Test bank of accounting information systems by hall ch13

Chapter 13—Managing the Systems Development Life Cycle TRUE/FALSE The majority of the cost of a system is incurred in the new systems development phase of the life cycle ANS: F According to the text, a stakeholder is an end user of a system ANS: F The objective of systems planning is to link systems projects to the strategic objectives of the firm ANS: T The Systems Development Life Cycle (SDLC) concept applies to specific applications and not to strategic systems planning ANS: F An accountant’s responsibility in the SDLC is to ensure that the system applies proper accounting conventions and rules and possesses adequate control ANS: T In the conceptual design phase of the Systems Development Life Cycle (SDLC), task force members are focused on selecting the new system design ANS: F 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 ANS: T One-time costs include operating and maintenance costs ANS: F 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 ANS: F 10 A tangible benefit can be measured and expressed in financial terms ANS: T 11 Instead of implementing an application in a single “big-bang” release, modern systems are delivered in parts continuously and quickly ANS: T 12 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 systems in-house ANS: T 13 All of the steps in the Systems Development Life Cycle apply to software that is developed in-house and to commercial software ANS: F 14 Mixing technologies from many vendors improves technical feasibility ANS: F 15 The first step in the SDLC is to develop a systems strategy ANS: T 16 System maintenance is often viewed as the first phase of a new development cycle ANS: T 17 Project initiation is the process by which systems proposals are assessed for consistency with the strategic systems plan and evaluated in terms of their feasibility and cost-benefit characteristics ANS: T 18 When the nature of the project and the needs of the user permit, most organizations will create the system in-house rather than rely on a commercial package ANS: F 19 Existing (maintained) applications are the prototypes for their new versions ANS: T 20 Because of the robustness of modern technology, businesses today see infrequent changes in their IT systems and much longer system life spans ANS: F MULTIPLE CHOICE When studying the detailed feasibility of a new project a prototyping does not affect the schedule feasibility analysis b the need for user training will influence the schedule feasibility analysis c protection from fraud and errors will influence the schedule feasibility analysis d a cost-benefit review will affect the schedule feasibility analysis ANS: B Protection from inadvertent disclosures of confidential information is part of the detailed a operational feasibility study b schedule feasibility study c legal feasibility study d economic feasibility study ANS: C A cost-benefit analysis is a part of the detailed a operational feasibility study b schedule feasibility study c legal feasibility study d economic feasibility study ANS: D Examples of one-time costs include all of the following except a hardware acquisition b insurance c site preparation d programming ANS: B Examples of recurring costs include a software acquisition b data conversion c personnel costs d systems design ANS: C Site preparation costs include all of the following except a crane used to install equipment b freight charges c supplies d reinforcement of the building floor ANS: C The testing of individual program modules is a part of a software acquisition costs b systems design costs c data conversion costs d programming costs ANS: D When implementing a new system, the costs associated with transferring data from one storage medium to another is an example of a a recurring cost b a data conversion cost c a systems design cost d a programming cost ANS: B An example of a tangible benefit is a increased customer satisfaction b more current information c reduced inventories d faster response to competitor actions ANS: C 10 An example of an intangible benefit is a expansion into other markets b reduction in supplies and overhead c more efficient operations d reduced equipment maintenance ANS: C 11 A tangible benefit a can be measured and expressed in financial terms b might increase revenues c might decrease costs d all of the above ANS: D 12 Intangible benefits a are easily measured b are of relatively little importance in making information system decisions c are sometimes estimated using customer satisfaction surveys d when measured, not lend themselves to manipulation ANS: C 13 Which technique is least likely to be used to quantify intangible benefits? a opinion surveys b simulation models c professional judgment d review of accounting transaction data ANS: D 14 The formal product of the systems evaluation and selection phase of the Systems Development Life Cycle is a the report of systems analysis b the systems selection report c the detailed system design d the systems plan ANS: B 15 One time costs include all of the following except a site preparation b insurance c programming and testing d data conversion ANS: B 16 Recurring costs include all of the following except a data conversion b software maintenance c insurance d supplies ANS: A 17 All of the following are reasons why new systems fail except a the user is not involved in the development of the system b system requirements are not clearly specified c systems analysts rely on prototyping models d system development techniques are ineffective ANS: