Martha Godfrey, CPA, is including audit data analytics is an audit for the first time. She is using ADA to try and identify any inappropriate journal entries. Excited about what she has accomplished, she tells you that it was much easier than expected. She began by planning the ADA and made sure the relevant assertions would be covered. She then approached the client to request the data. At first, the client indicated they would not have time to help with the data gathering. Upon further discussion, management assigned a recently hired member of their team who had the time available to walk through the requirements of the test to be performed and gather the necessary data. The employee found a report of all journal entries that is regularly run, which appeared to provide similar output to what Martha requires. They used that as the first point to extract data and then added some data from another report to provide Martha with what she needed. Martha performed journal entry testing using this information. In order to examine any potentially inappropriate journal entries, she tested journal entries posted near the end of the accounting period and journal entries posted by unauthorized users.

1) Did Martha follow the 5 steps of ADAs? Comment on what she did correctly and/or what she could improve on going forward?

2) Provide five additional items/tests that Martha could run with respect to journal entries. For each type of test, state why there would be value in identifying such an item.

3) What other area of the audit (aside from testing journal entries for appropriateness) could Martha use ADA in?

Answer rating: 100% (QA)

1 Yes Martha followed the five steps of ADA She correctly planned the ADA and made sure the relevant assertions were covered She then approached the c... View the full answer