Auditing, Sampling, Substantive test, Compliance

Common dollar financial statements add a second time dimension to financial reporing that beginning students of accounting mag find difficult to grasp. The authors find that students' difficulty in understanding the roll-forward adjustment and the distinction between monetary and nonmonetary items is alleviated when common dollar statements are introduced with a two-dimensional display. The two-dimensional display accommodates the money time dimension as distinguished from statement time, the monetary/nonmonetary distinction, the computation of income and the reconciliation of equity accounts as between statements based on common dollar magnitudes.

The primary objective of this paper is to review the extant literature concerning auditing and EDP systems. We trace the flow of EDP-auditing development, note salient points of similarity and difference in techniques and relate these issues to the auditors' professional responsibilities. We hope that this will contribute to efficient consideration of the past literature by those developing an interest in auditing-EDP systems. We also hope that it will encourage efficient progress in the effort to develop new EDP-auditing research. With this in mind, we have included a short section on new approaches to EDP-auditing which presents information on systems design involvement, software standardization and formal system assertions.