Your Ask Joey ™ Answer

What is audit data analytics (ADA)?

According to the AICPA, “Audit data analytics (ADAs) are a technique that can help you leverage current technologies and move toward a more data-driven approach to planning or performing an audit”.

This is basically saying that if you utilize the data and analytics tools that are currently on the market, then you’ll be able to better analyze data and spot anomalies in the data (i.e. potential misstatements or issues with the internal control environment). The most common tools available on the market include Alteryx, Tableau, Power BI, and Python. Some of the larger public accounting firms have designed their own data analytics tools.

The biggest benefit of audit data analytics is that audit sampling doesn’t need to be used because we can audit the entire population (yeah that is right, the entire population). So if the company has 1,000,000 sales transactions, we can test the full 1,000,000 rather than the 100 transaction that we “haphazardly” selected.

Now I know we have painted a beautiful sunset when it comes to data analytics in an audit, but the main issue is that most clients still don’t have quality data. To effectively use data analytics in an audit, the client needs to provide high quality data. That means that its accurate in the system, the data is complete, and it includes the necessary fields to be effectively used for audit procedures.

Now, don’t assume that you’ll work less hours in busy season. Technology and data analytics in audit will allow audit teams and accountants to work smarter and more efficiently.


Back To All Questions

You might also be interested in...

  • Write For Us

    Write For Us Submit your guest blog post! Universal CPA Review welcomes contributors to submit articles for publication on our website. Please review the following guidelines before submitting your article. Due to the high volume of submissions we receive daily, we cannot respond to each one individually. If your article is selected for publication, you...

  • A Guide to Hiring a Small Business Accountant

    Overview Your small business is thriving, sales are up, and you’re poised for a record-breaking year. Exciting times, indeed, but have you thought about the implications for tax filing or financial planning for the upcoming quarter? If these questions are on your mind, it might be time to consult a small business accountant. A skilled...

  • QuickBooks Helps Small Business Beyond Compare

    Introduction Want to work faster, smarter, and better? In today’s business environment, the myriad options for financial management solutions can overwhelm even the most seasoned entrepreneurs. Selecting the right tool for managing business finances is crucial, yet the task is often daunting due to the plethora of available options. This is where QuickBooks comes into...