Electronic Data Exchange aka EDI is the data exchange between two computers or system
connections that are transmitted and received instantaneously. c EDI replaces the paper documents
such as purchase orders, invoices, shipping documents, etc. which would usually take time to
process. c (IBM, 2022) The use of EDI presents audit and control issues. c 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. c Although EDI is simpler, the auditor loses
the audit that paper documents would provide. c (Glenn L. Helms and Janencino, 1998)
Image processing converts paper documents to a readable electronic format. c 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. c To test this, the auditor could
conduct a test by sending a document and verifying if the same document was received without any
changes. c 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 Janencino,
1998)
The auditor is ultimately responsible for confirming that the financial statements are accurate so all
tests should be completed to eliminate any misstatements. c (Messier Glover, & Prawitt, 2018)
EDI (electronic data interchange) and image-processing systems about electronic data interchange
and image-processing systems. For the most part it seems to be a platform for business partners to
send important business documents to one another. It seems like this is a major shift from a system
that use to be completely reliant on paper products. c EDI is a useful system for industries like
healthcare and automotive. A few benefits of electronic system would include: a reduction in
errors, less paper waste, time management, convenience, and overall better record keeping.
However, it is important for an auditor to keep in mind the availability of the document or record
and how long that document has existed for. This is necessary for the test of controls and the
extent that the auditor uses those substantive tests. So, although there are benefits to electronic
interchange there are negative implications as well. For example, the electronic evidence must be
properly accessed by the auditor. Then once accessed, it must be easily understood and usable by
the auditor. Also, being able to differentiate between purposeful errors and errors on the computer
must be done. There may be limited access to the evidence and the data may have been changed.
Distinguishing between fraud and clerical error must be done through careful procedure.
References
Williamson, A. L. (1997, February 1). The implications of electronic evidence. Journal of
Accountancy. Retrieved September 15, 2022, from
https://www.journalofaccountancy.com/issues/1997/feb/implic.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
