Audit Data Analytics

Question 1

What are the 4 primary reasons for audit data analytics (the art of discovering and analyzing patterns through analysis)

Answer 1

1) Risk assessment
2) tests of controls
3) substantive procedures
4) evaluating conclusion

Question 2

What is the five step approach to using ADAs?

Answer 2

1) Plan the audit data analytic
2) Access and prepare the data for use in an ADA
3) Consider the relevance and reliability of data used
4) Perform the ADA
5) Evaluate the results and decide whether the purpose and specific objective have been achieved

Question 3

In step #1 of the five step approach to using ADAs, what does step 1 consist of?

Answer 3

• Describe the objective the ADA
• Risk assessment: Obtaining an understanding of the entity including internal controls
• Substantive: Focus material misstatement at assurance level
• Brainstorm the use of the ADA with emphasis on where analytics might best be used

Question 4

In step #2 of the five step approach to using ADAs, what does step 2 consist of?

What is ETL, what does it stand for?

Answer 4

Accessing and preparing the data for use in an ADA

• Consider the type of data:
• Structured- data conform to specified organization
• Semi-Structured- The data are tagged
• Unstructured- Data such as text, audio, or video
• Prepare the data for use in the ADA
• Extract- Where the extraction came from and from whom
• Transform- The process of cleaning the extracted data so that it can be appropriately analyzed
• Load- The process of uploading the cleaned data in the software that will be used to perform the ADA

Question 5

In step #3 of the five step approach to using ADAs, what does step 3 consist of?

What the six desired attributes of the data extracted?

Answer 5

Consider the relevance and reliability of the data used; desired attributes include:

1) Accuracy
2) Completeness- No omission
3) Consistency- data fields are well defined and managed
4) Freshness- data contain the most up-to-date changes
5) Timeliness- Data are available when needed
6) Clarity and relatedness- Data fields are clearly defined and related to the objective(s) being tested

Question 6

In step #4 of the five step approach to using ADAs, what does step 4 consist of?

Answer 6

Perform the ADA

• Identify and address notable items
• if there is large number- Group/filter and address risks of groups
• If there are small number- Use manual risk assessment procedures; further procedures should be responsive to risks

Question 7

In step #5 of the five step approach to using ADAs, what does step 5 consist of?

Answer 7

Evaluate the results and decide whether the purpose and specific objectives have been achieved

• Evaluate whether the ADA has been appropriately planned and performed
• Documentation- Document the performance and results of the ADA (including screenshots and graphics necessary)

Question 8

Is visualization a important part of data analytics?

Answer 8

Yes

- Use various types of graphics (charts, scatter diagrams, trend lines, tables, or combinations thereof)