ACCT-4301 Exam 2 TTU Questions and Correct Answers

What is data analytics? Process of gathering and analyzing data and then using the results to make better decisions Descriptive analytics Reporting of past events to characterize what has happened Diagnostic analytics Provides insight about trends - cutting data in different ways for additional insight Predictive analytics Extract information, apply assumptions, and draw correlations to predict future outcome and trends Prescriptive analytics Analysis that tests various scenarios to evaluate which course of action would lead to the best potential outcome and/or predictions How does data analytics relate to financial statement audits and analytical procedures -Can be used by consultants, tax professionals, internal auditors, management, and external auditors -Analytical procedures performed by external auditors is essentially a form of data analytics -It is absolutely imperative that you develop skills to interpret data and detect patters that are consistent as well as inconsistent with expectations Trend analysis Looking at performance, such as sales and profits, over a period of time, to see direction rather than one isolated point in time. Ratio analysis Comparison across time or to a benchmark; look at relationships between financial statement account or between an account and non financial data Reasonableness analysis Develop a model and test to form expectations Three objectives of internal control -Reliability, timeliness, transparency of internal and external, non financial and financial reporting -Effectiveness and efficiency of operations, including safeguarding of assets -Compliance with applicable laws and regulations Types of controls -Procedures designed and implemented to prevent an error or fraud -Procedures designed and implemented to detect an error or fraud