Exam 2 Adv. Spreadsheet
The current US GAAP Financial Reporting Taxonomy defines approximately _________ elements with descriptions.
19,000
According to experts, each component of a Balanced Scorecard should include how many KPIs for each component (Financial, Customer, Internal Process, and Organizational Capacity).
3-4
Which of the following is the best example of artificial intelligence use in auditing?
A tool that prompts an auditor to reject management's proposed estimate
The audit data standards were developed by the _________.
AICPA
In an aging analysis, which accounts would you expect to be less collectible?
Accounts with older activity
The inventory turnover ratio is an example of what type of ratios?
Activity
What type of ratios measure a firm's operating efficiency?
Activity ratios
When you evaluate accounts receivable and place them in buckets based on how many days have passed since they were created, it is called:
Age analysis
If the average Benford's Law value of a population of sales transactions is 11%, which of the following is most likely to be suspicious?
An employee whose sales transactions average 4% using Benford's Law
When a Z-score is used to identify anomalies, which of the following most likely represents an outlier?
An observation with a Z-score of +3.1
What is considered an essential component of planning an audit and carrying out substantive testing that involves ratio analysis?
Analytical procedures
_____ is designed around the idea that computers can learn about action or behavior from the past and predict the course of action for the future.
Artificial intelligence
Which of the following defines the time period, the level of materiality, and the expected time for an audit?
Audit scope
As mentioned in the text, knowledge of financial statement analysis using ratios is a component of several professional certifications, including the CPA, CFA, and the ________?
CMA (Certified Management Accountant)
Which of the following is an example of the use of descriptive analytics?
Calculating the total sales for the month
________ can be used to group data by less obvious similarities, such as preference determined through purchase behavior.
Clustering
Which of the following is an advantage of generalized audit software over spreadsheets?
Common analytical routines can be automated.
Which stage of the IMPACT model (introduced in chapter 1) would the use of sparklines fit?
Communicate insights
In a competitive industry, which of the following would be the best comparison for a company's order fulfillment cycle?
Competitor Retail Company with Bricks and Mortar with similar products
In a competitive industry, which of the following would be the best comparison for a company's time to market?
Competitors producing similar products
The acronym CAAT stands for:
Computer-assisted Audit Techniques
COBIT are standards sometimes used to frame an audit. COBIT stands for the following:
Control Objectives for Information and Related Technologies
What would you consider to be a marketing KPI?
Conversion Rate
According to the textbook, which of the following is not a department of internal audit?
Cost variances and cost minimization
Dashboards tend to be monitored how often?
Daily
_____ analytics are useful for sorting and summarizing data to create a baseline for more advanced analytics.
Descriptive
________ analytics summarize activity or data based on certain attributes.
Descriptive
_________ analytics are used to find correlations or patterns of interest in the data.
Diagnostic
What is an interactive report showing the most important metrics to help users understand how a company or an organization is performing?
Digital dashboard
What is defined as an interactive report showing the most important metrics to help users understand how a company or an organization is performing?
Digital dashboard
Testing segregation of duties would be an example of an auditor addressing which audit-related question?
Do I need to test internal controls?
Which of the following is NOT a question an auditor might ask when identifying the problem?
Do I need to test internal controls? Am I trying to find phantom customers?
Which of the following is a question an auditor might ask when applying Data Analytics?
Does it add value?
_____ helps find specific values that are summarized in general data.
Drilling down
What do you call the process of disaggregating ROE into its component ratios of profit margin, asset turnover and financial leverage?
DuPont analysis
_____, such as TeamMate or Xero, automate the workflow of evidence collection, evaluation, and opinion generation on the part of the audit teams.
Electronic workpaper platforms
Employee satisfaction metrics would be considered to be what type of KPI?
Employee
Revenue per employee metrics would be considered to be what type of KPI?
Employee
On a Balanced Scorecard, which is not included as a component?
Employee Capacity
Carbon Footprint metrics would be considered to be what type of KPI?
Environmental
______ may include data extracts, transformed data, and model output used to provide support for management assertions.
Evidence
True or false: Internal auditors are likely to specialize in one type of (or one specific) enterprise resource planning system.
False
True or false: The numbers in the footnotes are not required to be tagged in XBRL.
False
True or false: There are some KPIs that should be included in every Balanced Scorecard.
False
True or false: XBRL is only available for sophisticated investors, like financial analysts.
False
A transaction that is flagged as an error or fraud but that really is not an error or fraud is an example of a:
False positive
Which of the following is NOT a driver for a modern audit?
