ADA - Audit Data Analytics Predictive Analytics Models Questions and Answers

Question 1

An audit team wants to develop a model that predicts the monetary value of expected sales for the next quarter based on historical sales data, seasonality, and recent marketing expenditures.
Which predictive analytics model would be most suitable for this task?

Accepted Answer

Regression Analysis

Answer

Clustering Analysis

Answer

Classification Analysis

Answer

Sequence Analysis

Question 2

An internal auditor is tasked with building a predictive model to identify which employee expense reports are most likely to be fraudulent. The model needs to categorize each new report as either 'high-risk' or 'low-risk'. Which of the following models is the most appropriate choice?

Accepted Answer

Classification

Answer

Time-Series Forecasting

Answer

Linear Regression

Answer

Outlier Detection

Question 3

Which of the following scenarios is the BEST application of time-series forecasting in an audit context?

Accepted Answer

Establishing an expected monthly revenue baseline to identify significant anomalies in the current year.

Answer

Grouping customers into segments based on purchasing behavior.

Answer

Predicting the probability that a specific sales invoice is fraudulent.

Answer

Identifying the root cause of inventory shortages from the previous year.

Question 4

An auditor is using logistic regression to develop a model that assesses the likelihood of a company defaulting on a loan. What type of output will this predictive model primarily generate?

Accepted Answer

A probability score between 0 and 1 indicating the likelihood of default.

Answer

A continuous value representing the potential loss amount.

Answer

A cluster number grouping the company with similar firms.

Answer

A trend line forecasting future loan performance.

Question 5

When an auditor develops a supervised machine learning model to predict fraudulent transactions, what is the most critical requirement for the training data?

Accepted Answer

It must contain a large and representative set of both known fraudulent and non-fraudulent transactions.

Answer

It must consist only of data from the most recent fiscal period.

Answer

It must be completely anonymized to remove any potential bias.

Answer

It must include only transactions that have been previously flagged as high-risk by other methods.

Question 6

An auditor uses a predictive model to flag purchase orders that have a high probability of being unauthorized. The model identifies 100 high-risk POs. Upon manual review, the auditor finds that 15 of these were indeed unauthorized. In the context of evaluating the model's performance, what does the number '15' represent?

Accepted Answer

True Positives

Answer

False Positives

Answer

True Negatives

Answer

False Negatives

An audit team wants to develop a model that predicts the monetary value of expected sales for the next quarter based on historical sales data, seasonality, and recent marketing expenditures.Which predictive analytics model would be most suitable for this task?

An audit team wants to develop a model that predicts the monetary value of expected sales for the next quarter based on historical sales data, seasonality, and recent marketing expenditures.
Which predictive analytics model would be most suitable for this task?