C 18 The systems steering committee is responsible for all of the following except a assigning priorities b determining whether and when to terminate systems projects c analyzing the technical feasibility of the project d budgeting funds for systems development ANS: C 19 Strategic systems planning is important because the plan a provides authorization control for the Systems Development Life Cycle b will eliminate any crisis component in systems development c provides a static goal to be attained within a five-year period d all of the above ANS: A 20 Project feasibility includes all of the following except a technical feasibility b conceptual feasibility c operational feasibility d schedule feasibility ANS: B 21 The degree of compatibility between the firm’s existing procedures and personnel skills and the requirements of the new system is called a technical feasibility b operational feasibility c schedule feasibility d legal feasibility ANS: B 22 The ability of a system to protect individual privacy and confidentiality is an example of a schedule feasibility b operational feasibility c legal feasibility d economic feasibility ANS: C 23 The systems project proposal a provides management with a basis for deciding whether or not to proceed with the project b supplies an input to the project planning activity c links the objectives of the proposed system to the system’s scheduling requirements d prioritizes the proposal in relation to other system proposals ANS: A 24 Which step is not used to evaluate a systems proposal? An analysis of the project’s a feasibility factors b ability to eliminate nonessential activities and costs c ability to provide a competitive advantage to the firm d use of Computer Aided Software Engineering (CASE) tools in developing the system proposal ANS: D 25 Reasons that a new systems implementation may be unsuccessful include all of the following except a organizational restructuring required by the new system results in displaced workers b end users not understand the strategic merits of the new system c employees are not trained to use the system d system development team members include representatives from end-user departments ANS: D 26 Typically a systems analysis a results in a formal project schedule b does not include a review of the current system c identifies user needs and specifies system requirements d is performed by the internal auditor ANS: C 27 A disadvantage of surveying the current system is a it constrains the generation of ideas about the new system b it highlights elements of the current system that are worth preserving c it pinpoints the causes of the current problems d all of the above are advantages of surveying the current system ANS: A 28 Systems analysis involves all of the following except a gathering facts b surveying the current system c redesigning bottleneck activities d reviewing key documents ANS: C 29 The systems analysis report does not a identify user needs b specify requirements for the new system c formally state the goals and objectives of the system d specify the system processing methods ANS: D 30 After the systems analysis phase of the System Development Life Cycle (SDLC) is complete, the company will have a formal systems analysis report on a the conceptual design of the new system b an evaluation of the new system c users’ needs and requirements for the new system d a comparison of alternative implementation procedures for the new system ANS: C 31 The accountant’s role in systems analysis includes all of the following except a specify audit trail requirements b prepare data gathering questionnaires c suggest inclusion of advanced audit features d ensure mandated procedures are part of the design ANS: B 32 The role of the steering committee includes a designing the system outputs b resolving conflicts that arise from a new system c selecting the programming techniques to be used d approving the accounting procedures to be implemented ANS: B 33 Project planning includes all of the following except a specifying system objectives b preparing a formal project proposal c selecting hardware vendors d producing a project schedule ANS: C 34 Aspects of project feasibility include all of the following except a technical feasibility b economic feasibility c logistic feasibility d schedule feasibility ANS: C 35 Which of the following is not a tool of systems analysts? a observation b task participation c audit reports d personal interviews ANS: C 36 When developing the conceptual design of a system, a all similarities and differences between competing systems are highlighted b structure diagrams are commonly used c the format for input screens and source documents is decided d inputs, processes, and outputs that distinguish one alternative from another are identified ANS: D 37 The role of the accountant/internal auditor in the conceptual design phase of the Systems Development Life Cycle includes all of the following except a the accountant is responsible for designing the physical system b the accountant is responsible to ensure that audit trails are preserved c the internal auditor is responsible to confirm that embedded audit modules are included in the conceptual design d the accountant is responsible to make sure that the accounting conventions that apply to the module are considered by the system designers ANS: A SHORT ANSWER Why is it important that the systems professionals who design a project not perform the detailed feasibility study of the project? ANS: Objectivity is essential to the fair assessment of each