-3
An Introduction
The IT systems study includes planning and
analysis through
development,
implementation, and
a feedback loop for each new IT application.
Chapter
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The Systems Development
Life Cycle
Organizations study and reengineer accounting systems because
 their current system is inefficient


two or more accounting systems need to be combined
the power of the Internet encourages development of a web
presence
A systems development work
begins with a formal investigation of an existing information
system,
is performed by
 in-house professionals in large organizations
 a hired team of outside consultants in smaller organizations
Chapter
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The Four Stages in the Systems
Development Life Cycle
Planning and Investigation involves
a preliminary investigation of the current system
organizing a systems study team, and
developing strategic plans.
Analysis involves
analyzing the company’s current system and
identifying its needs, strengths, and weaknesses.
Chapter
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The Four Stages in the Systems
Development Life Cycle
Designing involves
eliminating the current system’s weak points, and
preserving its strengths.
Implementation, follow-up, and maintenance
includes
acquiring resources for the new system,
training new or existing employees,
identifying any new problems.
Chapter
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System Development Life Cycle of
a Business Information System
Chapter
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Systems Studies and Accounting
Information Systems
Systems studies are part of the greater task of
reengineering one or more of the core systems
of an organization.
A systems study looks at
applications portfolio, which includes
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
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Chapter
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an enterprise system,
other specialized information systems,
many separate systems for functional areas
Systems Studies and Accounting
Information Systems
A systems study means
replacing or
modifying existing information systems
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

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Chapter
10-10
altering work flows,
changing data gathering and
recording tasks,
revamping employee responsibilities, and
revising ways of rewarding personnel
Systems Planning and
Investigation
Systems Planning and Investigation involves
Planning for Success

approach problems from a broad point of view,
 use an interdisciplinary study team to evaluate
information systems, and
 make the study team work closely with a steering
committee
Broad Viewpoint in a Systems Study

Chapter
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a systems approach aligned with mission, goals, and
objectives.
Systems Planning and
Investigation
The Study Team and the Steering Committee

top management personnel critical to the
success of a new system.
Investigating Current Systems reports

the problems or objectives the study team identified,

solutions or alternatives it investigated, and

further course(s) of action it recommends.
Chapter
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The Study Team
The Study Team
consists of interdisciplinary specialists


the importance of a broad viewpoint
interdisciplinary knowledge
communicates


closely with company’s managers
meaningfully to provide solutions
who might be chosen as
study team members?
Chapter
10-13
The Preliminary Investigation
The preliminary investigation
separates the symptoms from the causes,
considers alternatives to the current system,
attempts to estimate the costs and benefits, and
recommends desired alternatives.
The study team submits
this report to the company
steering committee.
Chapter
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The Steering Committee
The Steering Committee
interfaces between the company’s management and the study team
includes top management personnel like





the controller,
the vice president of finance,
the top-level information systems manager
one or more staff auditors, and
the CEO (for very important projects)
may disband the study team and do nothing,
perform further preliminary investigations, or
proceed to the formal systems analysis stage
Chapter
10-15
Systems Analysis
The phases in systems analysis are:
understanding the goals of the organization
using system survey techniques to acquire
sufficient information regarding problems
analyzing data to suggest possible solutions
to the systems problems
evaluating system feasibility
Chapter
10-16
Understanding The Goals
Organization goals include:
general systems goals,

awareness that benefits should exceed the costs,
 concern that the output should help in better decisions,
 designing to allow optimal access to information, and
 flexibility to accommodate to changing information needs.
top management systems goals, and

long-range budget planning data
 periodic performance reports
 short-range operating performance of subsystems
Chapter
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Understanding The Goals
operating management systems goals

are normally easier to determine

relate to well-defined and narrower
organizational areas.

