KARACHI, May 7: The International Federation of Accountants (IFAC) has issued new international guidance to help auditors address the e-commerce risks.

The IFAC communication received here on Tuesday said that the increasing use of the Internet for business-to-consumers, business-to-business, business-to-government and business-to-employee e-commerce was introducing new elements of risk that need to be considered by accountants while planning and performing the audit of financial statements.

To assist auditors in identifying and assessing these risks, the IFAC International Auditing Practices Committee now International Auditing and Assurance Standards Board (IAASB) has issued a new practice statement entitled “Electronic Commerce-Effect on the Audit of Financial Statements”, the communication added.

“Growth of internet activity without due attention by the entity to those risks may affect the auditor’s assessment of those risks,” points out Dietz Mertin, the IAASB chairman. For example, he added, an entity’s e-commerce strategy may affect the security of the financial records and the completeness and reliability of the financial information produced.

It was stated that this new International Auditing Practice Statement helps auditors address e-commerce issues by focusing on the level of skills and knowledge required to understand the effect of e-commerce on the audit and the extent of knowledge the auditor should have about the entity’s business environment, activities and industries.

It also focuses on business, legal, regulatory and other risks faced by entities engaged in e-commerce activities and internal control considerations such as an entity’s security infrastructure and transaction integrity as well as on the effect of electronic records on audit evidence.—APP