While reading on EDI and image-processing one thing was very evident, there are many pros and
cons to each. There has been years of trial and error and plenty of research for companies to
understand enough about an ever-changing world to make it work best for their company. I found
an article from 1998 and intentionally decided to use something this old just to show the same
things that were plaguing the full use of these techs in auditing is still as relevant today.
The implication of EDI back then was understanding how a company was utilizing this and being
able to adjust audit procedures accordingly. One other implication that EDI faced then and can still
become an issue today is "system might contain errors and compute an incorrect optimum order
amount, leading to a dispute if the client ships too few or too many raw materials" (Helms,
Mancino, 1998). By using the electronic system for tracking supplies and vendors utilizing it as
confirmation on material usage there comes the issue of the errors that can occur within the
system and inaccurate information. The implications of image-processing systems can stem from
trusting the authenticity of the documents. As an auditor is there any way to test the validity or
accuracy on them? The textbook states "Two issues are important in discussing inspection of
records or documents: the reliability of such evidence and its relationship to specific assertions"
(Messier, et al 2019).
Along with both EDI and image-processing there will always be the concern over security. Will
there ever be enough understandable security on the digital world to think that all your company
information is truly safe. As an auditor understanding the ways a company uses these digital forms,
to be able to see real time data of continuous auditing within the systems, and quicker access to
data exchange with the company are just some of the ways that an auditor must view and consider
the
EDI is a component of electronic commerce. It demands that two or more partners in a trade
approving to accept a specific standard data format for conducting conventional business
transactions. A main feature is EDI’s autonomy from a paper; conventional source records in a
vendor-client association. Messier, W. F., Glover, S. M., & Prawit, D. F. (2019). This could be like
the invoices and purchase orders, which do not appear in the form of paper. Another particularity
is the compressed business cycle, leading to lower year end balances for receivables inventory,
and payables. Frequently, accounting transactions and data are transferred between partners of
trade by a value-added network. The auditor should know how the entity handles business
utilizing EDI and to modify audit rules accordingly. EDI creates a dependency on the structure of a
trading partners computer, so its glitches and safety breaches might influence the client’s system.
Radley. (n.d.) The client manufactures raw materials to the partner based on an electronic demand
of the partners inventory system. This system may contain flaws and calculate an inaccurate ideal
order amount, resulting in conflict if the client ships too many or too few raw materials. The
auditor must be concerned that revenue and accounts receivables could be expanded if too many
of the products were shipped or result in liability in a case of too few shipped goods. There are
controls such as firewalls, encryption, etc. that relate to communication technologies. Radley.
(n.d.) The auditor may need to review the agreements on trading partner. The revenue concepts
might be altered because of the new business exercises.
The imaging processing system has technology that entails transforming paper records into
electronic form. This is done by scanning and then retrieving the electronic copy. The most
important issue in image processing records is the “authenticity”. The electronic copy is exactly
what it implies. The auditor always needs to examine the controls that make sure everything is
valid and documents are approved and scanned. Once the scanned image is captured the quality
control function is required to make sure there are no errors. Messier, W. F., Glover, S. M., &
Prawit, D. F. (2019). d The auditor will make sure there are passwords used to restrict unauthorized
modifications.
Sources:
What is edi. Radley. (n.d.). Retrieved September 15, 2022, from https://www.radley.com/edi-
solutions/what-is-edi/
Messier, W. F., Glover, S. M., & Prawit, D. F. (2019). Auditing & Assurance Services: A systematic
approach. McGraw-Hill Education.
Messier, W., Glover, S., & Prawit, D. (2019, October 19). Auditing & Assurance Services: A
systematic approach. McGraw Hill. Retrieved September 15, 2022, from
https://www.mheducation.com/highered/product/auditing-assurance-services-systematic-
approach-messier-jr-glover/M9781259969447.html
Helms, G., & Mancino, J. (1998, March 31). The electronic auditor. Journal of Accountancy.
Retrieved September 15, 2022, from
https://www.journalofaccountancy.com/issues/1998/apr/helms.html
