EDI has been described as a major change in the way organizations will process transactions in the future. Most paper will be eliminated, and the auditor will need to use new audit techniques to gain assurances that data has been recorded completely and accurately. The auditor will also need to look at source documents differently because such documents may no longer exist in a paper format.

Required:

a. Explain how each of the following computer audit techniques might be used for auditing an EDI environment in which your client orders goods from a vendor, receives the goods and enters the data using scanners, and pays the vendor for the amount of goods received:

• Tagging and tracing (snapshot)

• Test data or integrated test facility e Generalized audit software

• Embedded audit modules

b. What are the relative advantages/disadvantages of each approach? Would an auditor want to use more than one of the approaches in a particular audit engagement? Explain.