Managing the Systems Development Life Cycle:The Accountant’s Role in Managing the SDLC.

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The Accountant’s Role in Managing the SDLC

The SDLC process is of interest to accountants for two reasons. First, the creation of an information system represents a significant financial transaction that consumes both financial and human resources. Systems development is like any manufacturing process that produces a complex product through a series of stages. Such transactions must be planned, authorized, scheduled, accounted for, and controlled. Accountants are as concerned with the integrity of this process as they are with any manufacturing process that has financial resource implications.

The second, and more pressing, concern for accountants is with the products that emerge from the SDLC. The quality of accounting information systems rests directly on the SDLC activities that produce them. These systems are used to deliver accounting information to internal and external users. The accountant’s responsibility is to ensure that the systems apply proper accounting conventions and rules and possess adequate controls. Therefore, accountants are concerned with the quality of the process that produces accounting information systems. For example, a sales order system produced by a defective SDLC may suffer from serious control weaknesses that introduce errors into databases and, ultimately, the financial statements.

HOW ARE ACCOUNTANTS INVOLVED WITH SDLC?

Accountants are involved in systems development in three ways. First, accountants are users. All systems that process financial transactions impact the accounting function in some way. Like all users, accountants must provide a clear picture of their problems and needs to the systems professional. For example, accountants must specify accounting techniques to be used; internal control requirements, such as audit trails; and special algorithms, such as depreciation models.

Second, accountants participate in systems development as members of the development team. Their involvement often extends beyond the development of strictly accounting information systems applications. Systems that do not process financial transactions may still draw on accounting data. The accountant may be consulted to provide advice or to determine if the proposed system constitutes an internal control risk.

Third, accountants are involved in systems development as auditors. Accounting information systems must be auditable. Some computer audit techniques require special features that must be designed into the system. The auditor/accountant has a stake in such systems and must be involved early in their design.

THE ACCOUNTANT’S ROLE IN SYSTEMS STRATEGY

Auditors routinely review the organization’s systems strategy. History has shown that careful systems planning is a cost-effective activity in reducing the risk of creating unneeded, unwanted, inefficient, and ineffective systems. Both internal and external auditors have vested interests in this outcome.

THE ACCOUNTANT’S ROLE IN CONCEPTUAL DESIGN

The accountant plays an important role in the conceptual design of the system. He or she must recognize control implications of each alternative design and ensure that accounting conventions and legal requirements are understood. These issues need not be specified in detail at this point, but they should be recognized as items to be addressed during the construct phase of the system. Furthermore, the auditability of a system depends in part on its design characteristics. Some computer auditing techniques require systems to be designed with built-in audit features. Such features require resources and need to be considered at conceptual design.

THE ACCOUNTANT’S ROLE IN SYSTEMS SELECTION

The economic feasibility of proposed systems is of primary concern to accountants. Specifically, the accountant should ensure that:

• Only escapable costs are used in calculations of cost-savings benefits.

• Reasonable interest rates are used in measuring present values of cash flows.

• One-time and recurring costs are completely and accurately reported.

• Realistic useful lives are used in comparing competing projects.

• Intangible benefits are assigned reasonable financial values.

Errors, omissions, and misrepresentations in the accounting for such items can distort the analysis and result in a suboptimal decision.

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