Electronic Data Interchange (EDI) the exchange of information that
occur between one company and another, based on purchases, sales,
payment, and collection transactions, among others. Both companies
do their business transactions in an agreed standard format, and it
goes from the client's computer to the vendor's computer, and vice
versa. This type of transaction is characterized by the absence of
physical documents (paper formats), everything is digital, which
means that company "A" (client) will send to company "B" (vendor) a
purchase order with what it expects to buy, likewise company "B" will
send company "A" the sales order and the invoice of what it will send.
In the same way, the collection-payment relationship between both
parties will be executed. One of the advantages of this type of
transaction is the saving of time in the business cycle, in addition to
minimizing the human error that these transactions entail when they
are manual on paper.
The Image Processing System becomes a positive practice for
companies, and although not all of them adopt it for some reason
such as lack of equipment or programs. This practice offers the
possibility of keeping the record of all the documentation of
commercial transactions for much longer, in addition to simplifying
their storage. Likewise, this practice becomes a key tool to document
the traceability of the complete operation (cash conversion cycle) by
simply scanning to convert the physical documentation into a digital
image (a purchase order, a sales order, an invoice, the documentation
receipt of material, or a paid check among many other documents).
It is necessary for the auditor, to know how the company that is
auditing handles the EDI transactions with the clients and/or vendors,
and also what type of access from each one of them has to the
information of the company. Suppose the company manufactures "X"
product and one of its raw and packaging material's vendors has
access to the production forecast, if for some reason the company
executes a change in the production schedule without updating the
information accessed by the vendor, it could send more or less
quantities of raw or packaging material than you plan to manufacture.
All these digital transactions have many advantages as long as the
information is kept up to date, however the auditor must perform the
audit tests to obtain evidence: 1) Risk assessment procedures, to
obtain an understanding of the entity and its environment, including
its internal control, to assess the risks of material misstatement in the
financial statements and at the relevant assertion levels; 2) Tests of
controls to test the operating effectiveness of controls in preventing,
or detecting and correcting, material misstatements at the relevant
assertion level; and 3) Substantive procedures to detect material
misstatement at the relevant assertion level. Substantive procedures
include tests of details and substantive analytical procedures
(Messier, Glover and Prawitt, 2019).
Some advantages of paper evidence are that it is more difficult to
alter it without being noticed, while the electronic format if it is
altered, is not detected except by evaluating the integrity of the
security controls and techniques. Likewise, we look at the approval
levels in paper evidence on the paper itself, while in electronic
evidence we can evaluate the authorization levels using security
controls and techniques that allow us to determine who, how and
when the information was authorized.
