Page 273 - DCOM509_ADVANCED_AUDITING

Advanced Auditing

Notes 14.3.3 Automating Audit Procedures

There are several benefits from automating audit procedures. These include:
 Automatic generation of audit plans, programs, schedules and procedures.

 Savings due to more efficient working.
 Better compliance with audit firm procedures.
 Freeing audit personnel to think rather than merely go through procedures.
 Creation of networks such that online supervision becomes possible.
 Rapid sharing of information.

14.3.4 E-Commerce

E-commerce is a system of conducting business over the internet by electronic rather than
paper-based methods. In E-commerce, documents such as invoices are exchanged using a standard
method known as Electronic Data Interchange (EDI). Electronic form filling and transmission
becomes far quicker than manually completing a form and then posting it. Secure Electronic
Transmission (SET) is an extension of EDI. Using SET, monies can be transferred primarily
through credit card payments. E-commerce raises various risks for firms applying it and for
auditors as well.
Some risks involved in E-commerce are:

1. Systems breakdown: It includes Systems breakdown which may have going-concern
implications.
2. Computer viruses: Spread of computer viruses which can cause computer failure.
3. Failure of internet services: Failure of internet services may bring operations to a standstill.

4. Lack of confidentiality: Data which may be commercially sensitive may be obtained by
hackers or by other means.
5. Integrity: Electronic data may lack integrity since it may be corrupted or be unauthorised
or duplicated or lost.
6. Health and safety: Continuous exposure to computer screens may damage employees’
health and lead to actions for damages.
7. Compliance with laws and regulations: There are/there will be some laws and regulations
to be complied with.
8. Competition: Business competition is facilitated. For example, one can buy books more
cheaply from web-based booksellers in the USA than in the UK. This has implications for
many businesses that formerly had quasi-monopoly position.
9. Fraud: The complexity and anonymity of modern IT systems make fraud a possibility and
its detection more unlikely.
10. Money laundering: Money laundering is facilitated by modern IT systems.
11. Lack of audit trail: The trail of paper tracing all transactions is gradually disappearing as
the paperless office is coming in sight.

12. Lack of appropriate technical skills: E-commerce indeed presents a number of challenges
to the auditor. These include:

 The need for having a technical expert in E-commerce in the audit firm

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