Can Substantive Analytical Procedures with Data and Data Analytics Replace Sampling as Tests of Details?

2020 ◽  
Author(s):  
Kyunghee Yoon ◽  
Timothy Pearce
Keyword(s):  
Data Analytics ◽  
Careful Consideration ◽  
Analytical Models ◽  
Risks And Benefits ◽  
Audit Firms ◽  
Income Statement ◽  
Analytical Procedures ◽  
High Level ◽  
Audit Sampling ◽  
Substantive Analytical Procedures

To avoid problems caused by moderate or weak substantive analytical procedures (SAPs), audit firms tend to focus more on tests of details than SAPs, especially for large income statement accounts such as revenues. Based on findings from previous studies, this commentary study attempts to: 1) summarize the outcomes of SAPs developed by advanced analytics models (e.g., regression and time series models), and 2) respond to the question of SAP use by evaluating the limitations and benefits if one test replaces the other. The outcomes of prior studies generally show that SAPs developed by advanced analytical models do not provide a high level of assurance for revenue. Since SAPs and audit sampling present different risks and unique benefits, they are often complementary. Without the careful consideration of conditions related to the risks and benefits of each test, simply avoiding SAPs could reduce the effectiveness of substantive tests.

Between a Rock and a Hard Place: A Path Forward for Using Substantive Analytical Procedures in Auditing Large P&L Accounts: Commentary and Analysis

2014 ◽  
Vol 34 (3) ◽  
pp. 161-179 ◽  
Author(s):  
Steven M. Glover ◽  
Douglas F. Prawitt ◽  
Michael S. Drake
Keyword(s):  
Audit Quality ◽  
Financial Statements ◽  
Difference Threshold ◽  
Income Statement ◽  
Public Company ◽  
Significant Difference ◽  
Low Levels ◽  
Analytical Procedures ◽  
Hard Place ◽  
Substantive Analytical Procedures

SUMMARY Substantive analytical procedures can be an important and effective audit tool to gather evidence and highlight areas of potential misstatement, and for decades have been one of the common substantive procedures applied to income statement accounts. Recently, however, there is a growing trend for public company auditors to forego substantive analytical procedures on large income statement accounts, such as revenue, due to criticisms from regulatory inspectors that such procedures are not capable of providing useful substantive evidence. In this commentary, we address the concern that discouraging the application of appropriately rigorous substantive analytical procedures may diminish overall audit quality. We consider whether rigorous substantive analytical procedures can be designed to provide useful evidence at moderate and low levels of assurance for large income statement accounts, such as revenue, even when the significant-difference threshold exceeds overall materiality. Such procedures can provide strong evidence that financial statements are free of massive fraud or unintentional misstatement. Further, the moderate or low assurance obtained by such substantive analytical procedures can be combined with assurance provided by other audit procedures to yield high overall assurance. We illustrate one potential approach that may be useful in designing substantive analytical procedures to achieve moderate or low assurance and we explain how our approach is consistent with auditing theory and auditing standards.

Vaccinations in patients with multiple sclerosis: A Delphi consensus statement

2020 ◽  
pp. 135245852095231 ◽  
Author(s):  
Agostino Riva ◽  
Valeria Barcella ◽  
Simone V Benatti ◽  
Marco Capobianco ◽  
Ruggero Capra ◽  
...  
Keyword(s):  
Multiple Sclerosis ◽  
Seasonal Influenza ◽  
Careful Consideration ◽  
Delphi Consensus ◽  
Consensus Process ◽  
Disease Modifying Drugs ◽  
Risks And Benefits ◽  
Modified Delphi ◽  
Increased Risk ◽  
Evidence Based Decision Making