are for the current business year

are generated internally
Chapter
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Understanding The Goals
Question
In developing and implementing IT, the study team and steering
committee must consider organizational goals. These include:
Chapter
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a.
General, technical, and top management goals
b.
General, operating management, and technical goals
c.
Top management, operating management, and economic goals
d.
Top management, operating management, and
general systems goals
Systems Survey Work
Objectives of a systems survey:
The study team has to understand the company’s
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
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current system,
its environment,
strengths, and
weaknesses
The study team has to
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
Chapter
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retain the system’s strengths and
eliminate the system’s weaknesses.
Critical Success Factors
The strategic success of an information system
might be determined by achieving a small
number of critical success factors.
Two weaknesses of this approach are:
1.
2.
Chapter
10-21
It is biased toward the perceptions of top
management
It is difficult to analyze the responses to open-ended
questions and managerial opinions about a system
Understanding the Human Element
The appearance of a study team on the work scene
usually signals change.
The study team
will meet employee resistance to change
will have to deal directly with this problem
must gain the full cooperation and support of the employees
The best designed system ‘‘on paper’’
is likely to cause behavioral problems when implemented
should have wide user support for true success
Chapter
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Data Gathering
There are several ways of gathering data,
including:
Review of existing documentation.
Observation of the current system
Using questionnaires and surveys
Review of internal control procedures
Interviews with individual system participants
Chapter
10-23
Data Analysis
The study team must analyze the
results which, includes
creating summary statistics,
developing flowcharts and/or process maps
highlighting bottlenecks in
information flows,
reporting redundancy, and
identifying missing information links.
Chapter
10-24
Data Analysis
Systems analysis work
takes longer than a preliminary
investigation,
provides interim reports to the
steering committee
delivers the final systems
analysis report.
Chapter
10-25
Steps in the Systems Design Phase
Chapter
10-26
Evaluating System Feasibility
The design team must examine five feasibility areas:
technical feasibility

technical resources - hardware and software components
operational feasibility

examines its compatibility with the current operating environment
schedule feasibility

importance of completion on time
legal feasibility

system should comply with all applicable federal and state statutes
economic feasibility

Chapter
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anticipated benefits of the system exceed its projected costs
Evaluating System Feasibility
Question
The feasibility evaluation
a. is completed prior to detailed systems design.
b. includes economic, schedule, technical, legal,
and operational feasibility.
c. both a and b are true
d. neither a nor b is true
Chapter
10-28
Detailed Systems Design
Processes Descriptions
various processes in the revised system,
what and by whom
Data elements and data structure
required data elements and preliminary data structure
Inputs and outputs
system inputs and outputs - descriptions
Documentation
operation of revised system and each subsystem
Chapter
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Detailed Systems Design
Constraints
restrictions like staffing limitations and
regulatory requirements.
Controls
controls to reduce the risk of undetected errors
Reorganization
Chapter
10-30
Output, Process and Input Design
Output Design
may be classified according to the area of use
should be able to a demand report
should be able to trigger an exception report
Processes Design
earlier focus on what the system must provide
now focus on how the system can provide it.
Input Design
describe each data element in the systems design
specify the way data items must be coded
Chapter
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Detailed Systems Design
Prototyping
is developing a simplified model of a system
is an iterative process of trial-use-and-modification
is not recommended where the inputs,
processing, and outputs are already clearly defined.
Chapter
10-32
Detailed Systems Design
The system specifications report
produces a report after inputs, outputs, and processing
requirements are clear
submits this report to the steering committee - review,
comment, and approval
The Make or Buy Decision
to use internal IT staff to develop the project in-house or
to outsource the project’s development to a contractor.
Chapter
10-33
Choosing an AIS
In choosing an AIS The following must be the basis
Selection Criteria.
The Performance Capability of Each Proposed System
Costs and Benefits of Each Proposed System
Maintainability of Each Proposed System
Compatibility of Each Proposed System with Existing Systems
Vendor Support
Making a Final Decision.
Point-Scoring Analysis.
Selecting a Finalist
Chapter
10-34
Choosing an AIS
Question
In selecting a new accounting information system, the steering
committee should consider
Chapter
10-35
a.
all expected costs and benefits of the new systems, including
maintenance and operating costs.
b.
support that a vendor can provide, including training, maintenance,
and backup.
c.
compatibility of a new system with existing systems.
d.
All of the above are considerations in selecting a new system.
e.
Only a and b are important considerations in selecting the new system.
Outsourcing
Outsourcing – two kinds
Business Process Outsourcing (BPO)


