Chapter 10 AIS

The data analytics skill sets that should be developed are all but the following:

Decision making Knowledge of audit data standards

According to the textbook, audit data standards include all but the following benefits to accountants and auditors.

Lends itself to analysis by managerial accountants seeking to lower costs Is less expensive to implement and use. Is useful for those preparing tax returns

True or false: Auditors may monitor blogs and social media to assess the probability of a goodwill write-down.

True

The first step in the AMPS model is to _____.

ask the question

The analysis needed to address the question, 'Did return on assets improve or decline last year?', is _____ analysis.

descriptive

The analysis needed to address the question, 'Did we make a profit last year?', is _____ analysis.

descriptive

Addressing the question, 'Why did advertising expense increase, but sales increase', is an example of _____ analysis.

diagnostic

Addressing the question, 'Why did sales, general and administrative expense increase relative to the industry', is an example of _____ analysis.

diagnostic

Looking for anomalies and outliers are specific types of ______ analysis employed.

diagnostic

A study from McKinsey Global Institute estimates that Big Data could generate up to $_______________ trillion in value per year in just a subset of industries impacted.

3

Data analytics professionals spend up to _______________% of their time cleaning data for analysis?

90

Audit data standards were developed by the following party to facilitate audits.

American Institute of Certified Public Accountants

Which party would have the most interest in monitoring blogs and social media to assess the probability of the collectibility of bad debts?

Company accountant

ETL stands for which process for scrubbing raw data to make it ready for analysis?

Extract, Transform, and Load

True or false: Audit data standards are a set of data standards in preparation for the internal audit.

False Reason: Audit data standards are a set of data standards for the external audit.

True or false: Audits do not provide value beyond the financial perspective and providing assurance.

False Reason: Audits not only yield important findings from a financial perspective, but also information that can help companies refine processes, improve efficiency and anticipate future problems.

True or false: Data analytics allows auditors to vastly expand sampling beyond current traditional sample sizes, but does not allow the ability to test the full population of transactions.

False Reason: Data analytics allows auditors to vastly expand sampling beyond current traditional sample sizes and the ability to test the full population of transactions.

True or false: Data analytics comes up with computer algorithms that make decisions automatically without human intervention.

False Reason: Data analytics are suggestive. They examine raw data, remove excess noise, and organize the data with the purpose of assisting with decision making.

True or false: In general, data analytics requires the auditor to pull data at the client site before an external audit is completed.

False Reason: With data analytics, auditors will be able to work from anywhere, anytime, without the need to pull data at the client site.

According to the textbook, audits are expected to provide all but the following above and beyond the assurance perspective.

Help companies reduce future audit fees

True or false: Data analytics is defined as the science of examining raw data (now often Big Data), removing excess noise from the dataset, and organizing the data with the purpose of drawing conclusions for decision making.

True

True or false: One reason for the paradigm shift suggests that auditors will stay engaged with clients beyond the audit since data analytics allows them to offer value to their clients.

True

True or false: The phrase "Your data won't speak unless you ask it the right data analysis questions" really speaks to the expertise the accountant can offer by asking questions that are answerable by data.

True

Diagnostic analysis addresses which of the following questions?

Why did it happen?

The more _____ the question is, the better chance it has of being answered.

narrow

The AMPS model is performed ______ .

once or many times to address questions.

Classification and regression are specific types of ______ analysis employed.

predictive

Forecasting whether a company will go bankrupt is an example of ______ analysis.

predictive

The analysis needed to address the question, 'Can we forecast whether the company will have a profit next year?', is _____ analysis.

predictive

The analysis needed to address the question, 'Will these financial statements need to be restated?', is _____ analysis.

predictive

Addressing the question, "What should we do, based on what we expect will happen" is an example of ______ analysis.

prescriptive

The analysis needed to address the question, 'How can revenues be maximized if our employees go on strike?', is _____ analysis.

prescriptive

The analysis needed to address the question, 'What level of sales is needed to breakeven?', is _____ analysis.

prescriptive

According to the textbook, companies are empowered by using data analytics to do all but the following:

prevent fraud