Skip to content

ACCA Applied Knowledge · Business and Technology · The impact of advances in technology

A bank's internal audit team tests every transaction in its full ledger for unusual patterns using data analytics, rather than examining a sample. Which statement about this approach is most accurate?

Analytics lets auditors test an entire population rather than a sample, but flagged exceptions are only indicators and still need human investigation and judgement. It does not remove the need for judgement nor guarantee detection of all fraud, for example off-system or collusive activity.

  1. AIt removes the need for auditors to apply any professional judgement to the exceptions identified
  2. BIt allows whole populations to be tested, but the flagged exceptions still require human investigation to determine whether they are genuine problemsCorrect
  3. CIt guarantees that all fraud will be detected because every item is tested

Explanation

Analytics enables testing of 100% of a population, increasing coverage over sampling. However, exceptions are only indicators and false positives occur, so judgement is needed to investigate them. Fraud such as collusion or off-system activity may still go undetected, so no guarantee is possible.

Did you get it right without looking?

One question tells you little. A timed set on The impact of advances in technology shows your real accuracy, how long you take and where you lose marks.

Practise The impact of advances in technologyFree diagnostic mock

More The impact of advances in technology questions