AUD 3.10 - Audit Data Analytics

Question 1

Data analytic techniques that enable auditors to analyze and review both financial and nonfinancial data to discover patterns, relationships, and anomalies during audit

Answer 1

Audit data analytics

Question 2

ADAs can be used to perform:

Answer 2

Risk assessment procedures, test of controls, substantive procedures, and overall conclusion of the audit

Question 3

4 broad categories of ADAs:

Answer 3

Descriptive analytics
Diagnostic analytics
Predictive analytics
Prescriptive analytics

Question 4

Explains what happened or what is happening with data

Answer 4

Descriptive analytics

Question 5

Utilized when an organization wants to understand the underlying cause of results, essentially why something happened with the data:

Answer 5

Diagnostic analytics

Question 6

Uses historical data and facts to make predictions, estimations, and assertions about future events

Answer 6

Predictive analytics

Question 7

Built on predictive analytics and shifts the focus from addressing what will happen to how to make something happen. The most advances and complex category of ADA

Answer 7

Prescriptive analytics

Question 8

When sourcing data, ensure that it is:

Answer 8

Complete
Accurate
Relevant
Reliable

Question 9

Audit evidence to be used in ADAs may come from:

Answer 9

Information systems
Data storage functions (database, data mart, data lakes, etc)
Internal and reporting sources
External sources

Question 10

Two types of data

Answer 10

Structured and unstructured

Question 11

Organized, has consistent data types and formats and is easily searchable. Can be found in spreadsheets, databases, and information systems.

Answer 11

Structured data

Question 12

Usually in its original, unmodified form that is not organized. Difficult to sort. Examples are social media posts, transcripts, videos, images.

Answer 12

Unstructured data

Question 13

Used to test sufficient internal controls related to the informations systems and its functions

Answer 13

General IT control (GITC)

Question 14

Allows to evaluate relationship between variables. It shows the direction and strength of the relationship.

Answer 14

Regression analysis

Question 15

How is a regression analysis usually displayed?

Answer 15

Scatter plot

Question 16

Allows comparisons between a company’s forecasted values and actual values

Answer 16

Variance analysis

Question 17

How is a variance analysis usually displayed?

Answer 17

Bullet chart

Question 18

Used o compare financial or nonfinancial data

Answer 18

Period over period analysis

Question 19

How is period over period analysis usually displayed?

Answer 19

Column chart or bar chart

Question 20

A predictive analytic

Answer 20

Classification

Question 21

How is classification usually displayed?

Answer 21

Cotter plots, pie charts, or tree maps

Question 22

Used to develop expectations of future results

Answer 22

Trend analysis

Question 23

How is trend analysis is usually displayed?

Answer 23

Line charts

Question 24

The auditor may divide items in output from the ADA into two broad groups:

Answer 24

Clearly consequential or clearly inconsequential

Question 25

These items do not pose a risk of material misstatement individually or in aggregate. The auditor should document these

Answer 25

Clearly consequential outputs

Question 26

These items pose a possible misstatement found and the auditor must perform additional audit steps to further analyze and additionally procedures should be performed and documented

Answer 26

Clearly inconsequential outputs