project design To ensure objectivity, an independent systems professional should perform the study List at least three one-time costs and three recurring costs in system development ANS: One time costs include: hardware acquisition, site preparation, software acquisition, system design, programming and testing, data conversion, training Recurring costs include: hardware maintenance, software maintenance, insurance, supplies, personnel costs benefits can be measured and expressed in financial terms, while benefits cannot be easily measured and/or quantified ANS: Tangible, intangible What is a systems selection report? ANS: A systems selection report is a formal document that consists of a revised feasibility study, a cost-benefit analysis, and a list and explanation of intangible benefits for each alternative design The steering committee uses this report to select a system Why is the payback method often more useful than the net present value method for evaluating systems projects? ANS: Because of brief product life cycles and rapid advances in technology, the effective lives of information system tends to be short Shorter payback projects are often desirable 6 Contrast reactive and proactive management styles ANS: Reactive management responds to problems only when they reach a crisis state and can no longer be ignored In this situation, problem resolution is generally suboptimal Proactive management is alert for early signs of problems and actively looks for ways to improve the organization’s systems This allows adequate time for planning and implementing solutions Explain why accountants are interested in the legal feasibility of a new systems project ANS: Legal feasibility identifies conflicts between the proposed system and the company’s ability to discharge its legal responsibilities Accountants are often tasked with the legal requirements associated with developing the internal control system and securing information from inappropriate disclosure Explain an advantage of surveying the current system when preparing a systems analysis for a new systems project ANS: An analysis of the current system: will identify what aspects of the current system should be retained will facilitate the conversion from the old to the new system may uncover causes of reported problems What are two purposes of the systems project proposal? ANS: First, it summarizes the findings of the study conducted to this point into a general recommendation for a new or modified system This enables management to evaluate the perceived problem along with the proposed system as a feasible solution Second, the proposal outlines the linkage between the objectives of the proposed system and the business objectives of the firm It shows that the proposed new system complements the strategic direction of the firm 10 List two ways that a systems project can contribute to the strategic objectives of the firm ANS: A new system can improve the operational performance by eliminating nonessential activities and costs, provide a method of differentiating the product or service from the competitors, and provide information that will help improve management decision-making 11 List four types of facts that should be gathered during an analysis of a system ANS: data sources; information users; data stores; processes; data flows; controls; transaction volumes; error rates; resource costs; bottlenecks; and redundant operations 12 What is the Internal Business Process Perspective? ANS: Metrics based on this perspective allow the manager to know how well their business is running, and whether its products and services conform to customer requirements 13 What is the Learning and Growth Perspective? ANS: Learning and growth constitute the essential foundation for success of any organization This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement 14 When a company is doing financially well, why is the Customer Perspective measure important? ANS: These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs Poor performance from this perspective predicts of future decline, even though the current financial picture may look good The Customer Perspective includes objective measurements such as customer retention rate, as well as more subjective criteria such as market research and customer satisfaction surveys 15 Distinguish between escapable and inescapable costs Give an example ANS: Escapable costs are directly related to the system, and they cease to exist when the system ceases to exist An example would be an annual software support fee for purchased software If the system ceases to exist, the support for the software will no longer be necessary Inescapable costs, on the other hand, represent costs which will not be eliminated if the system is scrapped An example would be an overhead charge for office space in a building which is owned by the company If the system ceases to exist, these costs will be allocated to the remaining departments 16 Why is cost-benefit analysis more difficult for information systems than for many other types of investments organizations make? ANS: The benefits of information systems are oftentimes very difficult to assess Many times the benefits are intangible, such as improved decision making capabilities Also, maintenance costs may be difficult to predict Most other investments that organizations make, i.e purchase of a new piece of equipment, tend to have more tangible and estimable costs and benefits 17 What does assessing user feedback involve? ANS: recognizing the problem defining the problem