An Internal Auditor Is Using Data Analytics to Focus on High-Risk

question 156

Multiple Choice

An internal auditor is using data analytics to focus on high-risk areas during an engagement. The auditor has obtained data and is working to eliminate redundancies in the data. Which of the following statements is true regarding this scenario?

• A) The auditor is normalizing data in preparation for analyzing it.
• B) The auditor is analyzing the data in preparation for communicating the results.
• C) The auditor is cleaning the data in preparation for determining which processes may be involved.
• D) The auditor is reviewing the data prior to defining the question.

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Definitions:

Net Present Value

A financial analysis technique used to estimate the viability of projects or investments by discounting expected future cash flows to their present value.

Payback Period

The duration of time it takes to recoup the initial investment in a project or asset.

Cash Inflows

Cash Inflows are the money or cash received by a business from its various activities, including sales, investments, financing, etc.

Profitability Index

A capital budgeting tool that measures the ratio of the present value of future cash flows generated by an investment to the initial investment cost, used to assess the profitability.