Auditors are justifiably concerned that the movement to EDI will result in potential new risks to audit clients. Two of these new risks, described in the chapter, are economic interdependence and total systems dependence.

Required:

a. Describe the terms economic interdependence and total systems dependence.

b. Assume that economic interdependence was a concern for the auditor. Briefly identify the information the auditor would seek to address the concern.

c. Management must set up appropriate monitoring controls to deal with the total systems dependence issue. Identify types of monitoring controls that might be utilized by a firm engaged in purchasing or selling products using EDI.

d. Explain how reconciliation controls could be used to help ensure that transactions are properly and fully executed in an EDI environment.