Guide to Audit Data Analytics

Founded in 1887, the American Institute of Certified Public Accountants (AICPA) represents the CPA and accounting profession nationally and globally regarding rule-making and standard-setting, and serves as an advocate before legislative bodies, public interest groups and other professional organizations. The AICPA develops standards for audits of private companies and other services by CPAs; provides educational guidance materials to its members; develops and grades the Uniform CPA Examination; and monitors and enforces compliance with the accounting professions technical and ethical standards.  The AICPAs founding established accountancy as a profession distinguished by rigorous educational requirements, high professional standards, a strict code of professional ethics, a licensing status and a commitment to serving the public interest.

1 Introduction .01-.56


Objectives of This Guide 01-.02


Structure, Form, and Content of This Guide .03-.11


Considerations Regarding Examples in This Guide and Other Matters .12-.13


Relationship Between ADAs, CAATs, and Analytical Procedures .14-.16


Exercising Professional Judgment and Maintaining Professional Skepticism .17


Considerations in Determining Which ADA to Use to Meet the Objective of the Audit Procedure .18-.19


Using Graphics and Tables (Visualization) .20-.28


Graphics Often Linked With Particular ADAs .24


Matters to Consider Regarding Graphic Design .25-.28


Accessing and Preparing Data for Purposes of an ADA .29-.37


Accessing Data in a Format the Auditor Can Use .31-.33


Maintaining Data Security, Confidentiality, and Integrity .34-.35


Preparing the Data for Use .36-.37


Relevance and Reliability of Data .38-.45


Data Characteristics That May Affect Relevance and Reliability of Data .39


Relevance of Data .40-.41


Reliability of Data .42-.44


Possible Sequence of Procedures Regarding Data Relevance and Reliability .45


Addressing Circumstances in Which an ADA Identifies a Large Number of Items for Further Consideration .46-.47


Documenting the Procedures .48-.56


GAAS Requirements Regarding Documentation .48-.52


Screenshots of Graphics .53


Documenting Process to Address a Large Number of Items Warranting Further Consideration .54-.56


2 Using ADAs in Performing Risk Assessment Procedures and in Procedures to Assist When Forming an Overall Conclusion .01-.29


Matters Covered in This Chapter .01-.03


Specific Generally Accepted Auditing Standards Relevant to Use of ADAs in Performing Risk Assessment Procedures .04-.07


Definition of Risk Assessment Procedures .04-.07


Applying Five Basic Steps for an ADA .08-.09


Plan the ADA .10-.12


Determine the Specific Objectives of the ADA (Within the Context of Its Overall Purpose) .10-.12


Consider the Relevance and Reliability of the Data Used .13


Perform the ADA .14-.26


Identifying and Addressing Notable Items .14-.25


Addressing Risks of Material Misstatement for Remaining Population Items .26


Using ADAs in Performing Procedures to Assist When Forming an Overall Conclusion .27-.29


Appendix A Examples of ADAs Used in Performing Risk Assessment Procedures


3 Using ADAs in Performing Substantive Analytical Procedures .01-.63


Matters Covered in This Chapter .01-.02


Definition of Analytical Procedures .03


Nature and Objectives of Substantive Analytical Procedures .04-.05


Steps an Auditor Might Follow in Planning, Performing, and Evaluating a Substantive Analytical Procedure .06-.11


Auditor’s Expectations .08


Precision .09-.10


Level of Assurance .11


Plausibility and Predictability of Relevant Relationships .12-.15


Level of Disaggregation of Data .16-.18


Amount of Acceptable Difference of Recorded Amounts From Expected Values .19-.22


Investigation of a Significant Difference .23-.29


Effectiveness of Method Used to Develop the Auditor’s Expectation .30-.62


Trend Analysis .32-.38


Ratio Analysis .39-.45


Non-Statistical Predictive Modeling .46-.54


Regression Analysis .55-.62


Documentation .63


Appendix B Examples of ADAs Used in Performing Substantive Analytical Procedures


4 Using ADAs in Performing Tests of Details .01-.19


Matters Covered in This Chapter .01-.03


Certain GAAS Relevant to the Use of ADAs in Performing Tests of Details .04-.07


Nature and Extent of Substantive Procedures .04-.06


Evaluation of Misstatements .07


Applying Five Basic Steps for an ADA .08-.10


Perform the ADA .11-.19


Identification of Possible Misstatements and Actual Misstatements .11-.19


Appendix C Examples of ADAs Used in Performing Tests of Details


Appendix D Matters to Consider Regarding the Reliability of Data