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Sir can you please clarify how we write procedures using data analytics on revenue recognition and inventory valuation..Iam confused how we use data analytics in writing procedures?Thanks
You will find examples of the use of data analytics on page 82 of the AA notes. I don’t think you have to be overly concerned about the data analytics “angle” on procedures. For example, an audit procedure for revenue recognition is to “Analyse monthly revenue using disaggregated data by product/region and compare with prior period to identify unusual or unexpected revenue relationships or transaction”. This example comes straight out of ISA 240 and requires no specific reference to CAATs or data analytics.
Obviously you should be able to spot where data analytics may be used to assist the auditor but this is really no different to where you would recommend the use of audit software as a CAAT (i.e. in substantive procedures rather than tests of control).
The more interesting aspect of data analytics relevant to AAA is its “potential impact on the conduct of an audit and audit quality” – see pages 77/78 of out notes.
The recent article “written by a member of the AAA examining team” should suffice for any immediate exams https://www.accaglobal.com/an/en/student/exam-support-resources/professional-exams-study-resources/p7/technical-articles/data-analytics.html
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