ADA Risk Assessment & Control Testing 2

Question 1

Under SAS 145 (AU-C 315), which set of factors does the auditor use to place a risk on the spectrum of inherent risk?

Accepted Answer

Complexity, subjectivity, change, uncertainty, and susceptibility to management bias or fraud

Answer

SAS 145 lists these inherent risk factors to assess the likelihood and magnitude of misstatement.

Question 2

An auditor runs an analytic that matches the user ID that created a new vendor to the user ID that approved payments to that vendor. What is this procedure mainly testing?

Accepted Answer

Segregation of duties

Answer

The same user creating and paying a vendor indicates a segregation-of-duties conflict.

Question 3

Which data analytic best tests the operating effectiveness of an automated three-way match control over the full population?

Accepted Answer

Reperforming the match of purchase orders, receiving reports, and invoices for all paid invoices

Answer

Reperformance across the full population directly shows whether the control worked as designed.

Question 4

An auditor applies Benford's Law to expense amounts during risk assessment. What is the analysis designed to reveal?

Accepted Answer

First-digit distributions that deviate from expectation, which may indicate fabricated or manipulated amounts

Answer

Benford's Law flags unusual digit frequencies that can signal invented or altered numbers.

Question 5

An ADA run over the full sales population flags 140 transactions as outliers. What is the appropriate next step?

Accepted Answer

Investigate the outliers, possibly in groups, to determine whether they are misstatements or control deviations

Answer

The AICPA ADA guide requires the auditor to evaluate flagged items rather than accept or dismiss them automatically.

ADA - Audit Data Analytics Certification Practice Test

ADA - Audit Data Analytics Certification Practice Test

ADA Risk Assessment & Control Testing 2