Analyzing An Audit Population Via Either Excel Pivot Tables and/or R Language Cluster Analysis

Abstract

This case provides instructors the opportunity to have students analyze an audit population via either Excel Pivot Tables and/or cluster analysis via the R programming language and RStudio free software environment. The analysis takes place in the context of audit risk analysis and planning. The case was developed with a background description based on a real company and instructor-generated synthetic data containing seeded misstatements. Analysis via Excel Pivot Tables is fairly straightforward and allows students to easily get into the underlying audit planning questions. Use of cluster analysis via R is more difficult but provides students with an opportunity to think about cluster analysis when there is no underlying basis for discrete population splits or as a population stratification methodology. Student feedback from use of the R language approach was very positive with students indicating they had a better understanding of how to apply cluster analysis in an audit context