ADA Data Interpretation & Reporting 2

Question 1

An auditor runs a full-population journal entry analysis and flags 4,800 entries posted on weekends. What is the most appropriate next step?

Accepted Answer

Refine the criteria or stratify the results to isolate entries with higher risk characteristics

Answer

Large exception volumes often contain false positives, so auditors refine criteria or group results before investigating.

Question 2

In a substantive analytical procedure, the difference between the recorded amount and the auditor's expectation exceeds the threshold. What must the auditor do?

Accepted Answer

Investigate the difference through inquiry and corroborating evidence

Answer

Differences above the threshold require investigation, with management explanations corroborated by other evidence.

Question 3

Which visualization is best suited to show how monthly revenue compares with prior-year months to spot an unusual spike?

Accepted Answer

Line chart with both years plotted

Answer

Line charts display trends over time and make period-over-period deviations easy to see.

Question 4

A regression model used to build an expectation for payroll expense has an R-squared of 0.35. How should the auditor interpret this?

Accepted Answer

The model explains relatively little of the variation, so the expectation may lack precision

Answer

A low R-squared means the predictors explain little of the variance, which weakens the precision of the expectation.

Question 5

Under the AICPA Guide to Audit Data Analytics, why is it important to document the parameters and filters applied in an ADA?

Accepted Answer

So the procedure can be reperformed and the basis for conclusions understood

Answer

Documentation must allow an experienced auditor to understand the nature, timing, extent and results of the procedure.

ADA - Audit Data Analytics Certification Practice Test

ADA - Audit Data Analytics Certification Practice Test

ADA Data Interpretation & Reporting 2