ADA - Audit Data Analytics Descriptive Analytical Techniques Questions and Answers

Question 1

An auditor is analyzing a large dataset of journal entries to identify unusual patterns. Which of the following is a classic descriptive analytical technique used to detect anomalies by examining the frequency distribution of leading digits in numerical data?

Accepted Answer

Benford's Law

Answer

Benford's Law is a descriptive analytical technique that states the leading digits in many naturally occurring sets of numerical data follow a specific, predictable distribution. Auditors use it to identify anomalies or potential fraud when the observed digit frequencies deviate significantly from the expected pattern.

Question 2

During the risk assessment phase of an audit, an auditor calculates the mean, median, standard deviation, and range for employee travel and expense claims. These calculations are examples of which type of descriptive analytical technique?

Accepted Answer

Statistical Summaries

Answer

Calculating metrics like mean, median, standard deviation, and range are fundamental statistical summaries. In auditing, these descriptive statistics help to understand the characteristics of the data, identify the center and spread, and spot potential outliers for further investigation.

Question 3

Which of the following questions is best answered using descriptive analytical techniques?

Accepted Answer

What is the total amount of accounts receivable over 90 days past due?

Answer

Descriptive analytics focuses on summarizing historical data to answer the question 'What happened?'. Calculating the total of overdue accounts receivable is a direct summary of past events. The other questions relate to diagnostic ('why'), predictive ('what is the probability'), and prescriptive ('what is optimal') analytics, respectively.

Question 4

An auditor is conducting a review of a company's procurement process. They use data analytics to examine all purchase transactions for the past year and generate a report that groups purchases by vendor, highlighting the total amount spent per vendor. This process is an example of:

Accepted Answer

Data Aggregation and Summarization

Answer

Data aggregation and summarization are core descriptive analytical techniques. By grouping transactions by vendor and calculating totals, the auditor is summarizing historical data to provide a clear picture of past activities, which is the primary goal of descriptive analytics.

Question 5

When performing descriptive analytics, an auditor might use measures of central tendency and measures of dispersion. Which of the following are both measures of dispersion?

Accepted Answer

Range and Standard Deviation

Answer

Measures of dispersion describe the spread or variability of a dataset. The range (difference between the maximum and minimum values) and standard deviation (a measure of the amount of variation from the mean) are both key measures of dispersion. Mean, median, and mode are measures of central tendency.

ADA - Audit Data Analytics Certification Practice Test

ADA - Audit Data Analytics Certification Practice Test

ADA - Audit Data Analytics Descriptive Analytical Techniques Questions and Answers