Electronics — A Challenge to Auditors
BY ROBERT G. WRIGHT PRINCIPAL, CHICAGO OFFICE
Presented before The Institute of Internal Auditors, Atlanta Chapter — December 1956
What effect will electronic data processing have upon auditing procedures? Will some of our customary documents and records disappear
? Should audit techniques include verification of machine programs
? Will internal control be strengthened or weakened by the tran-sition to electronics ? In general, how much do we really have to know about electronic data processing to do an effective job of auditing?
Answers to these and related questions are of concern to all auditors,
internal or independent. The answers, of course, will be de-veloped gradually as electronic installations become more prevalent. However, experience to date in auditing the new systems, although limited, provides clues to some of the ultimate answers.
Our consideration of the impact of electronic data processing will begin with a discussion of some of the broader aspects of internal control.
Proper evaluation of internal control is a mandatory prerequisite to the issuance of an unqualified certificate by an independent public accountant. Similarly, internal control is uppermost in the mind of the internal auditor as he assists management in achieving efficient administration.
Auditors, professional and corporate alike, are concerned with the effect that electronic data processing will have on established systems of internal control.
A fundamental characteristic of a good system of internal control is an appropriate segregation of functional responsibiliites and duties. On the other hand, maximum utilization of the expensive electronic data-processing machines requires, in many instances, a so-called "consolidated functions" approach to processing. Thus, an electronic version of the "segregation versus integration" issue is at hand.
To illustrate, in processing a sales order, the electronic equipment
might be programmed to determine the availability of stock, check the customer's credit status, prepare necessary shipping documents,