Question

What is the similarity between traditional manual comparison of information and audit data analysis (ADA) procedure in a substantive test?

1) All of the choices are correct.
2) Both require the auditor to compare information in the accounting records to information on underlying documents.
3) Both require the auditor to evaluate inherent risk and perform tests of controls to assess control risk.
4) Both allow the auditor to contact the entity's supplier to confirm the accounts payable balance.

Answer 1

The similarity between traditional manual comparison and ADA in substantive tests lies in the requirement for auditors to compare accounting records to underlying documents.

Step-by-step explanation:

The similarity between traditional manual comparison of information and audit data analysis (ADA) procedure in a substantive test is that both require the auditor to compare information in the accounting records to information on underlying documents. This process involves critical analysis and careful evaluation of data to ensure accuracy and completeness. While ADA uses modern software and technological tools to analyze large datasets, traditional manual comparison might employ simpler methods but fundamentally both are centered on the comparison of recorded data to original documents to validate financial statements.The similarity between traditional manual comparison of information and audit data analysis (ADA) procedure in a substantive test is that both require the auditor to compare information in the accounting records to information on underlying documents.