Faster computers Existence of more data to audit
Which of the following is true regarding audit analytics:
For CAATS, a periodic validation should take place to make sure they continue to function as expected
Which audit data standard would most likely include the chart of accounts?
General Ledger Standard
The audit data standards include all of the following EXCEPT
General journal standard
A company has two divisions, one in the United States and the other in China. One uses Oracle and the other uses SAP for its basic accounting system. What would we call this?
Heterogeneous systems
The _________ model may be used to implement Data Analytics in the internal audit.
IMPACT
All of the following may serve as standards for the audit methodology:
ISACA's COBIT framework COSO's ERM framework PCAOB's auditing standards
In practice, auditors frequently must make multiple requests for flat files or data extractions from the
IT manager
Which of the following is an example of the use of diagnostic analytics?
Identifying missing or duplicate payments to vendors
Who is most likely to have a working knowledge of the various ERP systems that are in use in the company?
Internal auditor
The __________ subledger standard from the audit data standards covers the product master data.
Inventory
What would you consider to be an operational KPI?
Inventory Shrinkage Rate
Which audit data standards ledger defines product master data, location data, inventory on hand data, and inventory movement?
Inventory Subledger
By its design, a digital dashboard would be most likely to include:
KPIs
What is defined as a particular type of performance metric that an organization deems the most important and influential on decision-making?
Key Performance Indicator
What does KPI stand for?
Key performance indicator
The acid-test ratio is an example of what type of ratios?
Liquidity
Market Growth Rate metrics would be considered to be what type of KPI?
Marketing
Social Networking Footprint metrics would be considered to be what type of KPI?
Marketing
Becoming familiar with and using XBRL-tagged financial statements as a data source for subsequent analysis is part of which stage of the IMPACT model?
Master the data
If financial statements are published monthly, which time period is most appropriate for a balanced scorecard tracking financial performance KPIs?
Monthly
Which of the following relates to why we perform audit procedures?
Nature
How is ROA computed?
Net Income divided by Assets
Order fulfillment cycle time metrics would be considered to be what type of KPI?
Operational Performance
Six Sigma metrics would be considered to be what type of KPI?
Operational Performance
On a Balanced Scorecard, which is not included as a component?
Order Process
Which audit data standard would most likely include sales orders?
Order to Cash Subledger Standard
What is defined as any calculation measuring how an organization is performing, particularly when that measure is compared to a baseline?
Performance metric
What is defined as any number used to measure performance at a company?
Performance metric
Which of the following best illustrates the use of sentiment analysis in auditing.
Predicting an audit opinion based on comments written by the audit associates
Which of the following best illustrates the use of classification in auditing.
Predicting whether a transaction is fraudulent or not
_________ analytics are used to find hidden patterns and determine a likely value or class.
Predictive
_________ analytics identify a course of action based on observed past actions.
Prescriptive
Under the guidance of the chief audit executive (CAE) or another manager, these individuals build teams to develop and implement analytical techniques to aid all of the following audits:
Process efficiency and effectiveness. Governance, risk, and compliance, including internal controls effectiveness. Support for the financial statement audit.
The __________ subledger standard from the audit data standards covers data needed to evaluate purchases and payments.
Procure to Pay
Which audit data standards ledger identifies data needed for purchase orders, goods received, invoices, payments, and adjustments to accounts?
Procure to Pay Subledger
According to the DuPont Analysis, return on equity (ROE) equals:
Profit Margin X Asset Turnover X Financial Leverage
The DuPont Analysis disaggregates return on equity (ROE) into which of the following components:
Profit Margin, Asset Turnover, Financial Leverage
Profit margin is an example of what type of ratios?
Profitability
The PCAOB are standards used to plan an audit. PCAOB stands for the following:
Public Company Accounting Oversight Board
What regulatory body requires that all public company filers tag their financial statements in accordance with XBRL?
SEC
_____ are useful for identifying duplicate and/or missing transactions.
Sequence checks
What type of ratios measure a firm's ability to pay its debts and stay in business?
Solvency ratios
_______ is used to view items from largest to smallest or vice versa.
Sorting
_____ allows auditors to quickly see the maximum and minimum values.
Sorting data
What is defined as a small trendline of graphic that efficiently summarizes numbers or statistics in a graph without axes?
Sparklines
_____________ are generally small and just show simple trends rather than all the details regarding the horizontal and vertical axes that you would expect on a normal graph.
Sparklines
What is the name of the output from data vendors to help compare companies using different XBRL tags for revenue?
Standardized metrics
______ can be used to simplify analysis by grouping data on specific data attributes, such as a state or zip code.
Stratification
_______________ statistics provide insight into the relative size of a number compared with the population.
Summary
The balanced scorecard includes all but the following metric?
