Robert M. Benjamin
An employee identification badge and prepunched labor
card being inserted into IBM 357 "transactor" source recording
device for labor accounting.
Electronic data processing concepts have advanced so
much that, if put into practice, they might make conventional
auditing of automatic source recording physically
impossible. Several writers on the subject have predicted
that the conventional auditing techniques can be adapted
to the EDP systems in current use as well as those of the
future. These adaptations lean heavily on maintaining
audit trails and getting readable input and output data.
But a recent case study of an automatic time clock
system in a large industrial plant shows the need for a
use of a fresh auditing approach. It solves the problem by
emphasizing testing of procedures and controls rather
than transactions. It appears to be a valid method for
application to the "complete" business systems expected
to be common in the future.
Before highlighting the case study, we will define the
"complete" business systems as being on-the-line-real-time,
translating business transactions when they physically
take place. They have no audit trails. Input documents
are unconventional, almost eliminated. Output
information emerges in summary, not detail.
Steps toward the on-the-line-real-time systems taken
now by many businesses involve use of either computer
systems or semi-mechanized systems such as automatic
source recording devices. Examples of such devices are
time clocks, the subject of our study, point-of-sale
recorders for retailers, the airlines' automatic reservations
and ticketing networks.
In our case, the situation confronting the auditors was
an automatic time clock system which records labor transactions
in a major plant of a large manufacturer. Automatic
time recording devices (IBM 357 "Transactors")
are located throughout the shop areas. For the 11,600
employees covered by this system, these devices have
8 THE QUARTERLY