AIS Chp 10

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

False

Big Data - Veracity

Quality of data

Data analytics

The science of examining raw data with the purpose of drawing conclusions about that information

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

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

Data analytics professionals spend up to ______% of their time cleaning data for analysis.

90

AMPS

Ask the question Master the data Perform the analysis Share the story

Analytic mindset

Ask the right questions Extract, transform, and load relevant data Apply appropriate data analytic techniques Interpret and share the results with stakeholders

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

False

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

False

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

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

False

The data analytics skill sets that should be developed are all but the following: a. Acquiring/cleansing data b. Decision making c. Creating data structures/models d. Mining/Analyzing data

b. Decision making

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

3

Extract, Transform, and Load (ETL)

A common strategy for drawing information from multiple sources by extracting data from its home database, transforming and cleansing it to adhere to common data definitions, and then loading it into the data warehouse.

Big Data - Velocity

Speed data has been generated

Big Data - Variety

Structured Data: highly organized Unstructured Data: data without internal organization Semi-Structured: elements of both structured and unstructured

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

Four V's of Big Data

Volume, Velocity, Variety, Veracity

Big Data

a broad term for datasets so large or complex that traditional data processing applications are inadequate.

cording to the textbook, audit data standards include all but the following benefits to accountants and auditors. a. Lends itself to analysis by managerial accountants seeking to lower costs b. Reduces the time and effort involved in accessing data c. Interacts well with XBRL GL standards d. Facilitates testing of the full population of transaction

a. Lends itself to analysis by managerial accountants seeking to lower costs

Descriptive analysis addresses which of the following questions? a. What happened? b. Why did it happen? c. What should we do based on what we expect will happen? d. Will it happen in the future?

a. What happened?

The more _____ the question is, the better chance it has of being answered. a. narrow b. broad c. interesting

a. narrow

Classification and regression are specific types of ______ analysis employed. a. predictive b. diagnostic c. prescriptive d. descriptive

a. predictive

Forecasting whether a company will go bankrupt is an example of ______ analysis. a. predictive b. prescriptive d. descriptive c. diagnostic

a. predictive

Addressing the question, "What should we do, based on what we expect will happen" is an example of ______ analysis. a. prescriptive b. descriptive c. predictive d. diagnostic

a. prescriptive

According to the textbook, companies are empowered by using data analytics to do all but the following: a. prevent fraud b. discover various patterns c. investigate anomalies d. forecast future behavior

a. prevent fraud

Which party would have the most interest in monitoring blogs and social media to assess the probability of the collectability of bad debts? a. Customers b. Company accountants c. Stock Exchange d. Suppliers

b. Company accountants

According to the textbook, audit data standards include all but the following benefits to accountants and auditors. a. Reduces time and effort involved in accessing data b. Is less expensive to implement and use. c. Works well with standard audit and risk analytic tests d. Allows software vendors to produce data extraction for those that follow audit data standards (ADS)

b. Is less expensive to implement and use.

The analysis needed to address the question, 'Will these financial statements need to be restated?', is _____ analysis. a. descriptive b. predictive c. diagnostic d. prescriptive

b. predictive

Audit data standards were developed by the following party to facilitate audits. a. Securities and Exchange Commission b. Public Company Accounting Oversight Board c. American Institute of Certified Public Accountants d. New York Stock Exchange

c. American Institute of Certified Public Accountants

The data analytics skill sets that should be developed are all but the following: a. Creating data structures/models b. Acquiring/cleansing data c. Knowledge of audit data standards d. Mining/Analyzing data

c. Knowledge of audit data standards

The analysis needed to address the question, 'Did return on assets improve or decline last year?', is _____ analysis. a. diagnostic b. prescriptive c. descriptive d. predictive

c. descriptive

Addressing the question, 'Why did sales, general and administrative expense increase relative to the industry', is an example of _____ analysis. a. predictive b. prescriptive c. diagnostic d. descriptive

c. diagnostic

The AMPS model is performed ______ . a. once to comprehensively address all questions b. many times c. once or many times to address questions.

c. once or many times to address questions.

The analysis needed to address the question, 'Can we forecast whether the company will have a profit next year?', is _____ analysis. a. diagnostic b. prescriptive c. predictive d. descriptive

c. predictive

The analysis needed to address the question, 'How can revenues be maximized if our employees go on strike?', is _____ analysis. a. predictive b. descriptive c. prescriptive d. diagnostic

c. prescriptive

The analysis needed to address the question, 'What level of sales is needed to breakeven?', is _____ analysis. a. diagnostic b. predictive c. prescriptive d. descriptive

c. prescriptive

The first step in the AMPS model is to _____. a. ask management what questions they have b. address the question c. assess the data d. ask the question

d. ask the question

Counts, totals and sums are specific types of ______ analysis employed. a. predictive b. diagnostic c. prescriptive d. descriptive

d. descriptive

The analysis needed to address the question, 'Did we make a profit last year?', is _____ analysis. a. diagnostic b. prescriptive c. predictive d. descriptive

d. descriptive

Addressing the question, 'Why did advertising expense increase, but sales increase', is an example of _____ analysis. a. prescriptive b. predictive c. descriptive d. diagnostic

d. diagnostic

Looking for anomalies and outliers are specific types of ______ analysis employed. a. predictive b. prescriptive c. descriptive d. diagnostic

d. diagnostic

Optimization and what-if scenarios are specific types of ______ analysis employed. a. descriptive b. predictive c. diagnostic d. prescriptive

d. prescriptive

Audit Data Standards

developed by AICPA for data file and fields typically needed to support an external audit

Big Data - Volume

sheer amount of data regardless of source