Question

An auditor is using audit data analytics in the audit of inventory. Which of the following is true regarding preparing the data?

1) The auditor will want to make sure the inventory data being used is the same that is used to test the controls.
2) The auditor will want to make sure the inventory data being used is the same that is used to physically count the inventory.
3) The auditor will want to make sure the inventory data being used is the same that is used to prepare the financial statements.
4) The auditor will want to make sure the inventory data being used is the same that was used in the prior year.

Answer 1

In the context of an audit of inventory using audit data analytics, the inventory data should be the same as what is used for preparing financial statements, ensuring audit accuracy and reliability.

Step-by-step explanation:

When an auditor is using audit data analytics in the audit of inventory, it is crucial that the inventory data being used aligns with the data that is used to prepare the financial statements. This ensures that the auditor's analysis reflects the actual data that affects the company's reported financial position and performance. While verifying that the data matches what is used for testing controls and conducting a physical inventory count can be relevant, ensuring consistency with the financial statement data is fundamental for the audit's accuracy and reliability.