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DataAnalyticsforAccounting,1e(Richardson)

Chapter6AuditDataAnalytics

1)AsalesorderIDisauniqueidentifierforeachpurchaseorder.

Answer:FALSE

Difficulty:2Medium

Topic:WhentoUseAuditDataAnalytics

LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

2)Abusinessunitcodeisusedtoidentifythebusinessunit,region,andbranchatthelevelthatfinancialstatementsarebeingreconciled.

Answer:FALSE

Difficulty:2Medium

Topic:WhentoUseAuditDataAnalytics

LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology

3)AcustomeraccountIDidentifiesthecustomerfromwhompaymentisexpectedortowhomunusedcreditshavebeenapplied.

Answer:TRUE

Difficulty:2Medium

Topic:WhentoUseAuditDataAnalytics

LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology

4)Descriptiveanalyticssummarizesactivityormastersdataelementsbasedoncertainattributes.

Answer:TRUE

Difficulty:1Easy

Topic:WhentoUseAuditDataAnalytics

LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology

5)Theauditormayselectasampleoftheaccountstoverifythattheywereclosedandthedocumentationexists.

Answer:FALSE

Difficulty:3Hard

Topic:WhentoUseAuditDataAnalytics

LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

6)Onceanauditorhasabasicunderstandingofthedata,theycanthenperformdiagnosticanalyticswhichlookfordifferencesorpatternsofinterestinthedata.

Answer:FALSE

Difficulty:3Hard

Topic:WhentoUseAuditDataAnalytics

LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

7)Anauditorwillperformpredictiveanalyticsbeforediagnosticanalytics.

Answer:FALSE

Difficulty:1Easy

Topic:WhentoUseAuditDataAnalytics

LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

8)Prescriptiveanalyticsidentifiesacourseofactionfortheauditortotakebasedontheactionstakeninsimilarsituationsinthepast.

Answer:TRUE

Difficulty:1Easy

Topic:WhentoUseAuditDataAnalytics

LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

9)Samplingisusefulwhenyouhavemanualauditprocedures,suchastestingtransactiondetailsorevaluatingsourcedocuments.

Answer:TRUE

Difficulty:1Easy

Topic:DescriptiveAnalytics

LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

10)Monetaryunitsamplingallowsauditorstomitigaterisk.

Answer:FALSE

Difficulty:1Easy

Topic:DescriptiveAnalytics

LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

11)Benford'sLawpredictsthedistributionoffirstdigits.

Answer:TRUE

Difficulty:1Easy

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

12)Exactmatchingisawayinwhichauditorsjoindatabasetableswithaforeignkeyfromonetabletothesecondarykeyofanother.

Answer:FALSE

Difficulty:3Hard

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

13)Sequencechecksareusefulforfindinggaps,suchasamissingcheckinthecashdisbursementsjournal,orduplicatetransactions,suchasduplicatepaymentstovendors.

Answer:TRUE

Difficulty:1Easy

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

14)Regressionallowsanauditortopredictaspecificdependentvaluebasedonindependentvariableinputs.

Answer:TRUE

Difficulty:2Medium

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

15)Classificationinauditingistypicallyfocusedonriskassessment.

Answer:TRUE

Difficulty:1Easy

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

16)AuditDataStandards(ADS)weredevelopedbytheSEC.

Answer:FALSE

Difficulty:1Easy

Topic:WhentoUseAuditDataAnalytics

LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

17)Sortingindescendingordershowsthesmallestnumbervaluesfirst.Sortinginascendingordershowsthelargestvaluesfirst.

Answer:FALSE

Difficulty:1Easy

Topic:DescriptiveAnalytics

LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

18)Summarystatisticsprovideinsightintotherelativesizeofanumbercomparedwiththepopulation.

Answer:TRUE

Difficulty:1Easy

Topic:DescriptiveAnalytics

LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

19)Afuzzymatchisbasedonthesimilarityofthevalues.

Answer:TRUE

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

20)Artificialintelligenceisdesignedaroundtheideathatcomputerscanlearnaboutactionorbehaviorfromthepastandpredictthecourseofactionforthepresent.

