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