In an EDP (ELECTRONIC DATA PROCISSING) audit the auditor may not vouch each and every transaction but he must perform overall analytical checking to ensure that the financial records show true and fair view of the business entity.
Audit process in such a system may involve following steps:
Evaluation of the internal control system â€“ Auditor should care fully evaluate the internal control system.
He should check the system existing in the entity, as well its actual use by the business.
It is possible that whereas a well designed system is present but it is not put to use by the management. Based upon the evaluation of such a system, the auditor should decide the degree of reliance that can be placed on it.
Checking the records â€“ After checking the reliability of the internal control system auditor should proceed to checking the record produced by the system. He should check the basic records available in the entity. As far as possible auditor should insist on maintaining the supporting vouchers which can be checked with the books of accounts.
Explanation and information â€“ Auditor should make inquiries from the management and staff regarding the work. Basing on such inquiries he can decide upon the truthfulness of the financial records.
Analysis of the financial statements â€“ Auditor should then check the financial statement prepared form the books of account. All the other checking methods should be applied as are used in the manual auditing.