a) Explain why the external auditor would recommend that AIS establish an

information systems steering committee, and discuss its specific responsibilities.

What advantages can such a steering committee offer DFSB?

Establishment of an information systems steering committee helps delegate the

responsibility of monitoring and coordinating IT activities and minimize disruption to
day to day operation of the organization. The committee would be given specific
expectations and guidelines to perform their task. Specific responsibilities of an
information systems steering committee are:
1. To review system projects to be undertaken and determine which of these system
would be given priority
2. To evaluate project’s request from departments in the organization
3. To meet periodically in order to set and review important policies, budget and
planning decision
4. To resolve any conflict that might arise during the development process
5. To review status of existing projects. If a problem has occurred during the
development of the new system, the committee has the power to make decision
whether to continue or scrap the system.

The advantages offered by a steering committee to DFSB:

1. Facilitate coordination and integration of information system activities among
departments and functions. This will reduce goal conflict.
2. To ensure the right level of top management participation, guidance and control of the
information system function.

b) Identify who would be most likely to serve on the committee.

The committee is usually represented by the top management as well as senior managers
from major business functions, the accountant and IT personnel involved in system
development. Therefore, the committee members should preferably be made up of the
following individuals:
1. En Badrul, in his capacity as the president of the company, would head the committee
 2. Chief Information Officer whose key responsibility would be to oversee the IT
budget, performance management, IT acquisition oversight, professional development
and training of the end users
3. Chief Financial Officer/Accountant who have extensive knowledge of transaction
processing systems, internal controls and general business functions. Assist in
performing cost benefit analysis of the organization’s information system
4. IT Line Management who acts as a services coordinator between the data processing
area and other user departments. Since it is a centralized setup, the roles of IT
management are to acquire, install and maintain the system for the entire
organization.
5. Business Unit Management represented by senior managers from the user areas. They
would be able to give feedback on any specific requirements from their respective
departments as well as work together to resolve any conflict
6. Internal Auditor who’s role would be to advise the committee on issues of internal
control as well as to decide whether the existing controls need to be revamped to
accommodate the new system being developed.

c) Discuss typical components of a system requests.

System request is a written request raised by management or end users to initiate the
start of the systems development life cycle. The manager or end user will identify what
are the deficiencies in existence or improvement desired in the information system and
the nature of work that must be done for the information system. The work requested can
be substantial or minor. There are four things that need to be considered in a system
request; project sponsor, business needs, functionality, and expected value.
1. The project sponsor is the person who usually initiates the proposed information
systems project having an interest in seeing that the new system succeeds. The project
sponsor could be the person who will be working throughout the systems
development life cycle to make sure that the project is moving in the right direction
from the perspective of the business
2. The business needs included in the systems request describes why the information
system should be developed and explaining to the information systems steering
 committee why the organization should fund the project concerned. The business
needs should be clear and concise.
3. The functionality of the system describes what the proposed information system will
do for the example what features and capabilities the information system will need to
have. The system request includes the expected value to be gained from the proposed
system.
4. The expected value will specify rough estimations of tangibles benefits. Intangible
benefits will also be specified to justify the proposed system.

d) Before approving any system request, feasibility study will first be conducted.
Explain what is mean by a feasibility study. List and explain the three types of
feasibility study normally undertaken in initiating the development of an
information system.

Feasibility study is an overview of the proposed project and it identifies expected costs
and benefits in terms of technical, operational and economic feasibility. The study would
also analyses possible alternative solutions against the systems requirements, evaluate
their ability to carry out selected solution and include a recommendation for approval or
rejection. Planning phase would use the feasibility study as point of reference.

1. Technical feasibility: Establishes that the system can operate in the desired manner.
Issues that must be considered are as follows:
a. Determine whether required technology and resources (computer software,
equipments, programmers, testers, debuggers, etc) to develop the system are
available.
b. Can the current technical resources be upgraded or added to in order to fulfill
the request under consideration.
c. It must also assess whether the proposed system will be able to interface with
the systems used by the organization’s customers and suppliers.
2. Operating feasibility: Covers two aspects which are technical performance and
acceptance within the organization.
 a. Technical performance: Whether the proposed information systems can
provide the right information at the right place and time. It also determines if a
proposed system change enable the system to meet the operating objectives.
b. Acceptance within the organization: A significant factor in determining
operating feasibility. If users are dissatisfied with a system, they will not use it
and the system does not meet its objectives. Determining operational
feasibility requires creative imagination on the part of system analyst, as well
as the powers of persuasion to let users know which interfaces are possible
and which will satisfy their needs.
3. Economics feasibility: The basic resources to consider are your time and that of the
systems analysis team, the cost of doing a full systems study (including time of
employees you will be working with, cost of the business employee time, estimated
cost hardware, and estimated cost of software and or software development. The
concerned business must be able to see the value of the investment it is pondering
before committing to an entire system study. A good starting point for evaluating an
investment is to estimate the costs and benefit as cash flows and analyze its payback
period, return on investment and net present value.