range from routine assistance with asingle application
to almost all the accounting functions of the organization.
Knowledge Process Outsourcing (KPO) - three areas

intellectual property
 data mining of consumer data,
 and research and development related to medical drugs
and biotechnology
Chapter
10-36
Outsourcing
Advantages and Disadvantages of Outsourcing.

outsourcing also frees managerial time, financial
assets, and related resources for other purposes

disadvantage is inflexibility.

loss of control is

loss of competitive advantage
Chapter
10-37
Implementation
Implementation Activities
Managing IT Implementation Projects
Post-Implementation Review
System Maintenance
Chapter
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Implementation Activities
Implementation activities involve
Preparation of the physical site
Determination of functional changes
Selection and assignment of personnel
Training personnel
Acquiring and installing computer equipment
Chapter
10-39
Implementation Activities
Establishing internal controls
Converting data files
Acquiring computer software
Testing computer software
Converting to the new system
Chapter
10-40
Implementation Activities
Question
Which of the following statements is not true:
Chapter
10-41
a.
A preliminary investigation of a current system is
conducted by the steering committee.
b.
Implementation, follow-up, and maintenance of IT includes
acquiring resources for the new system.
c.
In designing an AIS, the design team will begin with outputs.
d.
The more work done during planning and analysis, the
less likely the new system will fail.
Managing IT
Implementation Projects
Two tools to help manage projects:
PERT (program evaluation and review technique)

useful project management tool
 to help managers identify critical paths
 to recognise areas where slack time occurs.
Gantt charts are useful


Chapter
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for scheduling and tracking the activities of systems
implementation projects
for indicating progress directly on the Gantt chart in
contrast to the planned progress.
Managing IT
Implementation Projects
Question
Which of the following statements is not true with respect to managing IT projects:
Chapter
10-43
a.
Program evaluation and review technique (PERT) allows management
to determine the shortest time it will take to implement a new system,
and any slack time that might exist between implementation activities.
b.
An advantage of PERT is that it allows managers to identify the
critical path in implementation.
c.
Both PERT and Gantt charts are manual techniques used in
managing IT implementations.
d.
Gantt charts are useful in scheduling and implementing IT
because they allow you to indicate actual progress versus
planned progress directly on the chart.
Post-Implementation Review
Reevaluation of the new system’s effectiveness by
Checking with personnel about satisfaction
with the new system.
Talking with end users to ascertain their satisfaction.
Evaluating the control procedures of the system
Observing employee work performance to determine
efficiency
Evaluating effectiveness of computer processing functions
Determining schedules for both internal and external
reports are met with the new computer system.
Chapter
10-44
System Maintenance
System maintenance continues the tasks
created by the initial follow-up study,
except that experts from the company’s IT subsystem
now perform the modifications
exclusively.
The IT subsystem is responsible to respond to
errors and anomalies in the system
estimate the cost of fixing them, and
perform the necessary modifications.
Chapter
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System Maintenance
The IT departments have
forms for such requests,
policies for prioritizing maintenance tasks, and
formulas for allocating maintenance costs
among the various departments.
Chapter
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System Maintenance
Organizations spend
about 20 to 30 percent on developing and implementing
the remaining 70 to 80 percent on further modifications
or software updates.
Maintenance
is not the most glamorous part of a system cycle
but always the most expensive part.
Chapter
10-47
Copyright
Copyright 2005 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Copyright Act without the
express written permission of the copyright owner is unlawful.
Request for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The purchaser
may make backup copies for his/her own use only and not for distribution
or resale. The Publisher assumes no responsibility for errors, omissions,
or damages, caused by the use of these programs or from the use of the
information contained herein.
Chapter
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Chapter 10
Chapter
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