Question 1

Some key issues to consider when planning an audit data analytics application are:

Accepted Answer

A) What financial statement items, accounts or disclosures and related assertions are being audited? 
B) What is the overall purpose of the audit data analytics application and how will it contribute to the balance of the audit? For example, is audit data analytics being used as a risk assessment procedure or as a substantive test? 
C) What audit data analytics tool is best suited for the audit purpose? For example, which techniques, tools, graphics, tables or other analytical techniques should be used. 
D) All these answer choices are correct. 
A) What financial statement items, accounts or disclosures and related assertions are being audited? 
B) What is the overall purpose of the audit data analytics application and how will it contribute to the balance of the audit? For example, is audit data analytics being used as a risk assessment procedure or as a substantive test? 
C) What audit data analytics tool is best suited for the audit purpose? For example, which techniques, tools, graphics, tables or other analytical techniques should be used. 
D) All these answer choices are correct.

Question 2

AU-C 315, Understanding the Entity and Its Environment, and Assessing the Risks of Material Misstatement, defines risk assessment procedures as _______.

Accepted Answer

A) audit procedures performed to obtain an understanding of the auditor and its environment, including the entity's internal control, to identify and assess the risk of material misstatement at the financial statement level and relevant assertion levels, whether due to error or fraud 
B) audit procedures performed to obtain an understanding of the entity and its environment, including the entity's internal control, to identify and assess the risk of material misstatement, at the financial statement level and relevant assertion levels - whether due to error or fraud 
C) any procedure that involves international currency transactions 
D) any procedure that was performed by the prior auditor, which is repeated by the current auditor 
A) audit procedures performed to obtain an understanding of the auditor and its environment, including the entity's internal control, to identify and assess the risk of material misstatement at the financial statement level and relevant assertion levels, whether due to error or fraud 
B) audit procedures performed to obtain an understanding of the entity and its environment, including the entity's internal control, to identify and assess the risk of material misstatement, at the financial statement level and relevant assertion levels - whether due to error or fraud 
C) any procedure that involves international currency transactions 
D) any procedure that was performed by the prior auditor, which is repeated by the current auditor

Question 3

The next step after visually observing a linear relationship _______.

Accepted Answer

A) is to observe more data sets to look for different patterns 
B) is to confirm the relationship with management 
C) is to confirm by estimating a linear regression 
D) is to confirm by estimating a slope line intercept value 
A) is to observe more data sets to look for different patterns 
B) is to confirm the relationship with management 
C) is to confirm by estimating a linear regression 
D) is to confirm by estimating a slope line intercept value

Question 4

An issue that may affect a regression analysis used by an auditor as part of audit data analytics is _______.

Accepted Answer

A) materiality 
B) seasonality 
C) faithful representation 
D) uniformity 
A) materiality 
B) seasonality 
C) faithful representation 
D) uniformity

Question 5

Substantive tests of details may involve _______.

Accepted Answer

A) matching information in the accounting records with information on underlying documents 
B) testing of internal controls 
C) the clients legal counsel 
D) the approval of senior management 
A) matching information in the accounting records with information on underlying documents 
B) testing of internal controls 
C) the clients legal counsel 
D) the approval of senior management

Question 6

Which of the following is a step associated with accessing and preparing data for audit data analytics (ADA)?

Accepted Answer

A) Checking the completeness of the data set to be used for ADA 
B) Ensuring the match of ADA data with the balance sheet 
C) Presenting a data set or key information as a chart or other image 
D) Matching ADA with the general ledger 
A) Checking the completeness of the data set to be used for ADA 
B) Ensuring the match of ADA data with the balance sheet 
C) Presenting a data set or key information as a chart or other image 
D) Matching ADA with the general ledger

Question 7

The auditor should always evaluate evidence _______.

Accepted Answer

A) with a questioning mind and attitude of professional skepticism 
B) under the assumption that all information is correct 
C) under the assumption that all information is incorrect 
D) after senior management has had a chance to review and approve it 
A) with a questioning mind and attitude of professional skepticism 
B) under the assumption that all information is correct 
C) under the assumption that all information is incorrect 
D) after senior management has had a chance to review and approve it

Question 8

Regression analysis is _______.

Accepted Answer

A) a non-statistical process which involves estimating a prediction equation that expresses an item of interest (commonly known as the y or dependent variable) in terms of other data fields (the x or independent variables). 
B) a statistical process which involves estimating a prediction equation that expresses an item of interest (commonly known as the y or dependent variable) in terms of other data fields (the x or independent variables). 
C) a non-statistical process which involves estimating a prediction equation that expresses an item of interest (commonly known as the x or dependent variable) in terms of other data fields (the y or independent variables). 
D) a statistical process which involves estimating a prediction equation that expresses an item of interest (commonly known as the x or dependent variable) in terms of other data fields (the y or independent variables). 
A) a non-statistical process which involves estimating a prediction equation that expresses an item of interest (commonly known as the y or dependent variable) in terms of other data fields (the x or independent variables). 
B) a statistical process which involves estimating a prediction equation that expresses an item of interest (commonly known as the y or dependent variable) in terms of other data fields (the x or independent variables). 
C) a non-statistical process which involves estimating a prediction equation that expresses an item of interest (commonly known as the x or dependent variable) in terms of other data fields (the y or independent variables). 
D) a statistical process which involves estimating a prediction equation that expresses an item of interest (commonly known as the x or dependent variable) in terms of other data fields (the y or independent variables).