Background: Patients with multiple sclerosis (MS) are at increased risk of infection. Vaccination can mitigate these risks but only if safe and effective in MS patients, including those taking disease-modifying drugs. Methods: A modified Delphi consensus process (October 2017–June 2018) was used to develop clinically relevant recommendations for making decisions about vaccinations in patients with MS. A series of statements and recommendations regarding the efficacy, safety and timing of vaccine administration in patients with MS were generated in April 2018 by a panel of experts based on a review of the published literature performed in October 2017. Results: Recommendations include the need for an ‘infectious diseases card’ of each patient’s infectious and immunisation history at diagnosis in order to exclude and eventually treat latent infections. We suggest the implementation of the locally recommended vaccinations, if possible at MS diagnosis, otherwise with vaccination timing tailored to the planned/current MS treatment, and yearly administration of the seasonal influenza vaccine regardless of the treatment received. Conclusion: Patients with MS should be vaccinated with careful consideration of risks and benefits. However, there is an urgent need for more research into vaccinations in patients with MS to guide evidence-based decision making.

scholarly journals The use of analytical procedures by Yemeni auditors

2015 ◽  
Vol 12 (2) ◽  
pp. 17-25
Author(s):  
Shamharir Abidin ◽  
Mohammed Abobaker Baabbad
Keyword(s):  
Financial Statements ◽  
Audit Firms ◽  
Analytical Review ◽  
Analytical Procedures

This study sets out to investigate the extent to which Yemeni auditors use analytical review procedures during the audit of client’s financial statements. It also examines the stage of auditing procedure in which Yemeni auditors implement analytical review procedures. Moreover, the study determines the relationships between the importance’s factors and the use of analytical review procedures. The findings of the study have indicated that the Analytical Procedures were utilized on high percentage by audits in larger and high experienced audit firms compared to small and low experienced audit firms where the results have shown low percentage. Nevertheless, the role of auditors’ perception towards Analytical Procedures has proved to have a significant effect of usage of Analytical Procedures

scholarly journals Disclosure and Audit Implications of Nonfinancial Measures: A Teaching Case

2018 ◽  
Vol 12 (1) ◽  
pp. I1-I13 ◽  
Author(s):  
Matthew L. Hoag ◽  
Gabriel D. Saucedo
Keyword(s):  
Financial Statements ◽  
Risk Assessments ◽  
Microsoft Excel ◽  
Teaching Case ◽  
Fraud Risk ◽  
Nonfinancial Measures ◽  
Analytical Procedures ◽  
Fraud Risk Assessments ◽  
Substantive Analytical Procedures

SUMMARY This case introduces students to nonfinancial measures (NFMs) and encourages thoughtful consideration and discourse surrounding their reporting and use by managers and auditors. NFMs are commonly reported by companies to provide increased transparency of operations and to more effectively describe performance. External parties such as analysts and auditors make use of NFMs in performing valuation assessments, fraud risk assessments, and substantive analytical procedures. In completing this case, students will be exposed to actual NFMs disclosed in SEC filings and employ Microsoft Excel knowledge to perform foundational analytical procedures. Students will also analyze how these NFMs link to the financial statements, as well as reflect upon the implications of NFMs for both internal and external users.

Enhancing Auditors’ Reliance on Data Analytics under Inspection Risk Using Fixed and Growth Mindsets

2021 ◽  
Author(s):  
Tongrui Cao ◽  
Rong-Ruey Duh ◽  
Hun-Tong Tan ◽  
Tu Xu
Keyword(s):  
Data Analytics ◽  
Growth Mindset ◽  
Psychology Research ◽  
Fixed Mindset ◽  
Audit Firms ◽  
Audit Evidence ◽  
Big Four

Audit firms have invested significantly in data analytics (DA). However, evidence shows that auditors are often reluctant to rely on DA. A major auditor concern is that inspectors will second-guess the audit evidence gathered using DA. Drawing on psychology research, we examine how the effect of inspection risk on auditors’ reliance on DA is moderated by a fixed mindset (a belief that one’s ability is fixed) versus a growth mindset (a belief that one’s ability is malleable). In an experiment with Big Four auditors as participants, we find that, relative to low inspection risk, high inspection risk reduces auditors’ reliance on DA when auditors are prompted with a fixed mindset, but increases it when auditors are prompted with a growth mindset. Our findings contribute to auditing literature on DA, inspection risk, and mindsets, and have implications for auditors, audit firms, and regulators.

