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Accounting Assignment Question
Topic: The challenges facing contemporary auditors.
You are required to consider the challenges facing contemporary auditors due to the increasing use of technology by businesses:
1. What impact does the purchasing and selling goods over the internet (both locally and internationally) have on business operations?
2. What are the risks businesses face due to purchasing and selling goods over the internet?
3. How might the risks identified in point 2 above lead to fraud or misstatements in the financial statements?
4. How can auditors go about identifying the fraud or misstatements you have identified in point 3.
Accounting Assignment Solution
Electronic Commerce involves conducting business electronically i.e. purchase and sale of goods over the internet. The businesses that choose to purchase and sell goods online need to understand the pros and cons of electronic commerce. These businesses need to understand the rewards as well as a potential risk before conducting online business. These risks may lead to misstatement or fraud of financial statements, which becomes a big challenge for the company to deal with. However, the auditors, by using various internal control techniques, can identify such frauds and misstatement of financial statements. This report focuses on the challenges that the present-day auditors face due to the increase in the use of technology by the organization. In light of this, this report discusses the impact of conducting business over the internet on business operations. The various risks are explored that the business face while conducting business over the internet. Further, the report attempts to find how the auditors identify business risks that lead to fraud and misstatement of financial statements.
Purchasing and selling goods online, i.e. over the internet is termed as Electronic Commerce. Electronic Commerce involves conducting business electronically. It comprises sharing unstructured and structured data of the business through the use of various means such as World Wide Web technology, electronic messaging or mail, smart cards, data interchange electronically, transferring funds electronically, etc. The business information is shared among the customers, suppliers, government bodies, etc., with the view to execute and conduct business transactions, consumer, and administrative activities (Wopperer, 2002). The businesses that choose to purchase and sell goods online need to understand the pros and cons of electronic commerce. These businesses need to understand the rewards as well as a potential risk before conducting online business. They need to consider whether they are prepared to take the challenges of electronic commerce and evaluate whether the payment of online business will be able to offset the challenges or risks. These risks may lead to misstatement or fraud of financial statements, which becomes a big challenge for the company to deal with. However, the auditors, by using various internal control techniques, can identify such frauds and misstatement of financial statements. This report discusses various risks that the business faces while conducting business over the internet. Further, it explores how the auditors identify such risk that usually led to fraud and misstatement of the financial statement………….
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