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John, an experienced auditor from the audit firm Sherwood, wants to utilize audit data analytics (ADA) to support his audit of inventory at Robinhood, a distributor of bows and arrows. Which of the following would be an appropriate way for John to use ADA in auditing inventory at Robinhood? John could use ADA in the client acceptance decision. Using ADA, John could review the general ledger to determine if Robinhood has inventory that needs to be audited. If inventory is present at Robinhood, John could ensure that Sherwood has adequate experience and knowledge to audit this particular area of inventory. Further, this information could be used to assemble an appropriate audit team with appropriate backgrounds pertaining to inventory for the engagement. John could use ADA in risk assessment procedures. Using ADA, John could review inventory account trends and balances, various ratios, and inventory transactions. John would look for consistencies and anomalies that would either confirm or modify Sherwood's audit plan. John could use ADA in completing and reporting on the audit. John could use ADA to review the appropriate classification of inventory as a current asset. Further, John could use ADA to review the disclosures related to inventory. Using this information, Sherwood could opine on the appropriateness of inventory in the financial statements. All of these answer choices are correct

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