Challenging Performing ADA involving matching A team from More & Less
CPAs are auditing SportsLovers, a U.S. sporting goods manufacturer and distributor. The audit team
recently had a meeting to discuss how to perform the current ADA, which is designed to investigate the risk of employees stealing by shipping products to their home address. The team has already completed the first three steps of the five-step ADA process. The discussion point in the meeting was how to compare the addresses in the Employee Master File with the addresses in the Shipment List File. The relevant fields in each database are shown below.
During the meeting, the following ideas were proposed for a criterion to identify notable items:
1. E_ADD is the same as SHIP_ADD.
2. E_ZIP is the same as SHIP_ZIP.
3. The result of joining E_ADD, E_CITY, E_STATE, and E_ZIP is the same as joining SHIP_ADD,
SHIP_CS, and SHIP_ZIP.
4. E_NUMS is the same as SHIP_NUMS. E_NUMS is created by joining E_ADD and E_ZIP together
and then removing all letters so only the numbers remain. In a similar way, SHIP_NUMS is created
by joining SHIP_ADD and SHIP_ZIP and retaining only the numbers.
Required
a. Critically analyze the advantages and disadvantages of each of the four suggestions.
b. Recommend a criterion to identify notable items and justify your choice.
c. Evaluate the risk of missing truly notable items given your recommendation in (b).