Final answer:
Calvin Andrews, an auditor, is looking for anomalies using audit data analytics (ADA) in accounts receivable testing. These anomalies could indicate potential errors or fraud within the financial records. The use of ADA helps focus audit efforts on higher-risk areas.
Step-by-step explanation:
When Calvin Andrews is an auditor using audit data analytics (ADA) on the accounts receivable testing for a manufacturer, he is looking for anomalies. These anomalies could indicate errors, fraud, or inconsistencies within the financial records that deviate from normal patterns. By using ADA, Calvin can efficiently review large volumes of transactional data to identify unusual or suspicious activities that warrant further investigation.
For instance, he might look for duplicate invoices, abnormally high transactions for certain customers, or receivables that have been outstanding for a longer duration than the normal credit terms. Identifying these anomalies helps to focus the audit efforts on areas with higher risks of material misstatement. It is a proactive approach to auditing that leverages technology to enhance the effectiveness and efficiency of the audit process.