A3 - M9 Audit Data Analytics

Question 1

Amber is currently auditing Blissful Springs. Blissful Springs is a completely outdoor retail chain and does not typically have many, if any, sales during cold or rainy days. Amber wants to perform an audit data analytic that correlates sales with weather data. Which of the following approaches to obtaining the weather data would be the best way to enhance that data’s reliability?

A.Option A.
Amber should utilize an external government website that maintains weather data.

B.Option B.
Amber should request that Blissful Springs provide a report of daily weather information.

C.Option C.
Amber should obtain the weather data internal to Blissful Springs using query language.

D.Option D.
Amber should discuss with management weather patterns and impact and document the results.

Answer 1

Amber should utilize an external government website that maintains weather data. (external party)

Question 2

Jackson wants to present the findings of his audit data analytic to his manager. He has decided to run a simple linear regression analysis to determine if utility expenses correspond with daily temperatures. Which visualization technique will aid Jackson in presenting and reviewing this audit data analytic with his manager?

A.Option A.
Bar chart

B.Option B.
Pie chart

C.Option C.
Line chart

D.Option D.
Scatter plot

Answer 2

Scatter plot (simple linear regression allows to show relationship between variables and allows for regression lines to show direction and strength of correlation)

Option A comparative information as opposed to relationships

Option B proportional information as opposed to relationships

Option C Trend information opposed to relationshps

Question 3

Audit data analytics provide many benefits during the course of an audit. Which of the following is not a benefit of applying audit data analytics?

A.Option A.
Enhanced fraud detection.

B.Option B.
Simplifying the creation and documentation of workpapers.

C.Option C.
Expanded audit coverage through testing of full populations.

D.Option D.
Insights gained from evaluating metadata and relationships among data both internal and external to the firm.

Answer 3

Simplifying the creation and documentation of workpapers. (may create additional documentation to describe how it work in workpapers)

Question 4

Elizabeth is performing a classification analysis using past sales data. The data she is working with was sourced directly from a spreadsheet. She is currently reviewing the spreadsheet controls employed by the client for this data. Based on this, Elizabeth is currently performing which step of the audit data analytic process?

A.Option A.
Plan the audit data analytic.

B.Option B.
Perform the audit data analytic.

C.Option C.
Evaluate and address the outcomes of the audit data analytic.

D.Option D.
Review and analyze the relevance and reliability of the sourced data.

Answer 4

Review and analyze the relevance and reliability of the sourced data. (considered reliability procedure since performing data utilized in an audit data analytic) Spread sheet control review is the giveaway

Option A Execution of reliability comes after the audit data analytical planning process

Option B Performing the audit data analytic should not be performed until after reliability of the data is evaluated

Option C Results cannot be produced until reliability of data is confirmed

Question 5

Frank wants to evaluate Copeland Distributor’s year-end allowance for credit losses. Frank obtains a listing of all customers with open balances as of the end of the fiscal period. Frank decides to age the data to evaluate the reasonableness of the allowance for credit losses balance. What type of data analytic is Frank executing?

A.Option A.
Prescriptive analytic

B.Option B.
Predictive analytic

C.Option C.
Diagnostic analytic

D.Option D.
Descriptive analytic

Answer 5

Descriptive analytic (describes what happened within data. Aging data would summarize describe the data)

Option A would prescribe or recommend actions be taken based on advance analtyics to reach goals

Option B provides expected predicted outcomes based on historical data.

Option C Explains why something happened to the data like when going to mechanic

Question 6

As part of an ongoing audit, Rick is evaluating the amount of supplies expense recorded for the year under audit. Rick has decided to employ a regression analysis to estimate supplies expense utilizing hours worked and revenue as the independent variables. What type of data analytic is Rick executing?

A.Option A.
Descriptive analytic

B.Option B.
Predictive analytic

C.Option C.
Prescriptive analytic

D.Option D.
Diagnostic analytic

Answer 6

Predictive analytic (utilizing hours worked and revenue to predict the total supplies expense for the year)

Question 7

Which of the following is not a reason an auditor may apply audit data analytics (ADAs) when concluding an audit?

A.Option A.
To update existing analytics with numbers that were revised during the audit.

B.Option B.
To verify the assertions of accuracy and occurrence for all material transactions.

C.Option C.
To gain comfort that no material misstatements went unidentified during the audit.

D.Option D.
The auditor will have a deeper knowledge of the entity being audited and may reperform tests done in the risk assessment process.

Answer 7

To verify the assertions of accuracy and occurrence for all material transactions. (substantive procedures not ADA’s)

Question 8

Which of the following terms is used to describe the unique attribute that identifies a specific record in a table?

