Final

Question 1

3 elements to an audit procedure

Answer 1

Nature- why we perform audit procedures
Extent- how much we can test
Timig- How often to run the procedure

Question 2

Computer assisted audit techniques (CAAT)

Answer 2

Automated scripts that contain data analytics procedures; used to validate data and test controls

Question 3

Descriptive analytics

Answer 3

Summarize activity or master data elements based on certain attributes
Looking at past

Question 4

Diagnostic analytics

Answer 4

Trying to understand what is going to happen

Looking for correlations or patterns of interest in the data

Question 5

Predictive analytics

Answer 5

Auditor attempts to find hidden patterns or variables linked to abnormal behavior

Question 6

Prescriptive analytics

Answer 6

Identify a course of action for auditor to take based on actions taken in previous similar situations

Question 7

Fuzzy matching

Answer 7

Finds correspondences between portions of text of other entries

Question 8

Internal audit advantages

Answer 8

Leads the way for audit analytics
Less restrictions
Easier to implement
Familiar with organization
Easier for them to tell the firm issues with the firm

Question 9

Systems triangle and risks of each

Answer 9

People risk: putting in a number wrong
Processes: segregation of duties violation. Downside: requires more people
Technology: system failure. Security cameras, video monitoring.

Question 10

Data warehouse advantages

Answer 10

Faster
No screw up (operational is at high risk for screw ups)
Enough data but not too much (Information overload)

Question 11

Residual Risk

Answer 11

Risk remaining after controls are put in place. The risk we care about.

Question 12

Work paper components

Answer 12

Audit procedures
IT doc and flow charts
Database maps, data dictionaries
Parameters/Variables about existing controls
Data extracts- evidence

Question 13

Descriptive CAATs

Answer 13

Age analysis
Sorting
Summary statistics (Mean, median)
Sampling

Question 14

Diagnostic CAATs

Answer 14

Z-score
Benford's law
Drill-down
Exact/fuzzy matching
Clustering
Stratification

Question 15

Predictive CAATs

Answer 15

Regression
Classification- predicts a category for record
Probability
Sentiment analysis

Question 16

Prescriptive CAATs

Answer 16

What if analysis
Applied statistics
Artificial intelligence

Question 17

Drill down

Answer 17

Double clicking a value to see the underlying transactions

Explores details behind values

Question 18

Sequence check

Answer 18

Detects gaps in records and duplicates entries

Makes sure all transactions are accounted for

Question 19

Artificial intelligence

Answer 19

[Computers] use observations of past actions to predict future actions for similar events

Question 20

Probability CAAT

Answer 20

Uses a rank score to evaluate strength of classification

Question 21

Performance metrics

Answer 21

Any number used to measure performance at a company

Question 22

Digital dashboard

Answer 22

An interactive report showing the most important metrics to help users understand how a company or an organization is performing

Question 23

Balanced Scorecard

Answer 23

Created to identify the most important metrics to measure ad target goals to compare them against

Question 24

Balance Scorecard Components

Answer 24

Internal Business Process- Efficiency
Organizational Capacity- Knowledge and Innovation
Customer/Stakeholder- Satisfaction
Financial Stewardship- Financial performance

Question 25

Balanced Scorecard characteristics

Answer 25

Objectives- should be aligned with strategic goals of organization Measures- show how well organization is meeting objectives Initiatives- actions that an organization can take to move Targets- achievable goals toward the metrics

Question 26

Attack a model steps

Answer 26

Evaluate the assumptions Attack the question Look at/Challenge the Data. Is it representative? Methods- Regression issues: we only choose to use one method and could ignore the hidden variables

Question 27

KPI process

Answer 27

Identify what we are trying to measure. Ex. Customer satisfaction Look for benchmarks- Look at competitors, integrity Identify the specific goal. Come up with KPI and how it is measured. Identify what factors may drive

Question 28

homogeneous systems approach

Answer 28

All divisions and subsidiaries use a uniform installation of SAP

Question 29

heterogeneous systems approach

Answer 29

Attempt to integrate the existing systems of acquired companies and use translators to convert the output

Question 30

Systems translator software

Answer 30

Attempts to map the various tables and fields from the systems to create a data warehouse

Question 31

Audit data standards

Answer 31

Define common tables and fields needed by auditors to perform common audit tasks Make recommendations to ERP vendors on to standardize data output

Question 32

Set of Audit data standards

Answer 32

Base Standard- defines format for files and fields and master data General Ledger Standard- adds chart of accounts, source listings, trial balance, and GL Order to Cash Subledger Standard- focuses on sales orders, A/R, shipments, invoices, cash receipts Procure to Pay Subledger Standard- purchase orders Inventory Subledger Standard- product master data

Question 33

Audit plan elements

Answer 33

Methodology- directs audit work, PCAOB, COSO Scope of the audit- time, materiality Potential risk- Riskier audits require more procedures Procedures and specific tasks- necessary data/attributes Formal evaluation- risk score, judgement of "goodness", explain findings

Question 34

Continuous auditing

Answer 34

Process that provides real time assurance over business processes and systems

Question 35

Continuous monitoring

Answer 35

Constantly evaluates internal controls and transactions

Question 36

Continuous reporting

Answer 36

Reports on the status of the system so an auditor can know at any given time if it is operating in parameters set by management Makes sure rules are not violated, and alarm is accurate, not

Question 37

Production or live systems

Answer 37

Active systems that collect and report and are directly affected by current transactions

Question 38

Data warehouse

Answer 38

A repository of data accumulated from internal and external data sources to help management decision making

Question 39

Six types of audits

Answer 39

Process efficiency/effectiveness- done by Internal audit Governance, risk, and compliance Information technology- SOC 2, age, processing, speed Forensic- fraud Financial statement Operational- management

Question 40

Four factors that affect speed

Answer 40

Hardware Software Telecommunications Hackers

Question 41

Sentiment analysis

Answer 41

Evaluate text to predict positive or negative outcomes or look for potential bias on management's part

Question 42

Types of KPIs

Answer 42

``` Financial Perormance Customer Marketing Operational Employee Environmental/Social Sustainability ```

Question 43

KPI strategies

Answer 43

Work backwards from goal Think about how we can cluster KPIs. Focus on 3-5 things Be aware of lags, in terms of performance and data. Ex. Customer satisfaction will give us money, but it will take time.

Question 44

Data Governance

Answer 44

Who has the right to the data, to make a decision Accounting- financial data Human resources- Employee data Sales- customer data

Question 45

Power of data automation

Answer 45

Elimiate significant hours Create repeatable analysis Reduce human error