Chap 9

Question 1

5 steps of ADA (Audit data analytics)

Answer 1

1. ADA can be performed at any stage of the audit. important for adtr to spend adequate amt of time
2. This process involves:
   - planning the ADA
   -Access and prepare the data
   -access the data reliability and relevance
   - perform the ada
   -evaluate the results

Question 2

planning the ADA

Answer 2

1. understand the client entity and the evaluate the effectiveness of its control

2.determine which type of ADA, on which acc and what assertion(based on preliminary risk assessment)

3. Identify the data needed, plan the test details and the documentation

Question 3

-Access and prepare the data

Answer 3

after selecting type of ada test and data pop identified:

1. needs to assess the data format and its condition

data needs be cleaned as effective controls does not provide data 100 % free of error. this is because audtr will need to perform test with clean data

Question 4

-access the data reliability and relevance

Answer 4

reliability is impacted by how and who collected the data and whether it is sourced from internal control

Question 5

• perform the ADA

Answer 5

1.looking at trends that are inconsistent with the knowledge gained about the entity which could indicate material misstament

2. adtr refer to the exceptions, outliers as notable items.

3.if too many notable items, adtr will have to revise original risk assessment

Question 6

-evaluate the results

Answer 6

1.important to confirm expectations and to identify notable items

2.evaluate the test results to make conclusion

3.if too many notable items found, this indicate that test may need to be revised or reperformed

Question 7

data analytics

Answer 7

analyse data and draw conclusion abt them

Question 8

descriptive anal

Answer 8

using historical financial data to understand past results

Question 9

diagnostic anal

Answer 9

anal to understand why smith happened

Question 10

predictive anal

Answer 10

analysis to make prediction using considering different scenarios

Question 11

prescriptive anal

Answer 11

anal to examine different solution leading to the best outcome

Question 12

how data analytics used

Answer 12

1.to examine large datasets as to identify ouliers, trends and other info

2.a way of gathering sufficient appropriate evidence but also improves efficiency n effectiveness of audit evidence compared to traditional audit procedures

3. Helps with indemnifying outliers and trends for investigation , thanks to visualization: presenting result of ADA in form of charts, tables etc..
4. also with regression analysis as part of substantantive procedures

Question 13

dash board

Answer 13

display of multiple visuals to monitor performance

Question 14

types of data

Answer 14

1. structured- fixed filed within a record or file
2. unstructured- data that are not in traditional database e.g emails, images

Question 15

data access

Answer 15

-to ensure adt efficiency when conducting ADA, adtr needs to solve data access issue in early planning stage

1. adtr has an understanding of type of data- prevent complications such as collecting wrong data or issues with data during ADA// cannot plan ADA if data not readily available
2. adtr need to have access to read only copy of data- avoid waiting time to receive information from client. however adtr respon. to ensure client data strongly protected
3. adtr understand size of database- know whether their system is capable to process that amt of data

Question 16

data quality

Answer 16

1. consistency
2. completeness
3. data cleansing

Question 17

data quality//consistency

Answer 17

business operating in different locations can be capturing data using different system. the concern of adtr is whether there is consistency in the data

Question 18

data quality//completeness

Answer 18

adtr should check for data completeness to ensure having a meaningful ADA. this is done by understanding how the client data is protected and whether they are usable

Question 19

data quality//cleansing

Answer 19

1.adtr needs to review dataset to remove data error even tho controls are effective

2.Data error is inaccurate , duplicate, missing and inconsistent data

3.adtr perform data cleansing- identifying and correcting incorrect, missing data into consistent form

4. adtr needs to keep a copy of the dataset before data cleansing and document all data preparation procedures
5. if too many data errors, need to reconsider effectiveness of performing an ada

Question 20

documentation

Answer 20

1. documentation required irrespective if it manual or ADA

2.special consideration to ada if adtr want to document test results in form of visualization

Question 21

data cycle

Answer 21

1. data collection- adtr acquiring client data
2. data processing- process data after checking for completeness, consistency and doing data cleansing for use
3. data usage-performing ADA using the data and interpreting its test result
4. data maintenance- adt file kept in storage

5.data deletion-when adt file no longer needed and thus deleted with quality assurance