Answer:FALSE

Difficulty:3Hard

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;BBIndustry

21)Whichofthefollowingstatementsistrue?

A)Monetaryunitsamplingismorelikelytopullaccountswithsmallbalances.

B)Monetaryunitsamplingallowsauditorstoevaluateaccountbalances.

C)Prescriptiveanalyticsattemptstofindhiddenpatternsorvariables.

D)Predictiveanalyticsusesmachinelearningandartificialintelligence.

Answer:B

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand;Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

22)Whichofthefollowingstatementsisfalse?

A)Predictiveanalyticsattemptstofindhiddenpatternsorvariables.

B)Regressionallowsanauditortopredictaspecificdependentvaluebasedonindependentvariableinputs.

C)Classificationinauditingismainlyfocusedonriskassessment.

D)Monetaryunitsamplingismorelikelytopullaccountswithsmallbalances.

Answer:D

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand;Remember

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

23)WhenworkingwithCAATs,whichofthefollowingstatementsisfalse?

A)Innerjoinwillshowonlytherecordsfrombothtablesthatmatchandexcludeeverythingthatdoesn'tmatch.

B)Leftjoinwillshowallrecordsfromthefirsttableandonlyrecordsfromthesecondtablethatmatch.

C)Rightjoinwillshowallrecordsfromthesecondtableandrecordsfromthefirsttablethatmatch.

D)Outerjoinwillshowallrecords,includingonlymatchingones.

Answer:D

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

24)Whichofthefollowingisthebestchoicefortheuniqueidentifierforeachsalesorder?

A)Item#

B)Shipping#

C)Purchase_Order#

D)Sales_Order#

Answer:D

Difficulty:2Medium

Topic:WhentoUseAuditDataAnalytics

LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

25)Whichofthefollowingisanexampleofdescriptiveanalytics?

A)Summarystatistics

B)Z-score

C)Similaritymatching

D)Fuzzymatching

Answer:A

Difficulty:2Medium

Topic:DescriptiveAnalytics

LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

26)Whichofthefollowingisnotanexampleofdescriptiveanalytics?

A)Drill-down

B)Ageanalysis

C)Sampling

D)Sorting

Answer:A

Difficulty:2Medium

Topic:DescriptiveAnalytics

LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

27)Whichofthefollowingisanexampleofpredictiveanalytics?

A)Classification

B)Z-score

C)Decisionsupportsystems

D)Diagnostic

Answer:A

Difficulty:2Medium

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

28)Whichofthefollowingisnotanexampleofpredictiveanalytics?

A)Classification

B)Regression

C)Probability

D)Artificialintelligence

Answer:D

Difficulty:1Easy

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

29)Whichtypeofauditanalyticsmightbeusedtosummarizeactivityormasterdatabasedoncertainattributes?

A)Prescriptiveanalytics

B)Predictiveanalytics

C)Diagnosticanalytics

D)Descriptiveanalytics

Answer:D

Difficulty:2Medium

Topic:DescriptiveAnalytics

LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

30)Whichtypeofauditanalyticsmightbeusedtodetectcorrelationsandpatternsofinterest?

A)Prescriptiveanalytics

B)Predictiveanalytics

C)Diagnosticanalytics

D)Descriptiveanalytics

Answer:C

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

31)Whichtypeofauditanalyticsmightbeusedtoidentifycommonattributesorpatternsthatmaybeusedtoidentifysimilaractivity?

A)Prescriptiveanalytics

B)Predictiveanalytics

C)Diagnosticanalytics

D)Descriptiveanalytics

Answer:B

Difficulty:2Medium

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

32)Whichtypeofauditanalyticsmightbeusedtorecommendactionbasedonpreviouslyobservedactions?

A)Prescriptiveanalytics

B)Predictiveanalytics

C)Diagnosticanalytics

D)Descriptiveanalytics

Answer:A

Difficulty:2Medium

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

33)Groupingbalancesbydateisreferredtoas________andisanexampleof________analytics.

