Big Mart is one of the largest retail organizations in

Big Mart is one of the largest retail organizations in the country. It has implemented POS to record sales, bar codes, and EDI. Some vendors are given the authority to manage store space, for example, making decisions about the style and size of jeans to stock in the store. Other vendors fill requests ordered by the purchasing agent. Most EDI communications with small vendors are routed through VANs. For the vendors that manage store shelf space, title to the goods does not pass until the goods are sold to the consumer and the POS equipment records the sale. For all other vendors, title passes when the goods are received and scanned into the system. Electronic invoices are not sent. Rather, the goods are set up for electronic fund payment at the time title changes hands. The terms of the payment are set by the trading agreement.


a. Explain how the client can utilize edit controls, reconciliations, and exception reports to control the EDI operations. Focus on the completeness, existence, and valuation assertions.

b. Identify the control procedures that should be in place to determine that the company pays the right price for goods that were received (valuation). Identify audit procedures that might be utilized to determine that the controls are working properly.

c. It was suggested that one approach to auditing complex computer systems would be to utilize tagging and tracing to determine if controls are working properly and processing is correct. Would an EDI application be a good application for the use of tagging and tracing approach? Explain how tagging and tracing could be used within an EDI application.


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