AUDIT FOR E-COMMERCE

Audit for E-Commerce

Executive Summary

E-commerce picked up the pace and revolutionizes the traditional mode of trade. With Internet, traders decrease their costs for commerce. With the increasing importance of E-commerce, Audit becomes necessary for the risk management. On one hand, external auditors make assessments on the assurance services of integrity and security provided by E-commerce traders. On the other hand, internal auditors supervise and manage the risk for E-commerce in the framework of Enterprise Risk Management (ERM) systematically and comprehensively. Electronic commerce (e-commerce) is generally defined to encompass any commercial activity that uses the transmission of electronic data to facilitate buying and selling. Applicability risk is related with the timeliness and applicability of information generated from the data on Ecommerce.

Table of Contents

Executive Summary2

Introduction4

E-Commerce4

Risks for E-Commerce5

a.Technology Risk5

b.Moral Hazard6

External Audit for E-Commerce8

Internal Audit for E-Commerce9

a.Enterprise Risk Management (ERM)9

b.ERM for Risks for E-commerce10

Conclusion10

References12

Audit for E-Commerce

Introduction

Information technology accelerated the revolution of traditionally commercial mode, in 1990s. With Internet, traders decrease their costs for commerce. Besides, the new technology increases commercial effectiveness and efficiency. However, many issues such as information security and legal defect take adverse effects on the development of E-commerce. Even so, the advance of E-commerce has been inevitable. In all issues influencing the advance of E-commerce, the risk generated from uncertainty and even generating the problem of security has turned into focus for all participants in this field who include both consumers with electronic payment and enterprises expanding their business with information technology (Chaffey, 2009). Audit is one of useful methods for risk management which have a vital important role in developing E-commerce. On one hand, external auditors make assessments on the assurance services of integrity and security provided by E-commerce traders. On the other hand, internal auditors supervise and manage the risk for E-commerce in the framework of Enterprise Risk Management (ERM) systematically and comprehensively.

E-Commerce

Electronic commerce (e-commerce) is generally defined to encompass any commercial activity that uses the transmission of electronic data to facilitate buying and selling. E-commerce therefore, spans a wide variety of industries, not only this trading in tangible goods (as traditional brick-and-mortar storefronts do) but also those brokering the transfer of intangible ownership rights. It also uses a wide variety of technologies, ranging from the simple buying and selling of products using electronic mail to more complex inventory-tracking systems that automatically replenish stock based on sales (Patton & Josang, 2004). Over the past 10 years, e-commerce has become an integral part of business organization and economic strategy.

Risks for E-Commerce

Generally speaking, information disclosure is one of the most significant causes affecting the development of Ecommerce. That is, E-commerce could advance rapidly only when the privacy and data on consumers and enterprises making transactions through Internet would be protected efficiently.

Technology Risk

Information technology such as Internet is the core factor influencing the development of E-commerce. However, as other technologies advancing rapidly, Internet has many drawbacks, which bring out much risk threatening the security of Ecommerce. Generally speaking, technology risk exists in the process of data exchange among ...