A)ageanalysis;diagnostic

B)ageanalysis;descriptive

C)sorting;diagnostic

D)sorting;descriptive

Answer:B

Difficulty:2Medium

Topic:DescriptiveAnalytics

LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

34)Identifyingthelargestorsmallestvaluesisreferredtoas________andisanexampleof________analytics.

A)sorting;diagnostic

B)sorting;descriptive

C)summarystatistics;diagnostic

D)summarystatistics;descriptive

Answer:B

Difficulty:2Medium

Topic:DescriptiveAnalytics

LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

35)________allowsauditorstoevaluateaccountbalancesandisanexampleof________analytics.

A)Monetaryunitsampling;diagnostic

B)Monetaryunitsampling;descriptive

C)Randomsampling;diagnostic

D)Randomsampling;descriptive

Answer:B

Difficulty:2Medium

Topic:DescriptiveAnalytics

LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

36)________assignsavaluetoanumberbasedonhowmanystandarddeviationsitstandsfromthemeanandisanexampleof________analytics.

A)AZ-score;diagnostic

B)AZ-score;descriptive

C)Benford'sLaw;diagnostic

D)Benford'sLaw;descriptive

Answer:A

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

37)Exploringthedetailsbehindthevaluesisreferredtoas________andisanexampleof________analytics.

A)sorting;diagnostic

B)sorting;descriptive

C)drill-down;diagnostic

D)drill-down;descriptive

Answer:C

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

38)________identifiestransactionsoruserswithatypicalactivitybasedonthedistributionoffirstdigitsandisanexampleof________analytics.

A)Monetaryunitsampling;diagnostic

B)Monetaryunitsampling;descriptive

C)Benford'sLaw;diagnostic

D)Benford'sLaw;descriptive

Answer:C

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

39)Detectinggapsinrecordsandduplicateentriesisreferredtoas________andisanexampleof________analytics.

A)sequencecheck;diagnostic

B)sequencecheck;descriptive

C)fuzzymatching;diagnostic

D)fuzzymatching;descriptive

Answer:A

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

40)Groupingrecordsbynon-obvioussimilaritiesisreferredtoas________andisanexampleof________analytics.

A)clustering;diagnostic

B)clustering;predictive

C)classification;diagnostic

D)classification;predictive

Answer:A

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

41)Predictingspecificdependentvaluesbasedonindependentvariableinputsisreferredtoas________andisanexampleof________analytics.

A)regression;prescriptive

B)regression;predictive

C)classification;prescriptive

D)classification;predictive

Answer:B

Difficulty:2Medium

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

42)Usingarankscoretoevaluatethestrengthofclassificationisreferredtoas________andisanexampleof________analytics.

A)regression;prescriptive

B)regression;predictive

C)probability;prescriptive

D)probability;predictive

Answer:D

Difficulty:2Medium

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

43)Evaluatingthetoneoftexttoforecastanoutcomeisreferredtoas________andisanexampleof________analytics.

A)classification;prescriptive

B)classification;predictive

C)sentimentanalysis;prescriptive

D)sentimentanalysis;predictive

Answer:D

Difficulty:3Hard

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Apply

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

44)Usingobservationsofpastactionstopredictfutureactionsforsimilareventsisreferredtoas________andisanexampleof________analytics.

A)artificialintelligence;prescriptive

B)artificialintelligence;predictive

C)appliedstatistics;prescriptive

D)appliedstatistics;predictive

Answer:A

Difficulty:2Medium

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

45)Whichofthefollowingz-scoresislikelyanoutlierthatwarrantsfurtherscrutiny?

A)−2.1

B)0.0

C)1.75

D)3.2

Answer:D

Difficulty:2Medium

Topic:DiagnosticAnalyticsandBenford'sLaw

LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking

46)Whichtestingapproachisusefulindeterminingprocedurestofollowwhennewcreditaccountsareopened?

A)Appliedstatistics

B)Regression

C)Fuzzymatching

D)Classification

Answer:A

Difficulty:2Medium

Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics

LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics

Bloom

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