A.Option A.
A primary key

B.Option B.
A secondary key

C.Option C.
A foreign key

D.Option D.
A schema

Answer 8

A primary key (unique identifier allowing user to identify specific record in database which primary keys are required so table records are always uniquely identifiable)

Option B Non-identifying column (or column-set) used to find a row in a table serves as candidate key for primary key

Option C Colum or column group that link data between two tables

Option D Construction of database

Question 9

During the process of transforming raw data into information that can be used in a relational database, which of the following must be used to create a relationship between two tables?

A.Option A.
The primary key

B.Option B.
A foreign key

C.Option C.
A data dictionary

D.Option D.
A conceptual-level schema

Answer 9

A foreign key (links primary key in one table to another foreign primary key from another table)

Question 10

Which of the following are components of a relational database?

A.Option A.
Tables, class hierarchies, foreign key

B.Option B.
Tables, primary key, attributes

C.Option C.
Object classes, primary key, attributes

D.Option D.
Object classes, class hierarchies, foreign key

Answer 10

Tables, primary key, attributes

(attributes are columns and rows in a table, and primary keys are unique identifiers)

Question 11

Jerry is currently auditing a large retail firm. As part of the risk assessment process, Jerry wants to perform a sentiment analysis on social media posts about the organization. Jerry is utilizing what type of data?

A.Option A.
Structured data

B.Option B.
Unstructured data

C.Option C.
Spreadsheet data

D.Option D.
Data mart data

Answer 11

Unstructured data (bunch of different lines, tables, and images)

Structured data is excel, data mart data

Question 12

Elaine is currently auditing the payroll process at Vanderman Retailers. Vanderman currently outsources its payroll function to Pay Services. Elaine has decided to run a drill-down analysis on changes in values throughout the year and obtains all the necessary data from Pay Services. Which of the following would be the best way to evaluate the reliability of the data obtained for this analytic?

A.Option A.
Perform summary statistics on the data and review outcomes to learn whether they tie to auditor expectations.

B.Option B.
Request a SOC 1® report for Pay Services.

C.Option C.
Use confirmations to verify balances.

D.Option D.
Perform validation of sourced data through review of batch totals, hash totals, and record counts.

Answer 12

Request a SOC 1® report for Pay Services.

Question 13

Which of the following errors most likely would be detected by analyzing financial totals?

A.Option A.
A transposition error on one employee’s paycheck on a weekly payroll run.

B.Option B.
A missing digit in an invoice number in a batch of daily sales.

C.Option C.
A purchase order mistakenly entered into two different batches.

D.Option D.
Malfeasance resulting from a receivable clerk’s pocketing of a customer’s payment and altering of the related records.

Answer 13

A transposition error on one employee’s paycheck on a weekly payroll run. (manual cal for each transaction file compared to computerized generated)

Option C/D company should have controls to prevent

Question 14

Brian is currently auditing the fixed-assets process at a large manufacturing firm. He wants to run a simple diagnostic analytic on changes in the different asset types that make up the fixed-assets account. He wants to obtain reliable data to ensure that the analytic can be utilized as audit evidence. Which of the following types of data obtained by Brian would be considered the most reliable?

A.Option A.
Data obtained through verbal interviews with the fixed-assets manager.

B.Option B.
Digital copies of the invoices for all major fixed-assets purchases during the year provided by the fixed-assets manager.

C.Option C.
A spreadsheet obtained by Brian through a query of the fixed-assets database.

D.Option D.
A spreadsheet provided by the fixed-assets manager detailing all changes to the fixed-assets accounts during the year, including dates and values.

Answer 14

A spreadsheet obtained by Brian through a query of the fixed-assets database. (source data files directly obtained from source machine are more reliable than ones passed to the auditor by a client)

Question 15

Which of the following is accurate as it pertains to utilizing visualizations to present audit data analytics findings?

A.Option A.
When utilizing a graph, scaling is an appropriate consideration to avoid misinterpretation of differences.

B.Option B.
Visualizations should be used sparingly because they do not provide audit evidence.

C.Option C.
Visualizations are utilized for communicating findings and are not part of the analysis.

D.Option D.
The type of visualization utilized will not change how the results are interpreted.

Answer 15

When utilizing a graph, scaling is an appropriate consideration to avoid misinterpretation of differences. (Example starting at y or x axis as an example to avoid missing data variances)

Option B can lead to greater insights and understanding of outcomes of data analytics

Option C Part of analysis and communicating them

Option D pie chart vs line graph significantly changes how results are interpreted

Question 16

What is the best type of visualization to utilize when performing a trend analysis?

A.Option A.
Line chart

B.Option B.
Bullet chart

C.Option C.
Pie chart

D.Option D.
Scatter plot

Answer 16

Line chart (forward moving time concept)

Option B Used for variance anlaysis

Option C Shows proportional make up of population by class or by category

Option D Utilized for analyzing relationships