A business uses Electronic Data Interchange (EDI) to exchange
information and record transactions (Messier et al, 2019). Businesses
can store data more affordably than at a conventional storage facility
by using EDI. Additionally, EDI makes it simpler and faster for a
business to track and retrieve data than manual paperwork.
Communication with others is also more effective when using EDI.
EDI can be safer than traditional paper-based processes thanks to
encryptions and other channels of approval that are not often found
in a paper chain of command (Messier et al, 2019). Companies must
have a system that can construct an image-processing system to scan
documents before they can begin to implement an EDI system
(Messier et al, 2019). This type of document storage makes it simple
for employees to find it. All the consequences of EDI concerning the
audit depend on how reliable the system is in terms of the data it
produces. The transaction's validity and the EDI system's efficiency
may be questioned if a document placed into the system is invalid
with the necessary safeguards in place (Messier et al, 2019).
While examining a company's financial statements, auditors are
obligated to consider a wide range of factors. The type of audit
evidence must be considered. The auditor must understand the
processes of the company to develop an audit plan to test the
effectiveness and accuracy of the EDI system. All EDI systems must
have an audit trail attached to all transactions that happen within that
system. The audit trail can then give the auditor an avenue to trace
back all the steps to see what securities are in place to keep the
transactions secure. What kinds of data are to be reviewed during the
auditing process? Data including journal entries, contracts, invoices,
and reports on the industry. The appropriateness and sufficiency of
the audit evidence are other factors. This gauges both the volume and
caliber of audit evidence (Messier et al, 2019). The risk of significant
misstatement and the caliber of the provided evidence has an impact
on the quality. The auditor must also be fair, objective, thorough,
grasp the type of evidence that is accessible, and assess it.
References
Messier, W. F., Jr. Glover, S. M., & Prawitt, D. F. (2019). Auditing &
Assurance Services: A Systematic Approach (11th ed.). S.l.: McGraw-
Hill Education
