Data Analytics in Accounting

As I addressed in my last blog post, data analytics is playing a large role in the audit industry. However, data analytics’ impact on the accounting field is greater than just its impact in audits. In this blog, I want to share general benefits of data analytics, the uses of data analytics in the accounting field, an example of accounting data analytics in the real world, and the new skills needed by employers.

In today’s business environment, timely and accurate information is of the highest priority before making business decisions. With the huge amount of data now available for companies, business decisions have become even more complex. Systems and processes that have been in place in the past no longer can keep up with the size and complexity of these data sets and the pace of society as a whole (Malikk). Therefore, innovation of these once-legacy systems and processes is required to adapt to the changing world. By using data analytics, one can convert large amounts of raw information into meaningful insight that can help a business create better decisions and sore to new unseen potential (PricewaterhouseCoopers). Some specific ways data analytics can be used by companies include helping them “understand their customers better, produce relevant content, strategize ad campaigns, develop meaningful products, and ultimately boost business performance” (Simplilearn). Because of this broad array of benefits, data analytics is prevalent in nearly every industry at the moment. 

The accounting world is not immune to this emerging technology. According to Franklin University “companies need strong accounting leaders to translate their portion of that data into valuable insights that can help a company improve business outcomes and adjust to changing sales patterns all in real-time” (Accounting & Data Analytics). In addition to providing deeper insights, data analytics is impacting accountants by helping them provide accurate predictive models and helping them automate repetitive tasks. The predictive models allow for very precise and accurate forecasting models which can lead to better strategies, budgets, and business plans. Furthermore, by automating repetitive tasks, the chance for error decreases and the speed and efficiency of these tasks increase. Automation also allows accountants to do more productive tasks with saved time (Uses of Data Analytics).

Big data and data analytics in accounting also allow for real-time reports instead of solely the traditional financial reports given each week, monthly, and/or year. To do so, accountants rely on emerging data analysis technology to process “very large amounts of data accurately and in a short time” (Uses of Data Analytics). Real-time monitoring also helps accountants with risk analysis and management. For example, data analytics can help detect fraud very quickly. Accountants provide benefits for their companies and clients by helping them mitigate risk.

There are numerous specific ways that CPAs find themselves using data analytics skills in their career For example, they may use data analytics to enable continuous monitoring and allow the analysis of full data sets instead of only auditing samples. Furthermore, other CPAs may use data analytics when helping a client with financial planning. By analyzing their financial data, they can help guide their client or company with the best course of action. Since data analytics is changing so quickly, change management may be necessary to help companies and CPAs adapt to the heated business environment. 

With an increasing demand for data analytics in accounting, companies like Ryan, LLC are becoming more prevalent. Unlike the Big Four, this firm does not charge its clients on an hourly basis. Instead, they receive a percentage of the amount of money they save their clients in taxes. They combine their knowledge of tax codification with data analytic technologies to find those savings. They use SQL to query through their client’s immense amounts of data. They search for places where, for whatever reason, the client paid too much in taxes. They then collect these records and use them as evidence of why the IRS owes them money back. Ryan, LLC is a great example of the importance of data analytics in accounting. 

            As the need for data analytics continues to grow within the accounting field, employers are going to be seeking potential employees with those skills. According to PwC, “accounting graduates must have the skill set needed to extract value from big data through advanced analytics” (Infusing Data Analytics). PwC’s statement is evidence of this future requirement of accountants. Having the data analytics skill set enables one to “dive deep into the data and extract the value in it” (Accounting & Data Analytics). UGA’s J.M. Tull School of Accounting is actively adapting to meet employers’ demands. Like I mentioned in my last blog post, a required course for all Accounting majors is ACCT 5310: Accounting Information Systems and Data Analytics. Along with the audit technology students learn, students also learn how to work with software like Tableau and Alteryx. These softwares allow accountants in the real world to clean and filter data as well as create diagrams of the cleaned data. Students also gain a basic knowledge of SQL. These skills are necessary for future accountants, and UGA is preparing these students well. 

The field of accounting is undergoing a very interesting and important transformation. Firms, CPAs, and clients need to lean into the opportunities and benefits that data analytics can provide them, or else there is a chance that they will not survive in the business world for much longer. Big data is available to accountants, and data analytics helps transform that information into valuable and timely insights. It also helps create more accurate predictive models, automate repetitive tasks, and increase the quality of services delivered. When a company or person can harness the power that is created at the intersection point of accounting and data analytics, they provide greater value for society. 

Works Cited

“Accounting & Data Analytics: What You Need to Know.” Accounting & Data Analytics: What You Need To Know | Franklin University, http://www.franklin.edu/blog/accounting-mvp/accounting-data-analytics. 

“Infusing Data Analytics into the Accounting Curriculum: A Framework and Insights from Faculty.” Journal of Accounting Education, Pergamon, 17 Apr. 2018, https://www.sciencedirect.com/science/article/pii/S0748575116301257. 

Malikk, Rohit. “21st Century Data Analytics with AWS.” LinkedIn, http://www.linkedin.com/pulse/21st-century-data-analytics-aws-rohit-malik. 

PricewaterhouseCoopers. “Analytics and Ai Transformation.” PwC, http://www.pwc.com/us/en/services/consulting/cloud-digital/data-analytics.html. 

Simplilearn. “Data Analytics Tutorial for Beginners: A [Step-by-Step] Guide.” Simplilearn.com, Simplilearn, 9 Mar. 2023, http://www.simplilearn.com/tutorials/data-analytics-tutorial. 

“Uses of Data Analytics in Accounting and Finance: Tally Solutions.” Tally, 21 Sept. 2022, https://tallysolutions.com/us/accounting/uses-of-data-analytics-in-accounting-and-finance/#gref.