Electronic Data Interchange (EDI):
EDI is a protocol that is maintained by the ANSI (American National Standards Institute) for the
exchange of business transactions via computer/computer. Basically, EDI allows two businesses
with different software’s to read the same report. Rather than having to have a report (i.e.,
purchase order) sent to the receiving company and manually entered by someone, their system
can read it due to EDI. It is a set language that both systems can easily understand.
Image Processing Systems:
Image processing systems allow important information to be extracted from the software. It is
like reading a report and only pulling what the person needs to know automatically, rather than
someone having to do it manually. This can be used to check for the occurrence of a
transaction and identification and verification of a transaction.
Implication on Audits:
The most obvious implication of this is that most, if not all, of the work for an audit is done
electronically - there will not be a paper file accompanying the audit like in the old days. Next,
more errors are likely to occur due to lack of review. With EDI, you see more automation
occurring both at the audit level, and management level. This means less close review of the
documents being processed. Lastly, it is important to note that any changes to the electronic
systems could wreak havoc on the communications between systems if not planned for.
Electronic data interchange or EDI allows information from a computer application in one
company to move directly to a computer application in another company using a standardized
format (IBM.com). This process replaces the use of paper documents for both organizations.
Image processing transforms an image into a digital format that allows functions to be
performed to extract important information. Auditors need to be aware of both concepts when
asking their client for audit documentation. The client may provide all evidence and
documentation only in an electronic format - there are many companies moving towards being
"paperless". The documents using EDI will be easier to trace back to their origin and may result
in less errors as they are coming directly from the other organization's system. I recall in my
dealings with auditors, there was always a request to see the file path that the documents
were saved under.
References:
IBM.com. What is EDI: Electronic Data Interchange. https://www.ibm.com/topics/edi-electronic-
data-interchang\
Great Learning.com. What is Image Processing? https://www.ibm.com/topics/edi-electronic-
data-interchange
Messier, W.F., Jr., Glover, S.M., & Prawitt, D.F. (2019). Auditing & Assurance Services: A
Systematic Approach (11th ed.). New York, NY: McGraw-Hill Education
Messier, W. F., Glover, S. M., & Prawitt, D. F. (2019). Auditing & Assurance Services: A
Systematic Approach. McGraw-Hill Education.