Contextual Complications in Analytical Modeling: When the Problem is Not the Problem

2021 ◽  
Author(s):  
Michael F. Gorman
Keyword(s):  
Contextual Factors ◽  
Careful Consideration ◽  
Risk Tolerance ◽  
Problem Definition ◽  
Data Availability ◽  
Analytical Models ◽  
Individual Risk ◽  
Future Research ◽  
Solution Approach ◽  
Complicating Factors

In this essay, I describe 10 critical complicating factors that directly affect the six basic modeling components of problem definition, assumptions, decision variables, objective functions, constraints, and solution approach. The proposed 10 contextual complicating factors are (1) organization, (2) decision-making processes, (3) measures and key performance indicators, (4) rational and irrational biases, (5) decision horizon and interval, (6) data availability, accuracy, fidelity, and latency, (7) legacy and other computer systems, (8) organizational and individual risk tolerance, (9) clarity of model and method, and (10) implementability and sustainability of the approach. I hypothesize that the core analytical problem cannot be adequately described or usefully solved without careful consideration of these factors. I describe detailed examples of these contextual factors’ effects on modeling from six published applied prescriptive analytics projects and provide other examples from the literature. The complicating factors are pervasive in these projects, directly and dramatically affecting basic modeling components over half the time. Further, in the presence of these factors, 23 statistically significant correlations tend to form in three clusters, which I characterize as culture, decision, and project clusters. Unrecognized, these factors would have hampered the implementation and ongoing use of these analytical models; in a sense, the models themselves were wrong, absent consideration of these contextual considerations. With these insights, I hope to help practitioners identify the effects of these common complications and avoid project failure by incorporating these contextual factors into their modeling considerations. Future research could seek to better understand these factors and their effects on modeling.

Cancer screening and prevention in gynaecology

2020 ◽  
pp. 755-765
Author(s):  
Lynette Denny ◽  
Rengaswamy Sankaranarayan
Keyword(s):  
Specific Antigen ◽  
Careful Consideration ◽  
World Health ◽  
Clear Understanding ◽  
Level Of Evidence ◽  
Access To Health ◽  
Screening And Prevention ◽  
Health Organization ◽  
High Level ◽  
Current Screening

In 1968, the World Health Organization published guidelines on the principles and practice of screening for disease, which are often referred to as the ‘Wilson and Jungner criteria’. These principles are still applicable today. With the onset of genetic screening, new controversies around screening emerged and in 2008, Andermann et al. synthesized and modified the Wilson criteria. Screening is a systematic attempt to select those who are at high risk of a specific disease from among apparently healthy individuals. The ultimate aim of screening is prevention of disease or to detect disease at an early, curable stage. There are many controversies about screening for cancer, such as the use of prostatic-specific antigen screening for prostate cancer, mammography screening for breast cancer, and debates around current screening for colorectal, lung, and cervical cancers. Controversies also exist with regard to the level of evidence required before screening for a disease is initiated. Even if there is a high level of evidence for efficacy and effectiveness, how the programme should be implemented needs careful consideration, particularly a clear understanding of benefits versus harms, potential or actual. In some countries, mass population screening programmes are implemented and in others, screening is dependent on access to health insurance. This chapter explores past and current screening activities among women for early detection and prevention of gynaecological cancers including cervical, ovarian, and endometrial cancers and discusses screening for vulval and vaginal cancer.

