Discuss about the Impact of E-Commerce on Audit Practices.
With the moving time, advance technology and e-commerce has brought lot of changes in the auditing style and process. In this article it is clearly visualize that how the online banking, and online shopping transactions are affecting the audit practices at large. The article has also identified the models for the auditing in this research paper in order to competitive with the e-commerce environment. The main objective of this article is to present the conceptual framework for the E-Commerce environment which has continuous feasibility of auditing the electronic transactions. The article has also studied their secondary objectives which are statistically monitoring the models develop for the auditing process when electronic transactions in the ecommerce environment. The evaluation of the models are done to acknowledge the success and failure in the ecommerce environment with the electronic transaction. The research article has been also addressing various issues which raise up when talks of electronic transaction comes in the E-Commerce environment.
The technology has both the sides the positive side and the negative side. The internet use with advance technology in the ecommerce has given the easy to use online services but it has also develop the problem of phishing, fraud, dissemination and publishing (Study Group, 1999). However, it is argued by many critics who believed that technologies are also making the information safe and secure in terms of publishing and disseminations (Borenstein et al.,1996;Camp and Sirbu,1997). There are also some supporting argument made conveying that only technologies without safety and secure protocol is not responsible but the hardware investment and software used are also responsible in the safe and secure internet. The transactions are not only done on WWW server for the small companies but it diverse the business activities using on global level. The WWW server has introduce new phase in the life of business by becoming more easy with sending and checking the business transaction using online banking or online shopping. The ecommerce has introduce new era though the electronic transactions, it has made business transactions hazel free, speedy, user friendly and cost effective (Graham et al,1991).
The success of the Ecommerce in the totally depended on the level of trust and confidence which business has on their auditors or the auditors holds in the business whose financial statements are being auditing. There is survey which shows that level of trust and confidence of business on online transactions or the electronic transactions is very less because the primary threat in such transactions is providing their full information about the card cumbers, banking details, personal information etc. so mostly 85% of direct customer are not wanting to give this information to the third parties who are handling the big companies data and personal securities of online transactions or electronic transaction(RittenbergandSchwieger,1997). Looking towards the surveys in supporting evidence presented by British Fraud department is it observed that 2/3rd of the fraud are taken place in 21st century because of the phishing and electronic transaction where security protocol is broken by the hacker (BBC, 2005). Thus, in my opinion is believed that new ecommerce environment for the business is much advantage because it is making the business becomes greener and sustainable for the longer terms. The audit methods should be also change with this new ecommerce environment and it should also be greener and sustainable. The new development helps both the auditing firm and businesses because there are lot advantages like cost effectiveness, reliable, flexible, compatible and adaptable whereas few limitations like internal control and securities etc. should be address by using the audit models like CAPM in the business.
The immense of auditing is also bigger issues when businesses areusing the electronic transaction. The audit risk is highly reflected and highlighted by such a transactions is carried out in the business(AICPAandCICA,1999b). There are certain norms and standard are develop by the accounting and auditing standard norms, this should be immensely followed by the business. The risk affects the auditing standards and accountability concept (AICPAandCICA, 1999c). However, it is also argued by Carroll (1997) that not only the audit risk is having bigger issue but the highly reliable on third parties, loss of confidentiality and potential loss of transactions trails etc. are much issuable factor in the audit practices with ecommerce environment. The critic Herringshaw (1997) has argued that with the time and moving advancement in technology the internal control are maintained with the new sections developed in the auditing rules and accounting standards which is going to highly focus on the electronic transaction and web based business. Thus, in my opinion it is understood that auditing practices has much stronger impact of ecommerce but this impact is much positive if factors like audit risk, confidentiality, potential loss, and reliability of third parties handle properly and the new laws or sections in the article should be enclose by the accounting standard or the auditing laws.
The issues of the audit risk and internal securities are been addressed by presenting the two models which is PAPM and CAPM(Pathaketal., 2005). The model has addressed the issue of real time auditing and it has also address the issues of continuous auditing (Elliott, 1995). Seeing the limitation of the PAPM the CAPM has evolve which is also making the barriers changed to advantages and it is also addressing the continuous auditing issues which has one of main drawbacks of PAPM. Thus, in my opinion using such a model for the auditing becomes much useful for the business because it helps to keep the business also engage with the ecommerce and new technology. Although,the traditional method advantages is not be included in that, but the new advantages is linked into it. The few limitations like the electronic signature and audit marked seal should be reframed and new conceptual framework by the accounting standard should developed in order to make the business working effectively in the ecommerce environment with the electronic transactions. The fraud prevention against the electronic signature and audit marked seal should be addressed properly in the future research.
Conclusion
Lastly, looking towards these models of auditing and its impact on the Ecommerce, it is understood that there is lot of improvement in the model needs to be done. Although with the latest technology and advancement in system the issues of electronic transaction in Ecommerce environment is well addressed by the models like CAPM and PAPM. These models helps to bring the appropriate level of security and safety at time of doing the online transaction. The audit risk is also been address effectively by using such a model in the auditing process. however, it is said that in the Ecommerce environment there is high threat of business transactions specially the electronic transaction which has no evidence on the papers for the company. The new business house are using the update methods and technology in their business in order to compete in the market. Thus, audit risks and safety and security of electronic transactions and data is very much essential point by the accounting scholars and standards.
There are lot of improvement can be made in this subject of continuous auditing, because in this article only few things are acceptable by the guidelines of accounting and accounting standards. The models presented in the article are also addressing the issue of the internal control security and audit risk at large in the Ecommerce environment. But, it has not address properly about the accounting standards. With the moving technology, new sections needed to be add in the accounting standards and audit practices while using the electronic way of auditing the financial statement and presenting to the government. The issues like electronic signature, audit marking seal etc. should be address properly by developing the new sections in the accounting and audit standards. The elaborations of using the new technologies should be given to businessman for their business, the technologies should also needed to be registered in order to provide the secure protocol of making transactions and data security.
References
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