Electronics and the Internal Auditor
BY VIRGIL F. BLANK PARTNER, SAN FRANCISCO OFFICE
Presented before The Institute of Internal Auditors, San Diego Chapter — May 1956
The accelerating trend toward the use of electronic data-processing equipment in the office raises some questions of concern to all auditors — internal or independent.
1. Can we assume that business electronic data processing
(called EDP) will not require a change in our auditing methods or our auditing standards?
2. Under EDP will some documents which are now utilized as
audit-trace media disappear?
3. Does the concentration of many critical operations in one powerful
machine system increase problems of internal control?
4. How much do we really have to know about EDP to do an effective
job of auditing?
As we explore some of the answers to these questions we arrive at some rather startling conclusions.
A review of the applications presently being accomplished on EDPM indicates that the accounting procedures followed are not essentially
different from those of the past. The accounting framework with which we all are familiar has been preserved. Source documents, books of original entry, ledgers, and detailed lists of transactions with their respective summaries form parts of the new system. Under such a framework it seems that our present auditing methods and standards are still valid.
Nevertheless, there will be elements of substantial change. Our evaluations will require modification of our techniques, our examination
schedules will become more exact, and some of our audit thinking will be changed — but, on the whole, our coverage of subject matter and our measures for performance should remain the same.
These conclusions are based on some case studies completed recently where medium- and large-scale electronic data processors are being used for business applications. In each case the approach to EDP has been to transfer to the electronic machines an already highly mechanized accounting application. Under such an approach, the