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Unit 8: Auditing in an EDP Environment

2. Checking the records: After checking the reliability of the internal control system auditor Notes
should proceed to checking the record produced by the system. He should check the basic
records available in the entity. As far as possible auditor should insist on maintaining the
supporting vouchers which can be checked with the books of accounts.
3. Explanation and information: Auditor should make inquiries from the management and
staff regarding the work. Basing on such inquiries he can decide upon the truthfulness of
the financial records.
4. Analysis of the financial statements: Auditor should then check the financial statement
prepared form the books of account. All the other checking methods should be applied as
are used in the manual auditing.
EDP Audit

1. Current IT Trends:
(a) End user computing
(b) Declining Hardware prices, increase in micro user
(c) RDBM extensive use
(d) System development and CASE tools adopted by many users..
(e) Shift from DOS to UNIX & C language.
(f) Knowledge based and decision support systems.

(g) Increased data communication and networking
(h) Use of EDI (Electronic data interchange)
(i) Scanners and voice recognition system for input.
2. Impact on Auditing:
(a) Unintentional Errors (inexperienced persons)
(b) Program modification can take place with a view to fraud.

(c) Improper use of DSS.
(d) Auditors participation in SDLC is necessary.
(e) Use of sophisticated audit software.
(f) Data communication and networking – new risk.
(g) Data security problems.
(h) Move towards EDI (Elimination of much of traditional audit trail).
(i) Change in nature of audit evidence.

Self Assessment

Fill in the blanks:
1. The auditor should obtain an understanding of the significance and .......................... of the
EDP activities.

2. Transaction is exchanged electronically with other .......................... in Electronic Data
Interchange (EDI) systems.

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