ExpertCPA · Question 18 · Area II: Risk Assessment
An auditor is using Audit Data Analytics (ADA) to perform risk assessment procedures on the revenue cycle. The auditor creates a visualization plotting sales price per unit against quantity sold for all transactions. The auditor notices a cluster of transactions with high quantities and extremely low prices compared to the standard price list. What is the auditor's MOST appropriate next step?
An auditor is using Audit Data Analytics (ADA) to perform risk assessment procedures on the revenue cycle. The auditor creates a visualization plotting sales price per unit against quantity sold for all transactions. The auditor notices a cluster of transactions with high quantities and extremely low prices compared to the standard price list. What is the auditor's MOST appropriate next step?
Answer options:
Immediately conclude that revenue is materially misstated.
Exclude these transactions from the population as outliers to normalize the data.
Investigate the identified transactions to determine if they represent valid discounts, errors, or potential fraud.
Increase the control risk assessment for revenue to maximum.
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