Internal audit is conducting an audit of customer transaction risk.
Which of the following would be the BEST reason to use data analytics?
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A. B. C. D.C.
Data analytics can be a useful tool for internal audit when conducting an audit of customer transaction risk. The BEST reason to use data analytics in this situation would be:
B. Anomalies and risk trends in the data set have yet to be defined.
The reason for this is that data analytics can help identify anomalies and trends in large volumes of transactional data that may not be readily apparent through traditional audit procedures. By analyzing the data, internal auditors can identify patterns and outliers that may indicate potential fraud, errors, or other risks. This can help auditors focus their efforts on areas that pose the greatest risk to the organization, enabling them to provide more effective and efficient audit coverage.
While the other answer choices may also be valid reasons to use data analytics, they are not as compelling as option B. For example, option A suggests that data analytics may be necessary due to the unreliable nature of the data, but this does not necessarily require the use of data analytics. Similarly, option C suggests that data analytics may be necessary to comply with regulations, but this is not necessarily the best reason to use this approach. Finally, option D suggests that the audit focus is on a small number of high-risk transactions, which may not require the use of data analytics if the transactions can be identified through other means.