Data Analytics

Question 1

What is data analytics?

Answer 1

Discovering and analyzing patterns, identifying anomalies, and extracting other useful information in data

Apply advantaged technology and models to accounting and auditing problems

Examples:

Audit data analytics (ADA)
Risk analysis and fraud

Question 2

What is business intelligence?

Answer 2

Very similar to data analytics- Use for a strategic focus

Tools:

• Microsoft Power BI
• Tableau
• Excel (old school… not so good)

Question 3

What skills do accounts need for data analytics?

Answer 3

“analytics” mind- set, think critically and exercise information professional judgement

Ask good questions, transform data, analyze, communicate with stakeholders

Data cleaning, structuring

Use legacy (mature and declining use) tools such as Exce

Question 4

What is the data analytics process?

Answer 4

ETL

Extract- Get the data from some source

Transform- Apply rules, functions, and cleaning operations to get data set

Load- Move data to target system. May be simple or complicated.

IDEALLY THIS IS AUTOMATED

DATA HAS TO BE RELIABLE

Question 5

What influences data reliability?

Answer 5

Nature of the data (Numbers Vs words)- Words are messy and hard to clean up

Source of the data (client’s general ledger, vs data insider stock trading)

Process used to generate the data (data from an audited accounting system vs unreliable accounting system)

Question 6

How do you integrate data analytics with business strategy?

Answer 6

• Data analytics is a strategy issue not a technology issue. It is about serving a business need.

Pre-analytics adoption organizations:

• Little use of analytics
• No existing or planned linkages between data analytics use and business strategy

Analytics driven organization

• Well- established analytics strategy
• Overall business strategy drives analytic strategy

Question 7

What are the four categories of data analytics:

Answer 7

1) What is happening?
- Line chart to show daily stock price changes
- Scatterplot to show relationship between sales and profits

2) why is it happening? (diagnostic)
- Why are sales down in Peoria?
- Detailed analysis of production processes at a plant to determine why assembly cost have increased

3) What is likely to happen?
- Called data mining
- Relies on advances statistic methods such as recession, cluster analysis, and pattern matching.
- Forecasting sales trends

4) How should we (re)act?
- Prescriptive analytics
- Apply advanced statistical methods to determine responses to burins problems
- methods include machine learning and neural network analysis

Question 8

What is data analytics applied to accounting

Answer 8

1) Audit data analytics (ADA): “Discovering and analyzing patterns, identifying anomalies, and extracting useful information in data”
2) KPIs (Key Performance Indicators): Are critical measures to an organization’s strategy

Question 9

What are benefits to audit data analytics?

Answer 9

• Improve understanding of an entity’s operations and associated risks
• Increased potential for detecting misstatements
• Improve communication with stakeholders

Question 10

What are key performance indicators?

Answer 10

Critical Measures from organizations strategy