You have been assigned to the audit of Ford Motor Co. Ford is quite complex. In preparing for the…
You have been assigned to the audit of Ford Motor Co. Ford is quite complex. In preparing for the audit, the partner describes the following characteristics about the audit client:
• Ford is moving into e-business via the Web. It will allow vendors to bid on supplying products to Ford. However, all vendors must first be certified as Ford Certified vendors so it is not quite like the open auction-type bids.The vendors must meet quality and delivery requirements.
• Ford currently uses EDI extensively.
• Ford’s use of EDI currently means that suppliers must deliver products directly to the assembly line ready to be assembled. Payment is made based on a trading agreement between the parties specifying penalties for lack of delivery, poor quality, etc. It also specifies payment based on items produced during a week with the electronic transfer to the supplier at the end of the week.
• Ford will be developing an e-commerce alternative to purchasing vehicles.They have already developed an agreement with UPS to utilize UPS’s tracking facility to ship their cars, trace their cars during shipment, and authenticate delivery.
• The E-Commerce is a movement to be more like Dell Computer, i.e., Ford will eventually be more of an assembler of cars, rather than a manufacturer of cars.
Develop a comprehensive approach to (a) audit the computerized processing of Ford Motor Co. and (b) institute computer audit techniques, where applicable, to conduct an annual audit of Ford Motor Company.
In preparing your answer, focus only on the unique risks that are associated with computer processing caused by the company’s involvement in e-business, e-commerce, and its use of EDI. Formulate your answer using the following headings:
a. Unique risks due to the E-Commerce, E-Business, and EDI Environment
b. Major controls that should be in place to address those risks:
• Identification of controls that need to be tested
• Identification of approach used to test the controls
c. Other audit tests, other than computer audit tests, that ought to be performed to satisfy the auditor that major e-business and e-commerce transactions are handled properly
d. Identification of computerized audit approaches, if any, that would be helpful in auditing the electronic transactions and resulting account balances described above for Ford Motor Company