The electronic data interchange (EDI) is “the computer-to-computer
exchange of business documents in a standard electronic format between
business partners,” (“What Is EDI (Electronic Data Interchange)?.” 2021).
This means information communicated from computer to computer and
replaces email, fax, and postal mail. An integration of EDI into the functions
of a business’s operations that allows the company and partners to share a wide
range of documents from business to business efficiently and in a timely
manner. Companies has the capabilities to share information such as invoices,
purchase orders, or quotations. The image-processing system is used to find
various patterns and characteristics in images. Analogue and digital image
processing are the two types of methods utilized for image processing.
Compression, encoding, image enhancement, and restoration are the four
common types of image processing.
There are many factors an auditor must take into consideration when
determining the timing and nature of the required auditing procedure of a
company’s financial statement. The nature of the evidence is one consideration
the auditor should consider and it is referred to the form or type of information
used in the audit process. The auditing records of the business includes
operational records of initial entries, journal entries, records of electronic
funds transfers, invoices, contracts, and computations, reconciliations, and
disclosures. The sufficiency and appropriateness of audit evidence is another
consideration, this step “measures the quality of audit evidence, sufficiency,
and appropriateness of audit evidence are interrelated,” (Messier Jr. et.al.,
2017). The risk of material misstatement and by the quality of the audit
evidence gathered can impact the quantity of audit evidence. This means, an
auditor must make an evaluation of the evidence gathered by analyzing and
understanding the types of evidence available. This evaluation will allow the
auditor to formulate an unbiased and thorough auditing process, which
determines fairness of management’s statements.
The electronic data interchange eliminates paper and related audit trials,
which allows transactions to be processed without any human intervention. An
auditor’s main concern when evaluating the EDI controls is to ensure that the
EDI transactions are authorize, validated, and in compliance with the policy of
the organization and no unauthorized organizations gain access to records and
approved data can only be accessed by authorized trading partners. EDI affect
audits because it presents audit and control implications. The auditor must gain
an understanding of how the entity conducts business when using EDI and
adjust audit procedures accordingly. EDI and image processing changes the
nature of technology, which creates a dependency on trading partners
computer system, so errors and security breaches might affect the client’s
system.
References:
GeeksforGeeks. (2019, December 4). Components of Image Processing
System. Retrieved September 13, 2022, from
https://www.geeksforgeeks.org/components-of-image-processing-
system/#:%7E:text=Image%20Processing%20System%20is%20the,pro
cessing%20on%20the%20digital%20images.
Messier Jr., W. F., Glover , S. M., & Prawitt, D. F. (2017). Auditing &
assurance services: A systematic approach . No Title (10th ed.). New
York, NY: McGraw-Hill Education.
Splettstoesser, I. B. (1997). Managing and Auditing: Electronic Data
Interchange. The CPA Journal, 67(11), 26. Retrieved from
https://search-ebscohost-
com.ezproxy.snhu.edu/login.aspx?direct=true&db=edsbig&AN=edsbig.
A57590711&site=eds-live&scope=site.
What is EDI (Electronic Data Interchange)? (2021, May 7). Retrieved
September 13, 2022, from https://www.edibasics.com/what-is-edi/
