Question 1

An auditor is performing interim testing of accounts.Should these same accounts be tested again at year-end?

Accepted Answer

The answer of An auditor is performing interim testing of...

Question 2

While assessing the reliability of data used in performing _______, it is important that the auditor obtains an understanding of the system of internal control and performs tests of control.

Accepted Answer

The answer of While assessing the reliability of data used...

Question 3

Designing _______ includes identifying conditions relevant to the purpose of the test that constitute a misstatement in the relevant assertion.

Accepted Answer

The answer of Designing _______ includes identifying conditions relevant to...

Question 4

When tests internal controls do not support a previous conclusion about internal controls, the auditor should _______.
A)obtain assurances about internal control from senior management
B)reassess internal controls at a higher level
C)consider withdrawing from the engagement
D)lower inherent risk related to internal control

Accepted Answer

When tests of internal controls do not support a previous conclusion about internal controls, the auditor should reassess internal controls at a higher level (e.g. entity-level controls) to determine whether there are any deficiencies that could affect the overall control environment. It is not appropriate to simply obtain assurances from senior management, as this does not provide sufficient evidence. Withdrawing from the engagement would only be necessary if there were significant and pervasive deficiencies in internal controls that could not be remedied. Lowering inherent risk related to internal control would also not be appropriate, as the auditor's assessment of inherent risk should be independent of the assessment of internal controls.

Question 5

An auditor has determined through testing of controls, that his or her previously determined opinion on internal control is not accurate.What should the auditor consider doing?

Accepted Answer

The answer of An auditor has determined through testing of...

Question 6

The auditor is most likely going to perform audit data analytics (ADA) as a substantive test when the auditor has _______.
A)performed tests of controls and concluded that the entity has strong controls
B)performed tests of controls and concluded that the entity has weak controls
C)completed the audit and is ready to issue the audit report
D)confirmed the procedures to be conducted with the internal audit function

Accepted Answer

Audit data analytics (ADA) as a substantive test is more likely when strong controls are present, as it allows the auditor to rely on those controls and use ADA to efficiently gather substantive evidence.

Question 7

When using audit data analytics, the balances or transactions that do not meet the auditor's expectations are defined as _______.
[[ notable items]] | false positives | high margin items | material misstatements

Accepted Answer

The answer of When using audit data analytics, the balances...

Question 8

The type of procedure the auditor will consider performing in regards to data reliability is a key question to be addressed in evaluating the _______ used in audit data analytics.

Accepted Answer

The answer of The type of procedure the auditor will...

Question 9

Delta company has determined that, on average, it turns its receivables over 14.5 times per year.Last year its receivables turnover was 12.7.Calculate both year days in receivables, and indicate if this is a positive or negative trend.

Accepted Answer

The answer of Delta company has determined that, on average,...

Question 10

An auditor has sent out positive confirmations to a sample of accounts receivables customers.For confirmations that have not been returned, what should the auditor do to obtain assurance on these accounts?

Accepted Answer

The answer of An auditor has sent out positive confirmations...

Question 11

The concept of a roll-forward process relates to _______.
A)audit risk
B)inherent risk
C)the timing of audit procedures
D)invoicing the client for work yet to be performed

Accepted Answer

The roll-forward process is a procedure used by auditors to extend the time period under audit from the original balance sheet date to a later date of interest. This extension of the audit period requires the auditor to perform additional procedures to obtain sufficient and appropriate audit evidence as of the later date. The roll-forward process is related to the timing of audit procedures. Therefore, option C is the correct answer. The other options are unrelated to the roll-forward process.

Question 12

As part of audit data analytics (ADA), any values that are unacceptable variations should be treated as notable items and be investigated further according to the _______ to determine whether their unusual characteristics are acceptable.
[[ risk analysis decision tree]] | cluster analysis | polynomial regression decision tree | matching information in key data fields analysis

Accepted Answer

The answer of As part of audit data analytics (ADA),...

Question 13

_______ helps auditors to identify patterns and deviations from patterns and outliers in the analysis stage of an audit data analytics (ADA) procedure.

Accepted Answer

The answer of _______ helps auditors to identify patterns and...

Question 14

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

Accepted Answer

The allowance for doubtful accounts is directly related to accounts receivable and can be used as a substantive test to validate the accuracy of sales revenue and accounts receivable.

Quiz 7: Data Analyticsoverview and Application

An auditor is performing interim testing of accounts.Should these same accounts be tested again at year-end?

While assessing the reliability of data used in performing _______, it is important that the auditor obtains an understanding of the system of internal control and performs tests of control.

Designing _______ includes identifying conditions relevant to the purpose of the test that constitute a misstatement in the relevant assertion.

When tests internal controls do not support a previous conclusion about internal controls, the auditor should _______.

An auditor has determined through testing of controls, that his or her previously determined opinion on internal control is not accurate.What should the auditor consider doing?

The auditor is most likely going to perform audit data analytics (ADA) as a substantive test when the auditor has _______.

When using audit data analytics, the balances or transactions that do not meet the auditor's expectations are defined as _______. [[ notable items]] | false positives | high margin items | material misstatements

The type of procedure the auditor will consider performing in regards to data reliability is a key question to be addressed in evaluating the _______ used in audit data analytics.

Delta company has determined that, on average, it turns its receivables over 14.5 times per year.Last year its receivables turnover was 12.7.Calculate both year days in receivables, and indicate if this is a positive or negative trend.

An auditor has sent out positive confirmations to a sample of accounts receivables customers.For confirmations that have not been returned, what should the auditor do to obtain assurance on these accounts?

The concept of a roll-forward process relates to _______.

_______ helps auditors to identify patterns and deviations from patterns and outliers in the analysis stage of an audit data analytics (ADA) procedure.

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