specifying system objectives determining project feasibility preparing a formal project proposal ESSAY Explain the five stages of the systems development life cycle? ANS: Systems Strategy The first step in the SDLC is to develop a systems strategy, which requires an understanding the strategic business needs of the organization This may be derived from the organization’s mission statement, an analysis of competitive pressures on the firm, and the nature of current and anticipated market conditions These needs reflect the organizations current position relative to where it needs to be long term to maintain strategic advantage Project Initiation Project initiation is the process by which systems proposals are assessed for consistency with the strategic systems plan and evaluated in terms of their feasibility and cost-benefit characteristics Alternative conceptual designs are considered and those selected enter the construct phase of the SDLC In-House Development As mentioned earlier, some organizations have such unique information needs that they can only be adequately met through internal development The in-house development step includes analyzing user needs, designing processes and databases, creating user views, programming the applications, and testing and implementing the completed system Commercial Packages 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 new system from scratch Maintenance and Support Maintenance involves both acquiring and implementing the latest software versions of commercial packages and making in-house modifications to existing systems to accommodate changing user needs Maintenance may be relatively trivial, such as modifying an application to produce a new report or more extensive, such as programming new functionality into a system Another aspect of maintenance includes a establishing a user support infrastructure This could include help desk services, providing user training and education classes, and documenting user feedback pertaining to problems and system errors What is the balanced scorecard? ANS: The balanced scorecard (BSC) is a management system that enables organizations to clarify their vision and strategy and translate them into action It provides feedback both from internal business processes and external outcomes to continuously improve strategic performance When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into operational tasks Define the feasibility measures that should be considered during project analysis and give an example of each ANS: Technical feasibility is an assessment as to whether the system can be developed under existing technology or if new technology is needed An example might be a situation where a firm wants to completely automate the sales process A question would be-Is technology available that allows sales to be made without humans? Economic feasibility is an assessment as to the availability of funds to complete the project A question would be-Is it cost feasible to purchase equipment to automate sales? Legal feasibility identifies any conflicts with the proposed system and the company’s ability to discharge its legal responsibilities An example would be a firm that is proposing a new mail order sales processing system for selling wine Operational feasibility shows the degree of compatibility between the firm’s existing procedures and personnel skills and the operational requirements of the new system Do the firm have the right work force to operate the system? If not, can employees be trained? If not, can they be hired? Schedule feasibility pertains to whether the firm can implement the project within an acceptable time frame An example would be a new ticket sales system for a sports team The system would need to be implemented prior to the start of the new season 4 Explain the role of accountants in the conceptual design stage ANS: Accountants are responsible for the logical information flows in a new system Alternate systems considered must be properly controlled, audit trails must be preserved, accounting conventions and legal requirements must be met The auditability of a new system depends in part on its design characteristics Contrast the feasibility study performed in the systems analysis phase of the Systems Development Life Cycle (SDLC) with the study performed in the systems selection phase of the SDLC ANS: A preliminary feasibility study for the project as a whole is performed in the systems analysis phase of the SDLC Five aspects to project feasibility are considered: technical feasibility, economic feasibility, legal feasibility, operational feasibility, and schedule feasibility The preliminary analysis is based largely on the judgment and intuition of the systems professionals In the systems selection phase of the SDLC, the same five feasibility factors are considered for the specific system features that have been conceptualized and for each conceptual design alternative The economic feasibility study in the detailed analysis includes a cost-benefit analysis for each alternative Explain why the Systems Development Life Cycle is of interest to accountants What is the accountant’s role in the Systems Development Life Cycle? ANS: The information system requires a significant financial investment Accountants are concerned that the capital investment involved in acquiring an information system is properly handled Also, the information system gathers the data used to prepare financial statements Accountants must be certain that the information system is applying accounting principles properly and that the system itself has adequate internal controls Any deficiencies in the information system could result in misstated financial statements Accountants have three roles in the Systems Development Life Cycle Accountants are users of the information system and as such must be able to communicate their needs to the systems designers These needs include audit trail requirements, depreciation models, and other accounting techniques Accountants are members of the SDLC development team and are expected to provide information about the requirements of the system including security needs Finally, accountants are auditors of the information system and determine what audit features should be designed into the system What are three problems that account for most system failures? ANS: Most system failures can be traced to three problems: a poorly specified system requirements, due to communication problems between users and systems professionals, the iterative nature of the process, and the need to rework parts of the system; b ineffective development techniques for presenting, documenting, and modifying systems specifications; and c lack of user involvement during critical development stages What is Industry analysis and why managers it ANS: Industry Analysis provides management with an analysis of the driving forces that affect their industry and their organization’s performance Such analysis offers a fact-based perspective on the industry’s important trends, significant risks, and potential opportunities that may impact the business’s performance Why is the announcement of a new systems project so critical to project success? ANS: Change is threatening to many individuals A new system can be perceived as putting jobs at risk in the name of “efficiency,” as a threat to organizational structure, and as requiring job skills that some users fear they lack The announcement of a new system must include upper management support and an explanation of the business rationale for the system and the expected benefits for ultimate users 10 Contrast the preliminary project feasibility study with the feasibility study performed in the systems evaluation and selection phase of the SDLC ANS: A preliminary feasibility study for the project as a whole is performed in the systems needs analysis phase of the SDLC Five aspects to project feasibility are considered: technical feasibility, economic feasibility, legal feasibility, operational feasibility, and schedule feasibility The preliminary analysis is based largely on the judgment and intuition of the systems professionals In the systems evaluation and selection phase of the SDLC, the same five feasibility factors are considered for the specific system features that have been conceptualized and for each conceptual design alternative The economic feasibility study includes a cost-benefit analysis for each alternative 11 Part of systems planning is a project feasibility study Several feasibility issues can be raised What are they? Explain the key concerns ANS: The key feasibility issues include: technical, economic, legal, operational, and schedule Technical feasibility relates to whether the proposed system can be developed with existing technology or requires new Economic feasibility relates to cost questions Legal feasibility relates to the firm’s ability to discharge is legal responsibilities under the proposed system Operational feasibility concerns the compatibility of the new and old systems, including personnel issues Schedule feasibility relates to meet target deadlines 12 Explain the role of accountants in the conceptual design stage ANS: Accountants are responsible for the logical information flows in a new system Alternate systems considered must be properly controlled, audit trails must be preserved, accounting conventions and legal requirements must be met The auditability of a new system depends in part on its design characteristics 13 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 ANS: training personnel-one-time initial programming and testing-one-time system design-one-time hardware costs-one-time software maintenance costs-recurring site preparation-one-time rent for facilities-recurring data conversion from old system to new system-one-time insurance costs-recurring installation of original equipment-one-time hardware upgrades-recurring 14 What is competency analysis and why managers it ANS: Competency Analysis provides a complete picture of the organization’s effectiveness as seen via four strategic filters: Resources, Infrastructure, Products/Services and Customers By assessing these factors, an organization can develop an accurate view of its relative strengths, weaknesses and core competencies The analysis helps in developing strategic options, which are based on an understanding of the future environment and firm’s core competencies Strategic opportunities may include market entry options or new product development options  ... professional judgment d review of accounting transaction data ANS: D 14 The formal product of the systems evaluation and selection phase of the Systems Development Life Cycle is a the report of. .. cost-benefit analysis more difficult for information systems than for many other types of investments organizations make? ANS: The benefits of information systems are oftentimes very difficult to assess... freight charges c supplies d reinforcement of the building floor ANS: C The testing of individual program modules is a part of a software acquisition costs b systems design costs c data conversion