An auditor is using audit data analytics (ADA) to identify high-risk transactions in the revenue cycle. The auditor visualizes the data and notices a cluster of sales transactions posted on Sundays, when the business is closed. This is an example of:

Answer options:

Conclusive evidence of fraud.

A control deficiency in the IT system.

Notable items requiring further investigation.

Material misstatement.

How to approach this question

Understand ADA terminology. Anomalies are 'notable items' until proven otherwise.

Full Answer

C.Notable items requiring further investigation.✓ Correct

Notable items requiring further investigation.

In the context of Audit Data Analytics (ADA), items that stand out or deviate from expectations (like sales on a closed day) are classified as 'notable items'. The auditor must then perform procedures to determine if they represent errors, fraud, or valid exceptions (e.g., online sales).

Common mistakes

Jumping to the conclusion of fraud before investigation.

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