INTRODUCTION
Electronic data processing is the function of planning, recording, managing and reporting business transactions by the use of computers and related peripherals. In EDP data is first taken from source documents such as invoices, revenue receipts, payment vouchers, written checks etc. There after data inputs to the computer where it is entered via the keyboard or other data entry peripherals. The entered data is then processed according to the accounting package in use; since there are different structures of modules used in sundry accounting application software, processing of the same data may differ from one package to another. As I said earlier that reporting is one of processing features, then it is apparent or undoubted that types of reports produced by different packages may vary from one system or package to another. For example some system may provide almost all basic financial reports such as
The trial balance,
The statement of financial position commonly known as the  balance sheet ,
The statement of financial performance which is commonly known as the statement of  income and expenditure  or The profit and loss account,
The statement of cash flows,
The statement of changes in equity
 
These types of packages offering almost all financial reports may be said to be compatible to all types of financial processing needs and are really expensive and used in many business and non business entities.
 
Turning to other packages that don’t offer all statements we can see that they have specific and limited applications that range from business to non business, some give only the trial balance leaving the rest of the report to be prepared by the accountant. Others give all other statement except the cash flows statement. These problem calls for the need to have the so called system analyst in organizations. These professionals have the responsibility of studying the need of the organization as refers to electronic processing data issues. They do this by doing a so called feasibility study which will be facilitated by communication with top financial executives of the organization.
 
Electronic data processing has merits and demerits to the society and the professionals. The following are some of the advantages and disadvantages that may be observed in every day life of our businesses.
Advantages
Fast and instant services in financial institution or banks as compared to manual data processing, as formally it used to be harder to get even your saving or current statement from the bank.
Records of Retired civil servants were not easily and readily available in the past and caused much disturbances to old people who had served in the government for many years; where as in modern electronic data processing such services are performed very fast and the retiree are free from the former troubles.
Performance in manufacturing industries and related works have improved due to inventory automated systems which controls purchases and stocks so that there is no idle cash tied into unnecessary stock pile ups.
 
Disadvantages
 
The electronic data processing systems have decreased vacancies for accountants as one person can perform the tasks that could have been done by five people. For example by entering a transaction where purchases have been bought by cash or on credit, stock will automatically be adjusted, total purchases also will be adjusted bank account if it is by cash also will be adjusted, Creditors total amount will be adjusted if the purchase was on credit and finally the financial statements i.e. financial position statement and financial performance statement and cash flows if purchase was by cash will automatically be adjusted. These are just few of activities that will be done after a simple entry of the transaction in the system by one accountant.
Electronic data processing requires more expertise and therefore a lot of money is required to be invested in IT so that the organization can run smoothly.
It is not possible to use electronic data processing without computers and where there is no steady supply of power
 
After discussing the merits and demerits of electronic data processing in the modern business arena lets talk a bit about some challenges facing organizations and these systems today. It is a non disputed fact that electronic data processing has today gained popularity among the majority of business organizations. However, some challenges need to be addressed before and after the organization have decided to turn from manual to electronic data processing. The first thing to be done by the organization is to ensure that it has its own Information technology policy which caters for Administration, replacement and maintenance of computers and peripherals and lastly but more significant Facilities and Access policy which will deal with Access codes and passwords. This is the remedy or answer to the challenge of security risks that I wanted to talk about. Yes, Security is a great or giant enemy of the electronic data processing systems. As some people may enter harmful programs known as viruses into the electronic data processing system and destroy important files or even running programs; likewise other unfaithful employee may access records and delete or change records to suit their interest and henceforth cause loss to the company. There are many risks but let me stop here.
 
For many years auditing have been performed in computer free environments, and as a result auditing have been done in manual accounting tools such as working sheets that the auditor uses to record his or her work. Control risk in manual processing and electronic processing are not the same this have necessitated the use of modern risk assessment techniques and audit. Also the use of computer assisted techniques has been brought into use as a result of the introduction of the electronic data processing in many organizations.
AUDITING AND EDP ENVIRONMENT
 
Meaning of Electronic Data Processing” (EDP)
 
Auditing in computer information system Environment CIS Environment or electronic data processing exists when an organization uses one or more computer (s) of any type or size for preparation of financial statements. While there is change in overall objective and scope of audit under CIS or EDP, the auditor will need to assess the effect of computers on (a) processing, (b) storage (c) retrieval, and (d) communication of financial information.
 
Under electronic data processing system, there is virtual elimination of errors such as calculation mistakes, posting errors, totaling, etc. However, any error in programming may result in serious errors and produce incorrect result.
 
Basic features of EDP environment
The following are the basic features of CIS or EDP environment:
 
(a) EDP infrastructure.
This includes hardware, operating systems and application software.
 
Hardware:
 
Hardware consists of CPU (central processing unit), Monitor, Printer, Mouse and Keyboard. One may put it to use differently, such as
i.            Personal computer ( PC )-Used by individual who feeds  and processes data on a single machine:
ii.             Local area network ( LAN ), where there is connection between two or more computers located at a given small place, ( say, office ) to store and program any data files centrally
iii.            Remote linked PCs, where location of PCs is at different places or cities, but  interconnected with one another;
iv.            Distributed data processing, where a mainframe computer handles main processing, and subsidiary processing takes place at decentralized processors.
v.            Electronic data interchange (EDI), under which there is transfer of structured data without manual review to individual computers, sparing them the need to process the data themselves.’
 
Operating systems
 
These may be window, Microsoft (Ms) Office, Disc Operating system (DOS), LUNUX, etc. They oversee the communication of data between the computer processor and its magnetic discs, as well as the management of files and programs on the discs.
 
Application soft ware
 
This is a set of computer programs, such as TALLY, MYOB, Simply accounting, Quicken etc.  that is a specially development accounting Software, including operating system, compilers, packages and user programs, which enable a particular computer centre to operate.
 
(b) Lack of documents and transactions trail
In manual accounting, there is a transactions trail. First, a document (voucher, invoice, receipt, etc.) originates transaction. Then, there is entry of the transaction in the original books of account (daybooks, journal, etc) Thereafter, there is posting of the transaction in the principal books (ledger, etc). Lastly, the net effect of transaction reflected in financial statements.
In electronic data processing, on the other hand, there are often no transaction – creating documents and no visible transaction trail. For example, if there is direct feeding of data into computer, there may not be any physical input documents, e.g. voucher, invoice, receipt, etc. and no transaction trail. For example in an online, system, salespersons may directly feed sale transactions in the computer without any supporting documents, or there may be certain transactions generated by the  system based on program instructions such as sending reminders to customers who have defaulted in payment,
 
Therefore, to asses how electronic data processing may influence the audit examination process, he should consider the availability of data
(a) Entered in computer,
(b) Retained in data files, and
(c) Generated for outputs.
 
The data may be available only in machine – readable form and accessible only for a brief period.
 
In certain cases, the auditor may have to request the client to retain any particular data [...]