Which advantage of data analytics software is most relevant to the audit of journal entries?
Answer and explanation
Correct answer: C. It can test every journal, for example entries posted at weekends
- Step 1: Data analytics can analyse entire populations rather than samples.
- Step 2: Criteria such as postings at weekends or by unexpected users can be applied to every entry.
Answer
It can test every journal, for example entries posted at weekends.
Why not the others: Technology never replaces scepticism or judgement. Analytics reduce risk but cannot guarantee detection of all fraud. The auditor needs the underlying complete data and cannot rely on the client's own summary.
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