CHAPTER 5

SYSTEMS DEVELOPMENT
AND PROGRAM CHANGE
ACTIVITIES
 PARTICIPANTS IN SYSTEMS DEVELOPMENT
1. Systems professionals
2. End users
3. Stakeholders
4. Accountants/Auditors
1. Systems professionals – These individuals actually build
system. They gather facts about problems with the current
system, analyze these facts, and formulate a solution to solve
the problems.
2. End users – those for whom the system is built. It includes
managers, operations personnel, accountants, and internal
auditors
3. Stakeholders – Individuals either within or outside the
organization who have an interest in the system but are not
end users.
4. Accountants/Auditors – professionals who address the
controls, accounting, and auditing issues for systems
development.
Why are Accountants and Auditors involved with
System Development Life Cycle(SDLC)?
 Creation/purchase of information system consumes
significant resources and has financial resource
implications.

 It concerns the quality of accounting information systems

and their output rests directly on system development
life cycle activities that produce them.
How are Accountants involved with the System
Development Life Cycle (SDLC)?
Three ways:

o Accountant as users – accountants must provide

a clear picture of their problems and needs to the
systems professionals
o Accountants participate in systems development
as members of the development team.
o Accountants are involved in systems
development as auditors.
 INFORMATION SYSTEMS ACQUISITION

• Organizations usually acquire information systems in

two ways:
1. They develop customized systems in-house through
formal systems development activities
2. They purchase commercial systems from software
vendors.
 INFORMATION SYSTEMS ACQUISITON
1. IN-HOUSE DEVELOPMENT – for organizations
which require systems are highly turned to their unique
operations.
2. COMMERCIAL SYSTEMS – purchase from software
vendors.
 Trends in Commercial Software Factors that
stimulate growth in commercial software market
• Lower cost than in-house development
• Industry-specific vendors
• A growing demand from small businesses
• The trend toward downsizing of organizational
units and the resulting move toward the
distributed data processing environment
 TYPES OF COMMERCIAL SYSTEMS
1. Turnkey Systems – completely finished and tested systems that
are ready for implementation. |It usually sold only as compiled
program modules, and users have limited ability to customize them
to their specific needs
 General accounting systems – designed to serve a wide variety of
user needs.
 Special-purpose systems – target selected segments of the
economy.
 Office automation systems – computer systems that improve the
productivity of office workers.
2. Backbone systems – provide a basic system structure on which
to build. It comes with all the primary processing modules
programmed.
3. Vendor-supported systems – hybrids of custom systems and
commercial software. This is popular in the health care and legal
services indutries
 Advantages of Commercial Software
 Implementation time
 Cost
 Reliability
 Disadvantages of Commercial Software
 Independence

 The need for customized systems

 Maintenance
 SYSTEM DEVELOPMENT LIFE CYCLE
Objectives:
• It ensures that high quality systems are delivered,
provide strong management controls over the
projects, and maximize the productivity of the
systems staff.
• This helps to boost efficiency. Not only this, it also
increases production rate and saves time helping
you conserve valuable man power for other projects
New systems development involves conceptual steps
that can apply to any problem-solving process:
• Identify the problem
• Understand what needs to be done
• Consider alternative solutions,
• Select the best solution, and,
• Implement the solution

Systems maintenance constitutes the organization’s

program change procedures. It begins once the seven
phases are complete and the system is fully implemented.
System Planning Phase I
Objective:
To link individual system projects or applications to the
strategic objectives of the firm.
 Who should do Systems Planning?
Steering committee may provide guidance and review the
status os system projects

STEERING COMMITTEE
 Chief executive officer
 Chief financial officer
 Chief information officer
 Senior management from user areas
 Internal auditor
 Senior management from computer services
 Steering Committee responsibilities:
 Resolving conflicts that arise from new systems
 Reviewing projects and assigning priorities
 Budgeting funds for systems development
 Reviewing the status of individual projects under
development
 Determining at various checkpoints throughout the
SDLC whether to continue with the project or terminate
it
Two levels of system planning:

Strategic Systems Planning

• Involves the allocation of systems resources at the
macro level
• It usually deals with a time frame of 3 to 5 years.
The strategic systems plan is concerned with the
allocation of such system resources
Why perform strategic systems planning?
Project Planning
• To allocate resources to individual applications
within the framework of the strategic plan
 Why perform strategic systems planning?
1. A plan that changes constantly is better than no
plan at all
2. Strategic planning reduces the crisis component
in systems development.
3. Strategic systems planning provides
authorization control for the SDLC
4. Cost management
Project Proposal
• Provides management with a basis for deciding
whether to proceed with the project. The formal
proposal serves two purposes.

Project Schedule
• Represents management’s commitment to the project.
The project schedule is a budget of the time and costs
for all the phases of the SDLC
The Auditor’s Role in Systems Planning
System Analysis Phases II

System Analysis is actually a two step process

involving first a survey of the current system and then
an analysis of the user’s needs.

System Analysis Report represents the findings of the

analysis and recommendations for the new system
Advantages of Surveying the Current System
• Identifying what aspects of the old system should be kept
• Forcing systems analysts to fully understand the system
• Isolating the root of the problem symptoms

Disadvantages of the Surveying the Current System

• Current physical tar pit
• Thinking inside the box
?