Question

Which of the following is most likely to be an advantage of using audit data analytics (ADA) as substantive tests?

1) The relevance and reliability of evidence is increased.
2) In the traditional substantive tests, the auditor cannot test at an interim date.
3) The auditor can implement more complicated audit procedures.
4) The auditor could compare accounting records to underlying documents electronically, so that the auditor can save more time.

Answer 1

Audit data analytics (ADA) as substantive tests can save time for auditors by enabling electronic document comparisons and may improve the relevance and reliability of evidence. ADA also offers the flexibility to conduct interim testing.

Step-by-step explanation:

One of the advantages of using audit data analytics (ADA) as substantive tests is that the auditor can save more time by comparing accounting records to underlying documents electronically. ADA enhances the efficiency of the audit process by automating the comparison, thereby freeing up resources for more complex audit areas. The relevance and reliability of evidence might be improved due to the ability to analyze large datasets comprehensively and systematically. Additionally, unlike traditional substantive tests, ADA allows auditors to test at interim dates, providing more flexibility in the audit schedule.