With advances in technology, an increasing number of data analysis techniques are being used on audit engagements to increase both efficiency and effectiveness. In an article titled “Introduction to Data Analysis for Auditors and Accountants,” published in the CPA Journal (February 16, 2017), authors Kogan, Vasarhelyi, and Appelbaum describe how technology-driven data analysis can be used in all stages of the audit. Read the article on data analysis (available at www.cpajournal.com) to answer the following questions: 

Required:

a. The authors discuss the emphasis on “audit by exception” when using data analysis. What does “audit by exception” mean and how does it differ from a traditional audit approach using statistical sampling? How does an auditor identify the exceptions? 

b. The authors note that data visualization can be used to conduct exploratory data analysis. Describe how data visualization could be used in the audit of the sales and collection cycle. 

c. Choose one of the methods identified by the authors as emerging approaches, for example blockchain or deep learning, and discuss how an auditor might test one of the accounts receivable balance-related audit objectives using this method.