You are an internal auditor participating in the design phase of a new online accounts receivable system. Customer accounts will be updated automatically with data captured using point-of-sale devices. The customer service depart ment will have terminals to create new accounts, debit customer accounts, inquire as to the status of accounts, and make alterations to adjust any errors identified in accounts.

When you review the design of the audit trail, you notice that the system designer has not provided for storing beforeimages and afterimages of the account balance with transaction records. When you ask him about this omission, he explains that he has made this choice to save storage space. Because of the large number of transactions that the system must process, he argues that the overheads incurred by the system will be too high if careful control is not kept over the amount of audit trail data that is recorded. In addition, he argues that beforeimages and afterimages of all records changed are written to the log used for backup and recovery purposes. He wants to minimize the amount of duplicate data maintained for audit trail purposes and backup and recovery purposes.

You explain to the designer that the customer service department will need to know the status of an account balance at various points in time to answer customer queries. He answers that all transactions for an account are chained to the account. Obtaining an account balance, therefore, is simply a matter of adding up all transactions associated with the account that is subject to the inquiry and subtracting this amount from the current account balance. He explains that this algorithm will be in the retrieval program that the customer service department will use. Moreover, in a worst-case scenario, he argues that the account balance at some point in time could be obtained for the backup and recovery log.

Required: Evaluate the designer's answer from an audit viewpoint. Can you think of any reasons why beforeimages and afterimages still should be stored with the transaction in spite of the designer's arguments?