e) Identify and explain which aspect(s) of feasibility DFSB failed to consider prior to
installing the present inventory system.

Operational feasibility covers on the aspects of technical performance. It means that

whether the information system can provide the right information of the right place and
time. DFSB cannot fulfill their customer requirements to send the inventory at the right
time and out of stock. So that their customer will turn to others suppliers and reduced the
customers satisfaction according to the services that have been provided by DFSB.
During the peak period, scanners do not perform well and the warehouse personnel are
required to work extra time in which cause the scanners do not records all inventory due
to the low operating temperatures for DFSB’s inventory.
Economic feasibility: involves determining whether a proposed information system will
yield benefits that exceed its costs. The warehouse employs six workers and required to
 work over time that can cause DFSB to incur higher costs. Not only that, DFSB also will
incur overhead cost such as electricity bills. It shows that DFSB costs more than its
benefits.

f) Describe commonly used technique in performing cost-benefit analysis.

Payback refers to the length of time taken to recover the value of the initial investment of
the system project. Payback period is determined by the amount of time that passes
before the accumulated benefits of an information system equal the accumulated costs of
developing and operating that system. Payback period is rarely used to compare or rank
projects because later benefits are ignored. Although payback period is often criticized
because it emphasizes on the earlier costs and benefits, it does have its usefulness. Many
business organizations establish a minimum payback period for project to be undertaken.
If a company policy requires a project to begin paying for itself within five years, then it
would be considered to be economically feasible.

Return on investment is a percentage rate that measures the profitability by relating the
estimates total net profits received from a project to the estimated total costs of the
project. It considers the costs and benefits for a longer time span than payback analysis.
Return on investment of a proposed information system can be computed for the entire
expected life of the system or at least for its useful economic life. In practice, the total
costs and benefits for a somewhat shorter period of time, typically, five to seven years,
are used in a return on investment calculation, thus using only more certain future costs
and benefit estimates. In many organizations, projects must meet or exceed a minimum
return on investment. This minimum return on investment is an estimate of the return the
organization would receive from investing its money in standard external opportunities
such as shares.

Net Present Value (NPV) or net present worth of a time series of cash flows, both
incoming and outgoing, is defined as the sum of the present values of the individual cash
flows. In the case when all future cash flows are incoming (such as coupons and principal
 of a bond) and the only outflow of cash is the purchase price, the NPV is simply the PV
of future cash flows minus the purchase price (which is its own PV). NPV is a central
tool in discounted cash flow analysis, and is a standard method for using the time value
of money to appraise long-term projects. Used for capital budgeting, and widely
throughout economics, finance, and accounting, it measures the excess or shortfall of
cash flows, in present value terms, once financing charges are met.

g) Describe possible techniques that can be used to quantify intangible benefits of a

system such as customer satisfaction as mentioned by the production manager.
Customers and employees opinion surveys are techniques that can be used to quantify
the benefits. Questionnaires enable us to obtain information from a large number of
people with a relatively small expenditure of time and money. The disadvantage is that
information provided may be less detailed than the information one could get from a face
to face interview and it also could be biased information if only a few individuals respond
to the survey. However, in terms of cost and time savings, questionnaires are the cheaper
method and quicker way to gather responses.
Statistical analysis is the formal science of making effective use of numerical data
relating to groups of individuals or experiments. It deals with all aspects of this, including
not only the collection, analysis and interpretation of such data, but also the planning of
the collection of data, in terms of the design of surveys and experiments.
Simulation is the imitation of some real thing, state of affairs, or process. The act of
simulating something generally entails representing certain key characteristics or
behaviors of a selected physical or abstract system. Simulation is also used when the real
system cannot be engaged. The real system may not be engaged because it may not be
accessible, it may be dangerous or unacceptable to engage, or it may simply do not exist.
Simulation also can be referred as trial process before we implement the proposed new
system information.
h) Describe the major stages that will be undertaken by the team to develop and
implement the new system

