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CHAPTER 22
SYSTEMS DESIGN, IMPLEMENTATION, AND OPERATION
SUGGESTED ANSWERS TO DISCUSSION QUESTIONS
22.1 Prism Glass is converting to a new information system. To expedite and speed up
implementation, the CEO asked your consulting team to postpone establishing standards
and controls until after the system is fully operational. How should you respond to the
CEO’s request?
accuracy.
22.2 When a company converts from one system to another, many areas within the organization
are affected. Explain how conversion to a new system will affect the following groups, both
individually and collectively.
The following are possible responses to each of the five areas:
b. Data Storage: One of the primary logistical concerns of implementing a new system is
making the required data accessible to the new system. This often requires that files be
converted to new formats and that the company's databases are restructured to accommodate
22.3 The following notice was posted in the employee cafeteria on Monday morning:
To: All Accounting and Clerical Employees
From: I.M. Krewel, President
Subject: Termination of Employee Positions
Effective this Friday, all accounting and clerical employees not otherwise contacted will be
terminated. Our new computer system eliminates the need for most of these jobs. We’re
grateful for the loyal service you’ve rendered as employees and wish you success. You may
wish to pick up your final checks on Friday before you go.
Discuss the president’s approach to human resource management.
This approach is clearly unproductive and it would not work.
What are the possible repercussions of this episode?
Assuming that job termination is the best alternative available, how should management
approach the situation?
22.4 In which phase of the systems development life cycle would each of the following
positions be most actively involved? Justify your answers.
a. Managerial accountant - The managerial accountant is usually involved in the analysis
phase as designers assess their needs as users. The project development team may also ask
the accountant to help with an economic feasibility analysis. In addition, the accountant may
also assist in the design phases, helping design reports.
22.5 During which of the five SDLC stages is each task, labeled (a) through (m), performed?
More than one answer may apply for each activity.
a. Writing operating procedures manuals - Physical (detailed) systems design phase and
Implementation and conversion phase
SUGGESTED ANSWERS TO THE PROBLEMS
22.1 You were hired to manage the accounting and control functions at the Glass Jewelry
Company. During your introductory meeting, the president asked you to design and
implement a new AIS within six months. Company sales for the past year were $10 million,
and they are expected to double in the next 18 months.
Outline the procedures you would follow to complete the assigned project.
a. You would perform the following steps to design and implement a new AIS:
systems analysis (initial investigation, systems survey, feasibility study, and determining
information needs and system requirements)
Include a description of the following:
1. Sources of Information
2. Methods of Recording Information
oprepare narrative descriptions and organization charts
3. Methods of Verifying the System Description
b. The accounts payable system will contain a number of programs, including Enter
Invoices and Print Payable Checks. For each program, describe its purpose and outline
application control considerations.
1. Enter Invoices
This program permits operators to enter unpaid vendor invoices into the Accounts
Payable system. The program should enable the distribution of the invoice to specific
2. Print Payable Checks
This program generatess supplier checks to pay outstanding invoices. Controls include:
oensures that the vendor number on the invoice is valid (i.e., vendor is still on file)
22.2 Wang Lab’s tremendous growth left the company with a serious problem. Customers would
often wait months for Wang to fill orders and process invoices. Repeated attempts by
Wang’s understaffed IS department to solve these problems met with failure. Finally, Wang
hired a consulting firm to solve its revenue tracking problems and expedite prompt receipt
of payments. The 18-month project turned into a doubly long nightmare. After three years
and $10 million, the consultants were dismissed from the unfinished project.
The project failed for many reasons. The systems development process was so dynamic that
the failure to complete the project quickly became self-defeating as modifications took over
the original design. Second, management did not have a clear vision of the new AIS and
lacked a strong support staff. As a result, a number of incompatible tracking systems sprang
from the company’s distributed computer system. Third, the project was too large and
complex for the consulting firm, who had little experience with the complex database at the
heart of the new system. Finally, the project had too many applications. Interdependencies
among subprograms left consultants with few completed programs. Every program was
linked to several subprograms, which in turn were linked to several other programs.
Programmers eventually found themselves lost in a morass of subroutines with no
completed program.
