AIS Midterm Chapter 1

A recent study from McKinsey Global Institute estimates that Data Analytics could generate up to...

$3 trillion in value per year in just a subset of the total possible industries affected.

Audit firms are increasingly considering operational data such as manufacturing logs, customer relationship management data and supply chain data primarily to ______________________:

help companies refine their operations

Data Analytics & Big Data are sometimes used...

interchangeably

___________________ data might be used to address many of the questions facing financial reporting.

internal & external

Data Analytics aims to transform

raw data into knowledge to create value

An attempt to estimate or predict, for each unit, the numerical value of some variable using some type of statistical model would be called the _____________ approach.

regression

Which testing approach would be considered to be an attempt to identify similar individuals based on data known about them?

similarity matching

Data Analytics may use what source to assess the probability of a goodwill write-down, warranty claims or the collectibility of bad debts?

social media

In a significant paradigm shift, data analytics will allow auditors to:

stay engaged with clients beyond the audit

Data Analytics

the process of evaluating data with the purpose of drawing conclusons to adress bsuiness questions

A digital dashboard would be part of which step of the IMPACT cycle?

track outcomes

Accountants need to be able to

- articulate business problems - communicate with data scientists - draw conclusions - present in an accessible manner - develop an analytics mindset - data scrubbing & prep - data quality - descriptive analysis - etc

Which would not be considered as one of the seven skills that analytic-minded accountants should have?

- data description - data visualization & data reporting - defining and addressing problem - data scrubbing and prep - DATA DESCRIPTION

How does Data Analytics affect auditing?

- enhanced audit quality - allows auditors to stay beyond audit engagement and help managers make decisions - allows for enhanced audits, expanded services, and added value to clients

How does Data Analytics affect tax?

- help develop tax planning strategies - helps predict outcomes of decisions and helps managers understand tax consequences of international transactions & investments

How does Data Analytics affect financial reporting?

- improve quality of estimates & valuations--> AR, Inventory, PP&E - Managers will better understand the business environment - Analysts will identify risks & opportunities through internet searches & social media - Assess the probability of goodwill write-down, warranties, or collectibility of bad debts.

Financial accounting often has challenges with valuation and estimates in all but the following area:

-AR - Goodwill - Inventory - Cash - CASH

An attempt to assign each unit (or individual) in a population into a few categories would be called the _____________ approach.

Classification

After data analysts slice and dice the data, find correlations, ask ourselves further questions, ask colleagues what they think, and revise and rerun the analysis, what comes next in the IMPACT cycle?

Communicate insights

Data Visualization would be part of which step of the IMPACT cycle?

Communicate insights

How much money do college students spend on fast food a week ?

Dependent (responses)variable: amount spent Indep: how expensive? how healthy? how much income do they have? how close it it?

Step 4 of Impact Model: Address & refine results

Identify Issues with analyses, possible issues, and refine the model - ask further questions - explore the data - rerun analyses

Big Data

datasets that are too large and complex for businesses' existing systems to handle utilizing their traditional capabilities to capture, store, manage, and analyze these datasets

True or false: Data analytics involves only the analysis of unstructured data.

false

Traditional audit approaches tested data _____________ of the transactions; in contrast, audits that fully integrates big data and analytics will test the full _______________ of data.

sample, population

Data Analytics often involves...

the technologies, systems, practices, methodologies, databases, statistics, and applications used to analyze diverse business data to give organizations the information they need to make sound and timely business decisions

True or false: Data analytics expands auditors' capabilities in services like testing for fraudulent transactions.

true

As part of mastering the data, data analysts perform data ________________ to provide a sense of the reliability of the data.

validation and completeness testing

Companies use Data Analytics to discover the ...

various buying patterns of their customers, investigate anomalies that were not anticipated, forecast future possibilities, and so on

What are the three V's of big data?

volume- the sheer size of dataset velocity- speed of data processing variety- number of types of data

What is the Impact Model?

1. Identify the questions 2. Master the data 3. Perform test plan 4. Address & refine results 5. Communicate Insights 6. Track Outcomes repeat

Which testing approach would be considered to be an attempt to discover associations between individuals based on transactions involving them?

Co- occurrence grouping

Step 5 of Impact Model: Communicate Insight

Communicate effectively using clear language and visualizations - dashboards - static reports - summaries

Step 6 of Impact Model: Track Outcomes

Follow up on results of the analysis - how frequently should analysis be performed - have the analytics changed - what are the trends?

Asking questions like "Are our customers paying us in a timely manner" would be the first step in which of the following processes?

IMPACT Cycle

Step 2 of Impact Model: Master the Data

Know what data are available and how they relate to the problem - Internal ERP systems - External networks & data warehouses - Data Dictionaries - E,T,L - Data Validation & completeness - Data Normalization - Data prep & scrubbing

Reviewing data availability in a firm's internal and external systems would be an example of which step in the IMPACT cycle?

Master the Data

According to the textbook, Data Analytics can be applied to taxes by helping to predict the tax consequences of a potential international transaction, a proposed merger or acquisition or ___________.

R&D investment

Step 3 of Impact Model: Perform test plan

Select an appropriate model to find target variable - classification - regressions - similarity matching - clustering -co-occurrence grouping - profiling

Step 1 of Impact Model: Identify the Questions

Understand the business problems that need to be addressed

The Forbes Insight/KPMG report, "Audit 2020: A Focus on Change.", found that the vast majority of survey respondents believe that technology will enhance the quality, transparency, and ____________ of the audit.

accuracy

In which step of the IMPACT cycle do data analysts slice and dice the data, find correlations, ask ourselves further questions, ask colleagues what they think, and revise and rerun the analysis?

address & refine results

Data sets that are too large and complex for businesses' existing systems to handle are called

big data

Which testing approach would be considered to be an attempt to divide individuals (like customers) into groups (or clusters) in a useful or meaningful way?

clustering

The firm practice of monitoring competitors, customers and suppliers to better understand its opportunities and threats is called __________.

data analytics

The real value inherent in data comes from ____________, discovering the various buying patterns of customers, investigating anomalies that were not predicted in firm operations, forecasting future demand and supply and so on.

data analytics