System planning
Ideally, system development takes place within the context of a systems master plan
that coordinates new information system development projects with the company’s long-
range plans. Many companies employ a staff of strategic planners who advise top
management and who identify and suggest long-range, such as new markets, new product
lines of business. So, when project team management is to achieve these goals, its system
must provide relevant information. Members of the strategic planning staff work with
senior MIS and accounting personnel to develop the system master plan. Before
beginning new developments projects, these people ensure that new projects are
consistent with the master plan.
Before the project management proceeds with the analysis, initial investigation is
needed. The project management needs to conduct initial investigation to screen projects.
The project management team must gain a clear picture of the problem or need,
determine the project’s viability and expected costs and payoffs, make an initial
evaluation of the extent of the project and the nature of the new AIS, and recommend
whether the development should be initiated as proposed, modified or abandoned. During
the initial investigation the exact nature of the problem under review must be determine.
In some instances what is though to be the cause is not the real source. If a project is
approved, a proposal to conduct system analysis is prepared, it assigned a priority and
added to the master plan, and the development teams begins the survey of the existing
AIS. As the investigation progresses, the proposal will be modified as more information
becomes available.

System analysis
When a new system is needed, a project management must prepare a written
request for system development. The request describes the current system’s problems,
why the change is needed, and the proposed system’s goals and objectives as well as its
anticipated benefits and costs.
 If the project passes the initial screening, the current system is surveyed to define
the nature and scope of the project and understand its strengths and weaknesses. Then an
in-depth study of the proposed system is conducted to determine its feasibility.
If the proposed system is feasible, the information needs of system users and
managers are identified and documented. This is the most important part of the system
analysis, as these needs are used to develop and document system requirements. System
requirements are used to develop a new system. A systems analysis report is prepared and
submitted to the information systems steering committee.
System analysis is initiated for three reasons. The first and most frequent reason is
that an existing system is not functioning as required. The second reason is a system
study team may be appointed is due to a new requirement for information. A new
requirement may be identified by a long range system planning staff or may result from
legal or competitive changes in the business environment. The third reason is sometimes
organization initiates systems analysis to take advantage of a new technology. The
existing system may be functioning satisfactorily but since its implementation,
technological change introduced new methods that are more efficient.

Conceptual design
During conceptual system design, the team project management decides how to
meet users’ needs. The first task is to identify and evaluate appropriate design
alternatives. There are many different ways to obtain a new system, including buying
software, developing it in-house by the IS staffs or users, or outsourcing the system to
someone else. Detailed specifications outlining what the system is to accomplish and how
it is to be controlled must be developed. This phase is complete when conceptual system
requirements are communicated to the information system steering committee.

Physical design
During physical design, the team project management translates the broad, user-
oriented requirements of the conceptual design into detailed specifications that are used
to code and test the computer programs. Input and output documents are design,
computer programs are written, files are created, procedures are developed, and controls
are built into the new system. This phase is complete when physical system design results
are communicated to the information systems steering committee.

Implementation and conversion

The implementation and conversion phase is the capstone phase where all the
elements and activities of the system come together. Because of this phase’s complexity
and importance, an implementation and conversion plan is developed and followed. As
part of implementation, any new hardware or software is installed and tested. New
employees may need to be hired and trained, or existing employees relocated. New
processing procedures must be tested and perhaps modified. Standards and controls for
the new system must be established and system documentation completed. The
organization must convert to the new system and dismantle the old one. Any fine-tuning
adjustment needed after the system is up and running will be made and post-
implementation review is conducted to detect and correct any design deficiencies. The
final step in this phase is to deliver the operational system to the organization, at which
time the development of the new system is complete. A final report is prepared and sent
to the information system steering committee.

i) Explain what is meant by structured approach to system development.

