310 Flashcards
IMPACT Model
Steps in using data analytics in an audit
I = Identify the questions
M = Master the data
P = Perform the Test Plan
A = Address and refine results
C = Communicate Insights
T = Track outcomes
Types of Data
- Qualitative Data
- Nominal Data
- Ordinal Data
- Proportion
- Quantitative Data
- Ratio Data
- Interval Data
- Discrete Data
- Continuous Data
- Distributions
Qualitative Data
Categorical Data (e.g. Count, group, rank)
Nominal Data
Simple Categories (e.g. Hair color)
Ordinal Data
Ranked Categories (e.g. Gold, silver, bronze)
Proportion
Shows the makeup of each category (e.g. 55% cats, 45% dogs)
Quantitative Data
Numerical Data (e.g. Age, height, dollar amount)
Ratio Data
Defines 0 as ‘absence of’ something (e.g. cash)
Interval Data
0 is just another number (e.g. temperature)
Discrete Data
Whole numbers only (e.g. points in a basketball game)
Continuous Data
Numbers with decimals (e.g. Height)
Distributions
Describe the mean, median, and standard deviation of the data
Analytics Testing
- Descriptive
- Diagnostic
- Predictive
- Prescriptive
- Example Audit Procedure
Descriptive Analytics
- What Happened? What is Happening?
1) Summary Statistics
2) Cross Tabulations of Performance (Pivot Tables)
3) KPI Tracking
4) Costing and/or Process Costing
5) Clustering Suppliers, customers, processes, locations
Diagnostic Analytics
- Why did it happen? Can we explain why it happened?
1) Comparison of KPIs to expectations
2) Price, Rate, Usage, quantity, and overhead variance analysis
3) Conditional Formating
4) Regression Analysis estimating cost behavior
5) Correlations
Predictive Analytics
- Will it happen in the future? Is it foreseeable? What is the Probability something will happen?
1) Sales Forecasting
a) Time Series
b) Competitor and Industry
performance
c) Macroeconomic Forecasts
d) Regression
e) Classification of Indirect Costs
i) What is the Appropriate cost-
driver to allocated overhead
Prescriptive Analytics
- What should we do based on what we expect to happen? How do we optimize our performance based on potential constraints?
1) What-if Analysis
2) Goal Seek Analysis
3) Cash Flow (Capital Budgeting) Analysis
4) Sensitivity Analysis
Example Audit Procedure
Analysis of new accounts and sales employee bonuses
Predictive and Prescriptive Analytics
Both provide probabilistic models
The Big V’s of Big Data
- Volume
- Velocity
- Variety
Volume
Refers to size
Velocity
Refers to frequency
Variety
Refers to different types
The Balanced Scorecard
- Identifies the most important metrics to measure and target goals for comparison
- Consists of:
1) Financial
2) Customer
3) Internal Process
4) Organizational Capacity
Financial (Component of Balanced scorecard)
How the company generates value
Customer (Component of Balanced scorecard)
How the company generates value
Internal Process (Component of Balanced scorecard)
How efficiently the company is operating
Organizational Capacity (Component of Balanced scorecard)
How the company is training employees
Profiling Based on Gathering summary statistics (5 steps)
1) Identify the objects or activities you want to profile
2) Determine the types of profiling you want to perform
3) Set boundaries of thresholds for the activity
4) Interpret the results and monitor the activity or generate a list of exceptions
5) Follow up on Exceptions
What would the Audit Process be to catch a fictitious vendor made by an employee?
Fuzzy Match, A technique that helps identify 2 elements of text, strings, or entries that are approximately similar but are not exactly the same.
How to improve the Profitability of a company?
- Cost cutting,
- Streamlining certain processes
- Create dashboards with KPIs and find room of improvement based on each department
What is the Difference between declarative and exploratory data analytics
Declarative Visualizations
1) Used to present finding
- Financial Results
Exploratory
1) Used to gain insights while you are interacting with data
- Identifying good customers
Explain the Test / Analysis you would use to find and determine a new store location based on sales tax
Create a map dashboard on Tableau or Power BI and sort each state by sales tax to determine the best state to put the new store.