Question 9

Some key questions that the AICPA Guide for Audit Data Analytics suggests that the auditor should address when evaluating the reliability of data used in an audit data analytics (ADA) application are:

Accepted Answer

A) What is the nature of the data? 
B) What is the source of the data? 
C) What is the process used to produce the data? 
D) All these answer choices are correct. 
A) What is the nature of the data? 
B) What is the source of the data? 
C) What is the process used to produce the data? 
D) All these answer choices are correct.

Question 10

Effective visualizations _______.

Accepted Answer

A) facilitate people making visual comparisons between data elements 
B) are generally understood by a smaller audience 
C) communicate a small amount of information efficiently 
D) are less likely to be remembered 
A) facilitate people making visual comparisons between data elements 
B) are generally understood by a smaller audience 
C) communicate a small amount of information efficiently 
D) are less likely to be remembered

Question 11

Which of the following is a risk associated with visualizations?

Accepted Answer

A) They do not provide precise figures or tests of statistical significance that are often needed in ADAs. 
B) They fail to communicate information efficiently. 
C) They use a lot of jargon. 
D) They are unlikely to be remembered. 
A) They do not provide precise figures or tests of statistical significance that are often needed in ADAs. 
B) They fail to communicate information efficiently. 
C) They use a lot of jargon. 
D) They are unlikely to be remembered.

Question 12

The auditor is most likely going to perform audit data analytics (ADA) as a substantive test when the auditor has performed tests of controls and concluded that the entity has _______.

Accepted Answer

A) strong information technology (IT) general controls, including strong access controls 
B) strong IT application controls related to the assertion being tested 
C) strong controls over electronic data interchange and the exchange of electronic information about a transaction between the client and its customers or suppliers. 
D) All these answer choices are correct. 
A) strong information technology (IT) general controls, including strong access controls 
B) strong IT application controls related to the assertion being tested 
C) strong controls over electronic data interchange and the exchange of electronic information about a transaction between the client and its customers or suppliers. 
D) All these answer choices are correct.

Question 13

To validate sales revenue and accounts receivable, the auditor could _______.

Accepted Answer

A) send confirmations to accounts payable holders 
B) attempt to reconcile the differences between gross and net sales 
C) use the allowance for doubtful accounts account as a substantive test 
D) request that the internal audit function sign off on its accuracy 
A) send confirmations to accounts payable holders 
B) attempt to reconcile the differences between gross and net sales 
C) use the allowance for doubtful accounts account as a substantive test 
D) request that the internal audit function sign off on its accuracy

Question 14

The auditor first obtains an understanding of the entity and its environment in order to identify misstatements and anomalies when performing audit data analytics (ADA) as which of the following procedures?

Accepted Answer

A) Risk assessment 
B) Auditing risk 
C) Material misstatement 
D) Control risk 
A) Risk assessment 
B) Auditing risk 
C) Material misstatement 
D) Control risk

Some key issues to consider when planning an audit data analytics application are:

AU-C 315, Understanding the Entity and Its Environment, and Assessing the Risks of Material Misstatement, defines risk assessment procedures as _______.

The next step after visually observing a linear relationship _______.

An issue that may affect a regression analysis used by an auditor as part of audit data analytics is _______.

Substantive tests of details may involve _______.

Which of the following is a step associated with accessing and preparing data for audit data analytics (ADA)?

The auditor should always evaluate evidence _______.

Regression analysis is _______.

Some key questions that the AICPA Guide for Audit Data Analytics suggests that the auditor should address when evaluating the reliability of data used in an audit data analytics (ADA) application are:

Effective visualizations _______.

Which of the following is a risk associated with visualizations?

The auditor is most likely going to perform audit data analytics (ADA) as a substantive test when the auditor has performed tests of controls and concluded that the entity has _______.

To validate sales revenue and accounts receivable, the auditor could _______.

The auditor first obtains an understanding of the entity and its environment in order to identify misstatements and anomalies when performing audit data analytics (ADA) as which of the following procedures?

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters

Exam 7: Data Analyticsoverview and Application

Some key issues to consider when planning an audit data analytics application are:

AU-C 315, Understanding the Entity and Its Environment, and Assessing the Risks of Material Misstatement, defines risk assessment procedures as _______.

The next step after visually observing a linear relationship _______.

An issue that may affect a regression analysis used by an auditor as part of audit data analytics is _______.

Substantive tests of details may involve _______.

Which of the following is a step associated with accessing and preparing data for audit data analytics (ADA)?

The auditor should always evaluate evidence _______.

Regression analysis is _______.

Some key questions that the AICPA Guide for Audit Data Analytics suggests that the auditor should address when evaluating the reliability of data used in an audit data analytics (ADA) application are:

Effective visualizations _______.

Which of the following is a risk associated with visualizations?

The auditor is most likely going to perform audit data analytics (ADA) as a substantive test when the auditor has performed tests of controls and concluded that the entity has _______.

To validate sales revenue and accounts receivable, the auditor could _______.

The auditor first obtains an understanding of the entity and its environment in order to identify misstatements and anomalies when performing audit data analytics (ADA) as which of the following procedures?

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters