Electronic Data Exchange aka EDI is the data exchange between two computers or system
connections that are transmitted and received instantaneously. d EDI replaces the paper documents
such as purchase orders, invoices, shipping documents, etc. which would usually take time to
process. d (IBM, 2022) The use of EDI presents audit and control issues. d For example, the auditor
will be dependent on the EDI system so if there should be any errors, they would be difficult to
detect thus the financial data may be overstated or understated. Although EDI is simpler, the
auditor loses the audit that paper documents would provide. d (Glenn L. Helms and Jan Encino,
1998)
Image processing converts paper documents to a readable electronic format. d One issue with
image processing is validating that the document image is correct to its true form to ensure no
modifications were done to the document after it was received. d To test this, the auditor could
conduct a test by sending a document and verifying if the same document was received without
any changes. d The auditors should also test the controls if unauthorized personnel have access to
passwords that would allow any changes to the document image. (Glenn L. Helms and Jan Encino,
1998)
The auditor is ultimately responsible for confirming that the financial statements are accurate so
all tests should be completed to eliminate any misstatements. d (Messier Glover, & Prawitt, 2018)
Technology is ever advancing and new innovations impact everyday society including the business
world. Examples of new technologies that may affect the world of business are electronic data
interchange and image processing among others. Electronic data interchange (EDI) gives users the
ability to exchange business documents computer-to-computer in a standard electronic format.
This technology would eliminate the need for an auditor and a client to process and send the data
in another form (email or a share file, perhaps). This takes the handling of data by people out of
the equation which could mean a faster audit. However, auditors must understand how new
technologies will impact risk assessment procedures as well as the effectiveness of controls in
relation to audit evidence (Messier & Prawitt, 2019). Risk may be increased by reliance of systems
or programs that might be inaccurately processing the data or may be sending inaccurate
information.
Likewise, image processing is a way of using computer algorithms to extract the useful information
from a digital image. This new technology like EDI can be helpful by giving auditors data in a
timelier manner which enables them to make informed decisions quicker. This also gives auditors
an ability to look at larger amounts of data (than previously able) without relying solely on
sampling to provide materiality estimates. New technologies can also provide auditors with the
capacity to focus on higher-level skills by reducing the amount of time necessary to review the
more routine transactions. Though in both cases, auditors may have data faster but determining
the reliability of that data is the crux (Tysiac, 2022).
References:
Messier, W. Glover, S. Prawitt, D. (2019). Auditing & Assurance Services: A Systematic Approach
11th Edition. McGraw Hill Education.
Tysiac, K. (2022, February 1). Embracing technology in the audit. In Journal of Accountancy.
Retrieved from https://www.journalofaccountancy.com/issues/2022/feb/embracing-technology-
audit.html
BY GLENN L. HELMS AND JANENCINO. (1998, April 1). The electronic auditor. Retrieved from
https://www.journalofaccountancy.com/issues/1998/apr/helms.html
Messier, W. F., Glover, S. M., & Prawitt, D. F. (2018). Auditing & assurance services: A systematic
approach (11th ed.). New York, NY: McGraw-Hill Education.
What is EDI: Electronic data interchange? (n.d.). Retrieved from https://www.ibm.com/topics/edi-
electronic-data-interchange
