Audit Data Analytics
This theory states that in large sets of numbers, the first digit follows a predictable distribution.
What is:
Benford's Law?
Summary statistics (e.g., total, average, median) are most closely related with this type of data analytics.
What is:
Descriptive Analytics
This language is used as part of financial reporting to organize, define, tag, and report on financial elements.
What is:
eXtensible Business Reporting Language (XBRL)
_______ involves identifying and minimizing potential tax liability prior to a tax return being completed.
What is:
Tax Planning
This practice is used to identify approximate matches between data that is submitted and data that exists in a database.
What is:
Fuzzy Matching
Data analytics can be used to improve the "NET" of audit procedures. The acronym "NET" stands for:
What is:
Nature
Extent
Timing
Macroeconomic forecasts are most closely related to this type of data analytics.
What is:
Predictive Analytics
This ratio is commonly used to measure components of return on equity (e.g., Profit margin × Asset turnover × Financial leverage).
What is:
DuPont Ratio
The IRS has several sources of taxpayer data. Name at least two of them.
What is:
SEC Filings
Historic Tax Returns
Personal Financial Data (credit scores, etc.)
Social Media Feeds
Etc.
This is established to show the structure of a database, often before the actual database is created.
What is:
Database Schema
These checks, often associated with an organization's procurement process, can be used to identify duplicate transactions.
What are:
Sequence Checks
There are two components of Key Performance Indicators (KPIs); one that looks forward and one that looks backward. Name both of them.
What are:
Lagging Indicators
Leading Indicators
This type of analysis is used to identify / calculate trends over a period of time.
What is:
Horizontal Analysis
This defines an organization or individual's ability to sustain similar tax performance over time.
What is:
Tax Sustainability
This term describes data used to evaluate an AI / ML model.
What is:
Test Data
There are three total determinants associated with random sampling. They are, (1) Desired Confidence Level, (2) Tolerable Misstatement, and ...what?
What is:
Estimated Misstatement
The Balanced Scorecard is comprised of four separate components. Name at least three of them.
What are:
Financial
Customer
Internal Process
Organizational
These types of financial statements, typically associated with vertical analysis, express each line item as a percentage of a significant total (e.g., revenue).
What are:
Common Size Financial Statements
What is:
Book-Tax Reconciliation
This type of ERP system requires a systems translation engine and is typically used when data is being collected from multiple sources that are diverse and/or complex in nature.
What is:
Heterogenous ERP System
This practice allows organizations to evaluate text for words that may be associated with positive or negative experiences.
What is:
Sentiment Analysis
Two types of prescriptive analytics are cash-flow analysis and goal-seek analysis. Give one other example.
What is:
What-if Analysis
This is the practice of analyzing the frequency of words in unstructured data and matching them to a sentiment (i.e., positive vs. negative).
What is:
Text Mining
______ represents actual taxes paid by a company / individual and ______ represents the risk of misreporting or requiring tax provision adjustments.
What is:
Tax Cost
Tax Risk
There are six steps in the IMPACT Model that we reviewed in each chapter this year. Name at least three of them.
What is:
Identify the Questions
Master the Data
Perform the Test Plan
Address and Refine Results
Communicate Insights
Track Outcomes