Drawing the Line at Age 14: Why Adolescents Should Be Able to Consent to Participation in Research

2017 ◽  
Vol 45 (3) ◽  
pp. 295-306 ◽  
Author(s):  
Robert Schwartz
Keyword(s):  
Decision Making ◽  
Decision Maker ◽  
Intellectual Development ◽  
Human Subjects ◽  
Federal Regulations ◽  
Specific Nature ◽  
Emotional Maturity ◽  
Risks And Benefits ◽  
High Level ◽  
Participation In Research

This article argues that teenagers become fully capable of consenting to participation in most IRB-approved research involving human subjects at age 14, four years earlier than they are allowed to consent under virtually all states' laws, and, consequently, four years younger than they are able to consent under currently applicable federal regulations. In determining the age at which person is old enough to have decision-making authority, legal institutions look at the intellectual and emotional maturity of someone of the age of the decision-maker, the risks and benefits of allowing the decision to be made by someone of that age, and the risks and benefits of denying a person of that age the authority to make the decision. Given the high level of safety of participating in IRB approved research, the value of doing so for both the society and the teenage subject, and the psychological and neuropsychological research on the specific nature of emotional and intellectual development during the teen years, the balance comes out in favor of allowing younger teens, by the age of 14, authority to consent to participate as subjects in IRB approved research. The current process requiring both teen assent and parental permission should give way to a process that requires only a teen's consent.

scholarly journals Effect of SBI Bank Merger on Education Loan, a Comparative Study Using Big Data Analytics

2018 ◽  
Vol 7 (2.32) ◽  
pp. 452
Author(s):  
Anjali Mathur ◽  
K Vinitha ◽  
R Shubham ◽  
K Gowtham
Keyword(s):  
Big Data ◽  
Comparative Study ◽  
Data Analytics ◽  
Big Data Analytics ◽  
Global Level ◽  
Analysis Techniques ◽  
Bank Merger ◽  
Huge Data ◽  
High Level ◽  
The Impact

A bank merger is a situation in which two banks or all branches of a bank join together to become one bank. The bank merger of State Bank of India was implemented on 1stApril 2017 in India. The bank merger is a good idea to centralize the customer’s data from nationwide. However, it is a difficult task for administrators and technologists. Some high level techniques are required to collect the data from the branches, of the bank present at nationwide, and merge them accordingly. For this huge data Big-Data Analysis techniques can be used to manage and access the data. The big data analytics provides algorithms to compare, classify and cluster the data at local and global level. This research paper proposes big data analytics for education loan provided by State Bank of India. The loan granting process becomes centralized after merger. It affects the processing of granting a loan, as earlier it was according to branches only. The proposed work is for comparative study of the impact of bank merger on education loan provided by State Bank of India.  

scholarly journals The Impact of Corporate Social Responsibility on the Company’s Financial Performance

2021 ◽  
Vol 15 (4) ◽  
pp. 18-35
Author(s):  
Anastasiya Potapova ◽  
Zhen Wang ◽  
Alina Steblyanskaya
Keyword(s):  
Financial Performance ◽  
Information Disclosure ◽  
Rating Scale ◽  
Analytical Models ◽  
Substantial Impact ◽  
Market Capitalization ◽  
Cultural Aspects ◽  
The Board Of Directors ◽  
High Level ◽  
The Impact

This article empirically evaluates the impact of CSR behaviour on the financial indicators of 286 companies from Brazil, Russia, India, and China over six years from 2013 to 2018. Company information and CSR ratings were retrieved from the Bloomberg and RobetaSAM databases, and hypotheses were proposed based on a literature review. We constructedvarious analytical models that differ in dependent variables to better evaluate of distinct CSR metrics through different regression methods. Analyzed factors include: (1) the presence of women on the board; (2) the presence of a company in CSR ratings, and (3) various cultural aspects of the society where companies operate. Our results support the conclusions of related research in this field of study. Among other consequences, our analysis indicates that CSR significantly influences financial performance, although this is also contingent on external factors. A company’s presence in the CSR rating scale has a more substantial impact on profitability and market capitalization indicatorsthan the actual score itself. CSR information disclosure has some effect on ROA and ROE, and the presence of women in the board of Directors showed a slight positive effect on market capitalization. Further, a high level of ‘power distance’ (i.e. the ostensible alienation of the general citizenry from political authority sources) in the society where company operatesharms the relationship between the rating score and financial performance.

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