The IS department finally developed a system to solve the problem, but their revenue
tracking system suffered quality problems for years.
Wang Labs asked you, a member of the IS staff, to write a memo explaining the failure of
the systems development project.
a. Why did the development project fail? What role did the consultants play in the
failure?
b. Identify the organizational issues that management must address in the future.
c. Recommend steps the company could take to guarantee consulting service quality.
22.3 Tiny Toddlers, a manufacturer of children’s toys and furniture, is designing and
implementing a distributed system to assist its sales force. Each of the 10 sales offices in Canada
and 20 in the United States maintains its own customers and is responsible for granting credit and
collecting receivables. Reports used by each sales office to maintain the customer master file and to
enter the daily sales orders are shown in Figures 22-4 and 22-5.
Evaluate the reports shown in Figures 22-4 and 22-5 using the following format:
Weakness Explanation Recommendation(s)
Customer Maintenance Form
Weakness Explanation Recommendation(s)
Weakness Explanation Recommendation(s)
can sign or initial.
would not know who filled out
the form.
22.3 (continued)
Sales Order Form
Weakness Explanation Recommendation(s)
There is no indication
that the customer
approves of the order.
Where possible, all orders should be
signed by the customer to ensure that
the customer is responsible for
requesting the order.
Provision should be provided on
the form for the customer's order
approval.
extended amounts on
the sales order form
sale price, or a standard price.
Some students may refer to the sales order form shown in the Revenue Cycle chapter.
22.4 Mickie Louderman is the new assistant controller of Pickens Publishers. She was the
controller of a company in a similar industry, where she was in charge of accounting and had
considerable influence over computer center operations. Pickens wants to revamp its
information system, placing increased emphasis on decentralized data access and online
systems. John Richards, the controller, is near retirement. He has put Mickie in charge of
developing a new system that integrates the company’s accounting-related functions. Her
promotion to controller will depend on the success of the new AIS.
Mickie uses the same design characteristics and reporting format she used at her former
company. She sends details of the new AIS to the departments that interface with accounting,
including inventory control, purchasing, human resources, production control, and
marketing. If they do not respond with suggestions by a prescribed date, she will continue the
development process. Mickie and John have established a new schedule for many of the
reports, changing the frequency from weekly to monthly. After a meeting with the director of
IS, Mickie selects a programmer to help her with the details of the new reporting formats.
Most control features of the old system are maintained to decrease the installation time, with a
few new ones added for unusual situations. The procedures for maintaining the controls are
substantially changed. Mickie makes all the AIS control change and program-testing
decisions, including screening the control features related to payroll, inventory control,
accounts receivable, cash deposits, and accounts payable.
As each module is completed, Mickie has the corresponding department implement the
change immediately to take advantage of the labor savings. Incomplete instructions
accompany these changes, and specific implementation responsibility is not assigned to
departmental personnel. Mickie believes operations people should learn as they go, reporting
errors as they occur.
Accounts payable and inventory control are implemented first, and several problems arise.
The semimonthly payroll runs, which had been weekly under the old system, have abundant
errors, requiring numerous manual paychecks. Payroll run control totals take hours to
reconcile with the computer printout. To expedite matters, Mickie authorizes the payroll clerk
to prepare payroll journal entries.
The new inventory control system fails to improve the carrying level of many stock items.
This causes critical stock outs of raw material that result in expensive rush orders. The new
system’s primary control procedure is the availability of ordering and user information. The
information is available to both inventory control and purchasing personnel so that both
departments can issue timely purchase orders. Because the inventory levels are updated daily,
Mickie discontinues the previous weekly report.
Because of these problems, system documentation is behind schedule, and proper backup
procedures have not been implemented. Mickie has requested budget approval to hire two
systems analysts, an accountant, and an administrative assistant to help her implement the
new system. John is disturbed by her request because her predecessor had only one part-time
assistant. Adapted from the CMA Exam.
a. List the steps Mickie should have taken during while designing the AIS to ensure that
end-user needs were satisfied.
b. Identify and describe three ways Mickie violated internal control principles during the
AIS implementation.
Most of the control features of the "old" system were retained in the "new" system;
however, the procedures for maintaining controls were substantially changed. The
