Module G Practice & Review Questions
When documenting an audit data analytic (ADA), an experienced auditor with no prior connection to the engagement should be able to understand all these elements of the ADA except
The software used in performing the ADA.
Proper order in performing ADA:
1. Plan the ADA 2. Access and prepare the data for the purpose of the ADA 3. Consider the relevance and the reliability of the data used. 4. Perform the ADA. 5. Evaluate the results and conclude on whether the purpose and specific objectives of performing the ADA have been achieved.
The automated approach to audit analytics can be delivered through
Continuous execution and repetitive analysis
Which of the following is correct regarding including client data in audit documentation for an issuer?
There is no specific requirement to include client data in auditing documentation.
The first step of planning an ADA is
Determine the overall purpose and specific objectives of the ADA.
Certain characteristics of data may affect the relevance and reliability of the data used in the ADA. The level of aggregation is one of these characteristics. Which of the following does not illustrate differing levels of aggregation? -Number of annual transactions compared to the number of weekly transactions -A consolidated statement compared to a single segment of a statement -A total account balance compared to a single transaction within that balance -All of the above illustrate differing levels of aggregation
All illustrate differing levels of aggregation
When auditing a client in the merchandising business, an auditor became concerned that the client was recording fraudulent credit sales. Which of the following procedures would have most likely alerted them to this potential fraud?
Analyzing cash receipts as a percentage of sales by month
Which of the following would occur during the planning stage of ADA?
Auditor must determine the nature, timing, and extent of the work to be performed in the ADA.
In determining the reliability of the data to be used by the audit team, an auditor discovers the data is controlled internally by the accounting department. Which of the following is the most likely step the auditor would take after learning of this information?
The auditor should consider obtaining information from a more reliable source before continuing with the ADA.
All of the following procedures are common uses of audit data analytics in risk assessment procedures except: -Analyzing trends in inventory costs. -Identifying sales that did not follow the typical three-way match control in the revenue cycle. -Comparing cash collections to sales invoices and discounts in the revenue cycle. -Calculating accounts receivable collection periods by region.
Comparing cash collections to sales invoices and discounts in the revenue cycle.
When identifying and assessing inherent risk through the use of audit data analytics, what type of analytic would an auditor most likely perform first?
Comparison of sales revenue to prior period and expectations.
Analysis of accounts receivable collection periods by region is most likely a part of which of the following types of ADA?
Risk assessment procedures.
Which of the following is not a typical problem found by auditors when cleansing client data for the purposes of performing an ADA?
Some fields may not be sorted in numerical order and require sorting for identification of outliers.
An auditor imports a client's purchasing cycle transactions for the purposes of testing authorization controls. Which of the following is true regarding the implementation of this audit data analytic?
Testing can be more efficiently conducted across 100% of transactions.
Which of the following is a common use of ADA in performing tests of controls?
The auditor performs journal entry exception testing for employee entry amount limits.
For documentation of an ADA to be considered sufficient, all the following should be recorded except? -Who reviewed work performed within the output of the ADA. -Who performed the work and created the output of the ADA. -The process used to produce the data examined. -Identifying characteristics of specific items or matters tested.
The process used to produce the data examined.
To determine the reliability of data, the auditor may consider all but which of the following?
Whether the auditor's system has been subject to reliability testing