When the information systems are highly structured and the business rules for an
application are relatively stable, using structured approach and a formal systems
development life cycle will probably work well. Structured development is most
appropriate for use with business information system because these systems are
predominantly data driven systems. i.e. the input of data initiates procedures or processes
that transform data from one form into another form or into information.
Many of the information systems that are currently in use were developed using
what are referred to as structured development techniques including structured analysis,
structured design and structured programming. Structured approach dominates the
information systems development efforts.
The structured approach employs a variety of diagrams and documentation
standards for describing the requirements of information systems. These include data
flow diagrams, entity relationship diagrams and structured diagrams. The structured
approaches to information system development are employed in many organizations
given the fact that they are quite effective for large system designed for relatively stable
applications.
The structured approach involves users in developing the information system.
Users need to participate in the analysis and design process as they are the people who
will eventually use the new system. The structured approach proceeds from general to
detail via a series of modules. It emphasizes in the logical system design.

j) The waterfall model of system development lifecycle suggests that all stages are
performed in a strict sequence whereby one stage must be completed before the next
be carried out and no stage can be repeated. Discuss possible critics of this
statement.

The greatest disadvantage of the waterfall model is that until the final stage of the
development cycle is complete, a working model of the system cannot be tried or tested.
Therefore, in between the development stages, he would not be able to determine whether
the work in progress is according to his requirements. Although the requirements are
specified early on, this is a document or set of diagrams, and real user understanding and
feedback will not occur until the system is implemented, which will be too late (or very
costly) to change. The user may not be able to describe the requirements of the desired
system in any detail early on. The model does not stress the need to anticipate for
changes — some systems take years to develop, but once the early stages have been
completed the model commits the project to a fixed specification of the system. Many
projects based on the waterfall model stress the importance of certain products
(documents) being delivered at certain times — it is possible for a project to become
managed in a bureaucratic way, with documents being delivered on schedule, but the
focus drifts away from a usable, effective system for the users. If a problem is identified
at a later stage, the model does not make it easy (or cheap) to return to an early stage to
rectify the mistake (since all intermediate steps will need to be repeated, resulting in
significant, unplanned, time and resource costs).
k) Discuss the main concerns of accountants in developing new system.
1.) Internal Control Standard: Accountants need to ensure that any system being
developed must comply with existing Internal Control Standards implemented by the
company to ensure information is reliable and valid. Compliance can be in terms of
authorization level, user access, process workflow and documents generated.

2) Audit Trail Requirement: The new system must be able to generate the necessary audit
trails (general ledger reports, subsidiary ledgers, journal listings, transactions report) that
are required to verify transactions entered into the system as well as backup for the
financial reporting.

3) External Reporting Requirement: The new system must be designed to comply with
various accounting standards and requirements. This is to avoid any legal exposure to the
company should the external reports produced contain non-compliance items. It is
therefore necessary for accountants to share their expertise on this area during the system
design process.

l) Discuss the skills required to become a good project manager.

a) Vision
A project manager should have a vision of what the project is going to be like and
how to get things done. He/she should be able to convey this vision to his/her team
members. When the vision is clear, there will be real involvement in the part of the
project manager and team members
b) Communication skill
Means that he need to persuade and inspire to get things done. He will need to
communicate regularly and openly with variety of people. How you communicate often
leaves more of impression on people than what you have said. A project manager would
have to communicate with users and management to enable him to more effectively
determine requirements and present the findings to management.
c) Delegating skill
Delegating skill is about the handing over authority. When a project manager has
clearly defined what is to be done and the outcome should be, the project team will
achieve the objective with ease. The key to controlling delegation is to establish what the
tasks are, who within the team has the skills and expertise to carry out the task and what
the final outcome will look like.
d) Negotiation skill
Anger and conflict can play an important part in business as people at all levels are
increasingly under pressure to get things done. This challenge necessitates a high level of
negotiation competence on the part of a project manager. He must navigate carefully
through relationships, reconcile differences, achieve a win-win solution and sustain
goodwill.

m) Discuss why it is important to understand the existing systems at the beginning

of the analysis phase.
First, it is to gain fundamental understanding of the operational aspects of the
systems. It is dangerous to modify the existing systems that we do not understand
thoroughly. We must study how the inputs are processed and what output are generated
and used in the systems. Besides that, we need to find out what procedure, documents and
who are involved in the operation. In addition, by knowing the people involved in the
systems on a daily basis, it allows an understanding of problems that top management
may be unaware of. Understanding the operation of the systems also enables us to
identify its strengths and weaknesses.
Second, is to establish a good relationship with the users of the systems. It is
important in order to understand what the users require from the new systems. This is
critical since the success or failure of a new system development depends on the quality
of relationship with people working in the current system. A poor relationship can result
in misunderstandings and misplaced design efforts. It is also to avoided possibility that
the new system will be rejected by the users of the systems for not meeting their needs
and expectation. They may resist implementation of the completed design. Such resistant
can come in many forms, including complaints to top management, strikes or sabotage.
 Third, is to identify weaknesses and strength of the existing systems. Identify
weaknesses in the existing systems enable to find the specific problems that require focus
in development of the new systems. Poorly defined the specific problems may lead
defects that will occur in the new systems.
Fourth, is to collect important information that is useful in developing the systems
design. The useful information may need to be transferred to the new systems. The new
systems may need:
1) Some of the functionality of the existing systems
2) Some of the data in the existing systems which is of value and must be migrated to the
new systems.
3) Technical documentation of the existing systems may provide details of processing
algorithm in the new systems.
4) The existing systems may have defects that should be avoided in the new systems.

