Challenging data practices

Question 1

Role of professional accountants in data ethics

Answer 1

They must ensure practices comply with ethical standards, maintain transparency and avoid bias.

This demonstrates professional scepticism

Question 2

what do professional accountants need to challenge

Answer 2

The selection of data , capture of data using tools and analysis/ use of data.

Question 3

Why do accountants need to challenge selection, capture, analysis and use of data

Answer 3

To improve integrity- (create trust between accountant and stakeholder)

To improve decision making

To reduce risk e.g use of automation can cause risks

To reduce data bias

To ensure ethical, accurate outcomes (not challenging data can cause issues such as poor reporting and ethical breaches)

Question 4

Data bias def

Answer 4

Data is biased when it is not representative of the population that is being analysed.

It can be inherent in the data collected or caused by those analysing the data

Question 5

Types of data bias:

Automation bias

Answer 5

When a human assumes the information generated by automation is correct despite contradictrary information

Question 6

Types of data bias:

CONFIRMATION BIAS

Answer 6

favouring data supporting pre- existing beliefs and ignoring contradictory evidence.

e.g may assume an investment will succeed despite opposing evidence

Question 7

Types of data bias:

Selection bias

Answer 7

Data is not representative of the broader population/ market

e.g using financial data from only successful companies to predict trends, overlooking less successful companies leading to optimistic expectations.

Question 8

Types of data bias:

Algorithmic bias

Answer 8

Bias introduced by AI systems or algorithms due to biased historical data.

Bias in credit score algorithm may lead to loans being denied toc certain groups

Question 9

Types of data bias:

Omitted variable bias

Answer 9

A statistical model fails to include one or more variables in the calculation.

Question 10

Types of data bias:

Survivorship bias

Answer 10

A type of selection bias where only survivors of an event are included

E.g analysing only companies that survived an economic shock resulting in positive outlook