Supply Chain Logistics Human Resources
Which internal audit department will work most directly with external auditors?
Support for the financial statement audit
Which term defines and describes each XBRL financial element?
Taxonomy
What is the name of the computerized technique would be used to perform sentiment analysis on an annual accounting report?
Text Mining
What computerized technique would be used to perform sentiment analysis on an annual accounting report?
Text mining
Which of the following is NOT an example of a summary statistic?
The employees whose names start with "R".
What would you consider to be a financial performance KPI?
Total Shareholder Return
To the extent that sparklines allows users to continuous monitor the status of various outcomes, it would fit into which stage of the IMPACT model (introduced in chapter 1)?
Track outcomes
True or false: Audit-related data may be available outside of the traditional financial reporting system.
True
True or false: Companies have the option of making their own, or customized tags, if they feel their financial data item does not fit within the existing taxonomy.
True
True or false: It does not make sense for some financial statement elements (such as goodwill or long-term debt) to be reported on a minute-by-minute basis.
True
True or false: Most audit data are provided in structured (or tabular) form.
True
True or false: The most important KPIs are placed in the top left corner because our eyes are most naturally drawn to that part of any page that we are reading.
True
True or false: There has been a shift of simply providing reasonable assurance on the processes to the additional assurance of the robots that are performing a lot of the menial audit work.
True
A transaction that is flagged as an error or fraud that really is an error or fraud is a
True positive
Which of the following is an example of the use of prescriptive analytics?
Using past manager actions on estimates to recommend a similar action in the future.
According to the text, which of these are not helpful in refining a dashboard?
Which data are the easiest to access or least costly to collect?
Nature Extent Timing
Why we perform audit procedures How much we can test How often the procedure should be run
What is the term used to describe the process of assigning XBRL tags internally within a financial reporting/ enterprise system?
XBRL GL
________ relates to the ability of enterprise systems to apply XBRL tags to financial elements within the firm's internal financial reporting system.
XBRL-GL
As mentioned in the text, XBRL data vendors include Calcbench and _______________ .
XBRLAnalyst
The ___________ shows the relative position of a point of interest to the population.
Z-score
When auditors use ratio analysis to identify areas of interest, it is called ______________________.
analytical procedures
The auditors' role is to make sure appropriate __________ are used and that that the output correspond with management's assertions.
analytics
There has been a shift of simply providing reasonable ______________ on the processes to the additional assurance of the robots that are performing a lot of the menial audit work.
assurance
Continuous _________ is a process that provides real-time assurance over business processes.
auditing or monitoring
CAATs are ___________ scripts that can be used to validate data, test controls, and enable substantive testing.
automated or automatic
One specialized type of digital dashboard, which is comprised of four components identifies the most important metrics to measure, as well as identifying target goals to compare metrics against is called _______________.
balanced scorecard
Descriptive analytics enable auditors to set a _______ or point of reference for their evaluation.
baseline
Predicting whether a company will be a going concern (or not a going concern) would be an example of _____.
classification
Separating transactions as either being fraudulent or not fraudulent would be an example of _____.
classification
Remote audit teams rely on electronic workpaper platforms as well as ____________ tools.
collaboration
Standardized metrics are created by data vendors to make XBRL financial data more ____________ between companies.
comparable
It is important to ___________ check in with the users of the dashboard to learn how to _________ improve it and its usefulness.
continually
If purchase orders are monitored for unauthorized activity in real time while month-end adjusting entries are evaluated once a month, those transactions monitored in real time would be an example of a:
continuous audit.
Database maps and ________ define the location and types of data auditors will analyze.
data dictionaries
Data analytics associated with a balanced scorecard (or digital dashboard) should involve the use of a ____________________ tool.
data visualization
Exact and fuzzy matching would be an example of _________ analytics.
diagnostic
Dashboards should provide __________ views for ___________ users.
different; different
A Balanced Scorecard is an example of a _______________.
digital dashboard
XBRL stands for:
eXtensible Business Reporting Language
If the judgment making and decision making is __________ defined, a rule-based analytic could automatically assign a score for the auditor to review.
easily
Audit working papers contain all of the following, EXCEPT
employee subledgers auditor preferences
When there is no alarm in a continuous audit, but there is an abnormal event, we would call that a:
false negative.
When there is an alarm in a continuous audit, but it is associated with a normal event, we would call that a:
false positive.