n) Explain why systems analysis is often the difficult part of the SDLC stage.
Determining information needs and systems requirement is often the most
difficult part because it is challenging process due to the sheer quantity and variety
information that must be specified.
Firstly, the analyst needs to thoroughly understand the operations of the existing
company’s information systems in order to identify its strength and weaknesses. To
understand the existing operation systems is not easy, this can only be achieved by
working closely with users of the systems. The users are often reluctant to discuss their
problems with someone they do not really know. Sometimes users might feel that
admitting a problem is somehow admitting failure. Therefore, the analyst needs to choose
the right method in order to get information and to better understand the operation of the
existing systems.
Second, users often are not sure about their actual information requirement. They
may not exactly know what they want or what they need. Often they are in a
disagreement with each other about the business problems. This happen when they may
not exactly know what the problem is. We cannot simply walk and ask the users.
Although the approach of asking user are very important in order to get the information.
The analyst needs to ask more detail questions about the nature of the problems in the
existing systems. This is important in order to understand and specify the specific needs
of users that must be met in the development new systems. .
Lastly, the business problems may be poorly defined and some problems may not
be informed related but require some other solution such as training or change of
management.

o) Describes several flaws in the approach taken by Amran to obtain information

about the department.
Several flaws in approach taken by Amran:
First: Amran do not use the right tone of voices when the interview starts with the
supervisor. Amran tone of voice is more likely an order to the supervisor for give
information about the systems to him.
Second: Amran do not make an appointment with the warehouse supervisor in
order to reconfirm time and places of interviews. By doing an appointment the warehouse
supervisor enable the supervisor to arrange their time to meet with the Amran.
Third: Amran do not read background material of the interviewees and
organizational. By doing this Amran will get information about the interviewees and
organizational that will help him to do the interview smoothly. The information can get
by contact the interviewer, from a current annual report and a corporate newsletter
Fourth: Amran do not establish good working relationship with the management.
This will reduce communication gap between Amran and the supervisor. It will be done
by communicate the benefit of the proposed systems to the individual involved. Amran
can communicate to the supervisor warehouse how the systems development project will
give benefit him. For example Amran might indicate to warehouse supervisor that the
new systems will help to reduce the numbers of hours need to scan the inventory.
.
 p) Discuss the other possible techniques that can be used to gather information
about the problems faced at the warehouse, state the advantages and disadvantages
of each technique identified.
The other possible technique

Technique Advantages Disadvantages

Review of documents -Analyst gain an overall -Document do not update
understanding of the currently
organization -Discrepancies between
-helpful to study industry or actual systems
trade of journal to become performances and
familiar with the nature and documented systems
operations of business to be performances
analyzed
Observation -watch transaction being -Time consuming because
processed trough the entire required more time to make
systems observation
-Conduct more effective -Costly, it required more
interviews with manager expenses to make an
and users observation.
Questionnaire -Manager may have a lot -Less personal and does not
more time to think about establish a working
particular question before relationship with manage
responding -Large numbers of question
-written questionnaire can might result in frivolous
be administered answer
anonymously - employees are restricted to
- useful technique to answer an a narrow responses list
large no of question -Risk of important question
being omitted

References:
http://www.buzzle.com/articles/leadership-qualities-for-a-project-manager.html

http://www.cluteinstitute-onlinejournals.com/PDFs/19992.pdf

http://www.projectsmart.co.uk/top-10-qualities-project-manager.html

Khashi’ah Yusof, Analysis and Design for Accounting Students, McGraw Hill, Third Edition

Murphy KE, Simon SJ, Intangible Benefits Valuation in ERP Projects, Info Systems Journal
(2002) 12, 301-320