Harvard University

AUDIT 111

Chapter 5-Systems Development and Program Change Activities

TRUE/FALSE

1)The objective of systems planning is to link systems projects to the strategic objectives of the firm.

2. The Systems Development Life Cycle (SDLC) concept applies to specific applications and not to strategic systems planning.

3.  An accountant’s responsibility in the SDLC is to ensure that the system applies proper accounting conventions and rules and possesses adequate control.

4. In the conceptual design phase of the Systems Development Life Cycle (SDLC), task force members are focused on selecting the new system design.

5. When determining the operational feasibility of a new system, the expected ease of transition from the old system to the new system should be considered.

6. One-time costs include operating and maintenance costs.

7. When preparing a cost-benefit analysis, design costs incurred in the systems planning, systems analysis and conceptual design phases of the Systems Development Life Cycle are relevant costs.

8. A tangible benefit can be measured and expressed in financial terms.

9. Instead of implementing an application in a single big-bang release, modern systems are delivered in parts continuously and quickly

10. When the nature of the project and the needs of the user permit, most organizations will seek a pre-coded commercial software package rather than develop a system in-house.

11. All of the steps in the Systems Development Life Cycle apply to software that is developed in-house and to commercial software.

12. Mixing technologies from many vendors improves technical feasibility.

13. The first step in the SDLC is to develop a systems strategy                         
14. System maintenance is often viewed as the first phase of a new development cycle.

15. During the detailed feasibility study of the project, the systems professional who proposed the project should be involved in performing the study.

16. Recurring costs include: hardware maintenance, software acquisition, software maintenance, insurance, supplies, personnel costs.

17. The payback method is often more useful than the net present value method for evaluating systems projects because the effective lives of information system tend to be short and shorter payback projects are often desirable.

18. Intangible benefits are not physical, but can be measured and expressed in financial

terms.

19. Legal feasibility identifies conflicts between the proposed system and the company’s ability to discharge its legal responsibilities

20. Programs in their compiled state are very susceptible to the threat of unauthorized modification.

21. Maintenance access to systems increases the risk that logic will be corrupted either by the accident or intent to defraud.

22. Source program library controls should prevent and detect unauthorized access to application programs.

23. The user test and acceptance procedure is the last point at which the user can determine the system’s acceptability prior to it going into service.

24. The presence of a SPLMS effectively guarantees program integrity.

25. Firms with an independent internal audit staff may conduct tests of the system development life cycle on an ongoing basis.

MULTIPLE CHOICE

1. Which control is not associated with new systems development activities?

2. Which test of controls will provide evidence that the system as originally implemented was free from material errors and free from fraud? Review of the documentation indicates that

3. Routine maintenance activities require all of the following controls except

4. Which statement is correct?

5. Which control is not a part of the source program library management system?

6. Which control ensures that production files cannot be accessed without specific permission?

7. Program testing

8. Which statement is not true?

9. When the auditor reconciles the program version numbers, which audit objective is being tested?

10. Which is not a level of a data flow diagram?

11. Which statement is not correct? The structured design approach

12. The benefits of the object-oriented approach to systems design include all of the following except

13. Which level of a data flow diagram is used to produce program code and database

tables?

14. Evaluators of the detailed feasibility study should not include

15. A cost-benefit analysis is a part of the detailed

16. Examples of one-time costs include all of the following except

17. Examples of recurring costs include

18. A commercial software system that is completely finished, tested, and ready for implementation is called a

19. Which of the following is not an advantage of commercial software? Commercial software

20. Which step is least likely to occur when choosing a commercial software package?

21. The output of the detailed design phase of the Systems Development Life Cycle (SDLC) is a

22. The detailed design report contains all of the following except

23. System documentation is designed for all of the following groups except

24. Which type of documentation shows the detailed relationship of input files, programs, and output files?

25. Typical contents of a run manual include all of the following except

26. Computer operators should have access to all of the following types of documentation

except

27. Which task is not essential during a data conversion procedure?

28. When converting to a new system, which cutover method is the most conservative?

29. Site preparation costs include all of the following except

30. The testing of individual program modules is a part of

31. When implementing a new system, the costs associated with transferring data from one storage medium to another is an example of

32. An example of a tangible benefit is

33. An example of an intangible benefit is

34. A tangible benefit

35. Intangible benefits

36. Which technique is least likely to be used to quantify intangible benefits?

37. The formal product of the systems evaluation and selection phase of the Systems Development Life Cycle is

38. One time costs include all of the following except

39. Typically a systems analysis

40. A disadvantage of surveying the current system is

41. Systems analysis involves all of the following except

42. The systems analysis report does not

43. After the systems analysis phase of the System Development Life Cycle (SDLC) is complete, the company will have a formal systems analysis report on

44. The accountant’s role in systems analysis includes all of the following except

45. The role of the steering committee includes

46. Project planning includes all of the following except

47. Aspects of project feasibility include all of the following except

47.          Which of the following is not a tool of systems analysts?

49. When developing the conceptual design of a system,

50. The role of the accountant/internal auditor in the conceptual design phase of the Systems Development Life Cycle includes all of the following except

51. Recurring costs include all of the following except

52. Strategic systems planning is important because the plan

53. Project feasibility includes all of the following except

SHORT ANSWER

1. Contrast the source program library (SPL) management system to the database management system (DBMS).

2. Describe two methods used to control the source program library.

3. New system development activity controls must focus on the authorization, develop- ment, and implementation of new systems and its maintenance. Discuss at least five control activities that are found in an effective system development life cycle.

4. List three advantages and one disadvantage of commercial software.

5. Describe a risk associated with the phased cutover procedure for data conversion.

6. Why is it important that the systems professionals who design a project not perform the detailed feasibility study of the project?

7. List at least three one-time costs and three recurring costs in system development.

8.                                                   benefits can be measured and expressed in financial terms, while                                        benefits cannot be easily measured and/or quantified.

9. What is a systems selection report?

10. Why is the payback method often more useful than the net present value method for evaluating systems projects?

12. Describe a test of controls that would provide evidence that only authorized program maintenance is occurring.

13. What are the audit’s objectives relating to systems development?

.

14. What are program version numbers and how are the used?

15. Explain why accountants are interested in the legal feasibility of a new systems

project.

16. Explain an advantage of surveying the current system when preparing a systems analysis for a new systems project.

.

17. What are two purposes of the systems project proposal?

18. List two ways that a systems project can contribute to the strategic objectives of the

firm.

19. List four types of facts that should be gathered during an analysis of a system.

20. Distinguish between escapable and inescapable costs. Give an example.

21. Why is cost-benefit analysis more difficult for information systems than for many other types of investments organizations make?

ESSAY

1. Outline the six controllable activities that relate to new systems development

Systems Authorization Activities: All systems should be properly authorized to ensure their economic justification and feasibility. This requires a formal environment in which users submit requests to systems professionals in written form.

2. Explain the five stages of the systems development life cycle?

3. Define the feasibility measures that should be considered during project analysis and give an example of each.

4. Explain the role of accountants in the conceptual design stage.

5. Explain why the Systems Development Life Cycle is of interest to accountants. What is the accountant’s role in the Systems Development Life Cycle?

6. What are three problems that account for most system failures?

7. Classify each of the following as either a one-time or recurring costs: training personnel

initial programming and testing system design-one

hardware costs

software maintenance costs site preparation

rent for facilities

data conversion from old system to new system insurance costs

installation of original equipment hardware upgrades

8. Discuss the advantages and disadvantages of the three methods of converting to a new system: cold turkey cutover, phased cutover, and parallel operation cutover.