Inquisitive Company (IC) is an on-line trading business established by Thomas Jones. The business buys assorted household goods from different manufacturers locally and abroad. Orders are made on-line from suppliers. Customers also order goods on-line from YEC and their invoices are processed and transmitted to the store from where the goods are dispatched to the customers through the delivery stores scattered all over the country.

IC has not been satisfied with the work of the previous auditors and has approached your firm to be appointed as the new auditors. Appropriate professional clearance has been resolved for the work to commence.

You are the audit manager responsible for the engagement. You have also been assigned on the job with some new trainees who are not conversant with controls in on-line businesses.

Required:

Write a report to audit committee evaluating FOUR risks associated with the business of IC in the application of electronic data interchange in an on-line business and FOUR effective controls that may be put in place to minimize the risks.