ADA - Audit Data Analytics Assessing Data Reliability Questions and Answers

Question 1

An auditor is using Audit Data Analytics (ADA) to test the completeness of a client's sales transaction data. Which of the following procedures would be most effective for this purpose?

Accepted Answer

Comparing the sequence of sales invoice numbers in the sales journal to the sequence of shipping document numbers.

Answer

To test for completeness, the auditor needs to ensure that all transactions that should have been recorded are, in fact, recorded. Comparing the sequence of shipping documents (which represent goods shipped) to the sales invoices (which represent goods billed) can identify shipments that were never invoiced, thus revealing incompleteness in the sales data.

Question 2

When evaluating the reliability of data for use in an ADA, an auditor's assessment is primarily influenced by the:

Accepted Answer

Intended use of the data and the risk associated with its use.

Answer

The reliability of data is not an absolute concept but is assessed in the context of its intended use. According to guidance, the auditor determines if the data is fit for use given the audit's objectives and the risk of using insufficiently reliable data. A more extensive assessment is needed if the data is the sole source for significant findings.

Question 3

An internal auditor is preparing to use an ADA to analyze payroll data for a large multinational corporation. The data is extracted from multiple, disparate HR systems from different countries. Which of the following is the most critical first step in assessing the data's reliability?

Accepted Answer

Analyzing the metadata to understand the data definitions, formats, and sources across the different systems.

Answer

When dealing with data from disparate sources, the first step is to understand what the data represents. Analyzing the metadata provides insight into the structure, definitions, and potential inconsistencies (e.g., date formats, currency codes, data types) that must be addressed before the data can be considered reliable for analysis. This process, often part of data transformation, is crucial for ensuring consistency and comparability.

Question 4

Which of the following attributes is a primary component of data reliability, as defined in an audit context?

Accepted Answer

Completeness

Answer

In an audit environment, data reliability is consistently defined by its core attributes, which include accuracy, completeness, and applicability for the audit's purpose. Completeness ensures that all relevant records and fields are present and sufficiently populated. Visualization, velocity, and volume are characteristics of big data, not fundamental attributes of data reliability for an audit.

Question 5

An auditor obtains a data file of all purchase orders (POs) directly from the client's production ERP system via read-only access. The client's IT general controls are known to be strong. From a data reliability perspective, this data is generally considered more reliable than a spreadsheet of POs provided by the purchasing manager because:

Accepted Answer

Direct extraction from the source system with strong controls reduces the risk of undetected alteration.

Answer

The reliability of data is enhanced when it is obtained directly by the auditor from a system with strong internal controls. This method minimizes the risk that the data could be manipulated or altered by management or staff before being provided to the auditor. A spreadsheet provided by an employee has a higher risk of intentional or unintentional modification.

ADA - Audit Data Analytics Certification Practice Test

ADA - Audit Data Analytics Certification Practice Test

ADA - Audit Data Analytics Assessing Data Reliability Questions and Answers