Audit Module G

word cloud

a data visualization image that is comprised of words that are used in a specific context

3-way match controls ensure that

all purchases are recorded and that recorded purchases represent valid transactions and are recorded at an accurate amount

Auditors will have to rethink the _____ formerly on manual audit procedures to now consider how to best analyze and interpret the available data for audit purposes.

amount of time spent

The audit of the future will have to employ _____ in a robust and meaningful way that will maximize the usefulness of "big data" on the financial statement audit.

analytics

An auditor needs to be able to identify _____ to test in detail.

anomalies

With technology, Auditors can

assess clients data for completeness and accuracy and then import the detailed records into audit or visualization software to assess risk

Auditors are trying to improve their firms use of

audit data analytics

Accounting professionals can also use data visualization tools to help other

better understand what the data is telling them

The availability of _____ provides the basis for changes in the financial statement audit process.

big data

The audit of the future seeks to take advantage of _____ in a way that improves _____ and ultimately improves audit _____.

big data, advanced analytical tools, and other cutting-edge auditing technologies; efficiency; quality

big data

consist of large datasets that are generally unstructured

It is essential that auditors respond to the _____ that is now characterized by the pervasive use of information technology by audit clients across industries.

current business environment

As a general concept, _____ implies an elemental level of numbers and/or characters within an organization.

data

The data chain for auditors is

data > information > knowledge (risk assessment) > wisdom (sufficient, appropriate evidence)

Non-traditional data, like images or words, can be found in

different forms and pulled from varied sources, so that ability to analyze all of it leads to better insight

Auditors have new tools to extract and visualize data, allowing them to

dig into larger, non-traditional data sets and perform more intricate analysis

The possibility of _____ is why a strong incentive exists for audit firms to employ new and improved analytics.

enhancing audit quality while improving efficiency at the same time

data

facts and/or statistics that are collected together for some type of reference point or analysis, ultimately within a context

The size of each word in a word cloud reflects the

frequency and/or the importance of the word in that context

Once the data is ready for use, the auditor must still consider

how to model and ultimately evaluate the data that will be used before its deployment on the audit

Auditors use word clouds as a way to

improve understandability of that context

Analytical tools can rely on data sources that are _____ to the client.

internal and external

Data becomes information for auditors when

it is considered within a meaningful context

In order for the knowledge to be useful as evidence, a determination must be made about

its relevance towards mitigating the risk of material misstatement for the relevant assertion identified

Information is then compared to other information in a way that leads to

meaningful knowledge

Within the purchasing cycle, the 3-way match control activity is commonly used to support the _____ assertions for purchase transactions.

occurrence and accuracy

A determination also need to be made about its

reliability

On each and every audit, questions will certainly arise about the _____ of the different types of data sets that are available from within and outside the audit client.

reliability and ultimately the auditability

For example, an auditor would use an analytical tool to identify missing sales invoice numbers as a way to assess _____.

risk

Wisdom is otherwise known as

sufficient appropriate evidence related to a relevant assertion about a significant account or disclosure

Effective operation of the 3-way match control occurs when

the details of an authorized purchase order are compared to the details of a receiving report and the details of the invoice received from a vendor

What offers the potential to improve audit efficiency and audit quality?

the development of new audit techniques that take full advantage of big data, advanced analytical tools, artificial intelligence, and robotic process automation

audit data analytics

the science and art of discovering and analyzing patterns, identifying anomalies, and extracting other useful information in data underlying or related to the subject matter of an audit through analysis, modeling, and visualization for purpose of planning or performing the audit

At a basic level, analytics are

the systematic computational analysis of data in a manner that yields insight in the audit process

In order for data to be useful for decision makers it must be

thought about within a meaningful context which would allow it to be understood

The essential first step in the use of analytical tools in a financial statement audit process is

to be able to apply advanced analytical tools in a manner that will identify anomalies in an underlying data set

Data analytics are altering the way the audit process is done at the _____ levels.

transaction and general ledger

It is essential for auditors to

understand the nature of the data that is available and make sure it is properly "cleansed" for use on the audit

The analytics chain is

understanding > cleansing > modeling > evaluation > deployment (audit plan)

anomalies

unusual or atypical items of audit interest in an overall data set

The final step in the data chain for auditors is to

use the knowledge as wisdom for the financial statement audit

It is important for the auditor to carefully consider the _____ of different types of data.

usefulness

Audit professionals must carefully consider the issue of

whether a source of data is verifiable or not