The scope of the audit defines parameters that will be used to _________ the records or transactions being evaluated.
filter
External auditors would be relatively more concerned than the internal auditors regarding which of the following?
financial statement quality
Drill down is used to:
find specific values that are summarized in general data
Benford's law evaluates large sets of numbers based on the ______ digits.
first
Sequence checks are useful for identifying _________ or duplicate transactions.
gaps
IDEA, ACL, or TeamMate Analytics are examples of ______ audit software.
generalized
Companies that have undergone multiple mergers and acquisitions are more likely to have ___________.
heterogeneous systems
Firms have data from SAP for its supply chain and purchasing, PeopleSoft for its payroll and HR functions, and Oracle for its financial reporting are an example of the use of ____________________.
heterogeneous systems
Companies that have grown organically (without many mergers or acquisitions) are more likely to have ___________.
homogeneous systems
When too many exceptions are actually normal transactions, auditors face
information overload.
A(n) _________ join will show only the records from both tables that match and exclude everything that doesn't match.
inner
The DuPont analysis of return on equity (ROE) includes all of the following component ratios except:
inventory turnover.
The creation of a balanced scorecard or any type of digital dashboard is ________, just as the entire IMPACT cycle should be ____________ throughout any data analysis project.
iterative
A(n) _________ join will show all records from the first table and only records from the second table that match.
left
In a financial dictionary, which word would not be considered to be a negative word?
liability cost
What word would considered to be a negative word in normal English, but not considered to be a negative word in a financial dictionary?
liability cost
The primary goal of the audit data standards is to reduce auditors' efforts to:
load and transform the data
For each of the four components of the balanced scorecard, objectives, __________, targets, and initiatives are identified.
measures
Data analytics _________ may be framed by specific standards created by organizations such as the PCAOB.
methodology
For each of the four components of the balanced scorecard, _________, measures, targets, and initiatives are identified.
objectives
Manual tasks, including __________ and inspection are generally areas where Data Analytics may not apply.
observation
Each financial data item is tagged to ____ item(s) in the XBRL taxonomy.
one
An right join between employees (left table) and sales transactions (right table) would show:
only the employees involved in sales transactions
Asset turnover is also known as _________________ .
operating leverage
A(n) _________ join will show all records, including notmatching ones.
outer
The name of the method that measures the proportion of negative words to total words to measure sentiment is called
overlap
Data stored in _____________ can be scanned and converted to tabular data using specialized software.
paper documents
Working papers are essential to audit planning, ________, and evaluation.
performance
Working papers are essential to audit ________, performance and evaluation.
planning
If a sample is of appropriate size, its features can be confidently generalized to the __________.
population
Artificial intelligence would be an example of _________ analytics.
prescriptive
Predicting the relationship between overhead incurred and potential cost drivers would be most appropriate for a _____ analysis.
regression
Predicting the relationship between overtime incurred and worker productivity would be most appropriate for a _____ analysis.
regression
Understanding how the four components interact to answer different types of questions and meet different strategic goals is critical when it comes to identifying the _______________________.
right KPIs to include in a Balanced Scorecard
There has been a shift of simply providing reasonable assurance to additional assurance of the _____________ that are performing the menial audit work.
robots
Automated bots do more of the ___________ tasks and leave the _________-level tasks to the human auditor.
routine; higher
Data analytics increasingly allows testing of the full population instead of _____.
sampling
The ______ of the audit defines the time period, level of materiality and expected time for the audit.
scope
Data vendors like Calcbench and XBRLAnalyst use _____ tags to allow financial statement comparisons between companies.
standardized
The balanced scorecard is based around a company's ____________.
strategy
With a well-defined mission, vision, and set of values to create and maintain a successful culture, the balanced scorecard is based around a company's ____________.
strategy
XBRL is considered to be eXtensible because it allows:
tagging to be extended for customized tags that don't fit standard definitions
For each of the four components of the balanced scorecard, objectives, measures, ____________, and initiatives are identified.
targets
The XBRL _______________ defines and describes each key data element.
taxonomy
The XBRL _______________ defines the relationships between each element such accounts payable being a component of current liabilities and current liabilities, in turn are a component of total liabilities..
taxonomy
What is not a reason that real-time reporting doesn't exist today?
technology to publish the financial statements
Auditors can perform Data Analytics on _________ to determine the sequence of approvals.
time stamps
A general rule for data visualization is that the most important KPIs should be placed in the ____________ corner of the dashboard.
top left
The most important KPIs should be placed in the __________ corner of the page even if we are not following a strategy map template.
top left
Surveillance video or text from email are examples of _____ Big Data potentially usable by auditors.
unstructured
A segregation of duties analysis may assist auditors in finding
which accounting users had too much access to other accounting tasks