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Unit 8: Auditing in an EDP Environment

6. Procedure: Find out whether internet downloading and other uses of the internet is restricted Notes
to safeguard entity’s information.
Inherent risk: Virus penetration into the system is simple due to uncontrolled
internet activities
7. Procedure: Investigate to be sure that, the use of antivirus programs is present, there is safe
storage of backups which are frequently tested to identify irrelevant backups
Inherent risk: Restoration of data is not possible when misfortunes occur.

Nature, Timing and Extent of Audit Procedures

It is customary for Auditors to perform timing and design of audit procedures that are supposed
to suit the audit they need to execute. This is important because the audit evidence obtained after
audit need to have relevance to the audit report issued. The relevance so mentioned is verified
by reviewing the documentation of nature, timing and extent of procedures employed in the
audit; this is done in a process called quality review.

Conclusions drawn from the evidence obtained

Conclusions drawn by the Auditor are the final output of the audit which when presented in a
formal and standardized manner is called an audit report. Conclusions such as these need to be
documented systematically and in a way that another auditor who have not participated in the
audit should be able to use them in reporting without the need of more elaboration from the
auditor involved in the audit.

Safe Storage of the Evidence in Electronic Form

After completion of the audit and collection of relevant and sufficient audit evidence it is advised
that the Auditor should store the evidence so obtained in a safe storage and which is expected to
be in electronic form. This may be put in disc storage devices which are not easily affected by
viruses and not easily altered.

8.5 Auditor’s Challenges and Modern Ways for Auditing Electronic

Data Processing (EDP) Accounts or Financial Statements

Electronic data processing is the function of planning, recording, managing and reporting business
transactions by the use of computers and related peripherals. In EDP data is first taken from
source documents such as invoices, revenue receipts, payment vouchers, written checks etc.
There after data inputs to the computer where it is entered via the keyboard or other data entry
peripherals. The entered data is then processed according to the accounting package in use; since
there are different structures of modules used in sundry accounting application software,
processing of the same data may differ from one package to another. It is said earlier that
reporting is one of processing features, then it is apparent or undoubted that types of reports
produced by different packages may vary from one system or package to another.

Example: Some system may provide almost all basic financial reports such as
1. The trial balance,
2. The statement of financial position commonly known as the balance sheet ,

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