Contents

CHAPTER 1: DATA ANALYTICS FOR ACCOUNTING ................ 2

BUSINESS
ANALYTICS
REVIEWER
 CHAPTER 1: DATA ANALYTICS FOR ACCOUNTING - Data Analytics enables auditors to improve its risk assessment in
both its substantive and detailed testing.
2. Management Accounting
What is Data Analytics?
- Aims of MA is similar to Data Analytics
- Volume of data: o Asked questions by management
o 2010 – 2 zettabytes o Find data to address questions
o 2020 – 59 zettabytes o Analyze the data
o 2024 – 149 zettabytes o Report the results to management
- process of evaluating data with the purpose of drawing - Same job description M. Accountant and Data Analyst
conclusions to address business questions. 3. Financial Reporting and FS Analysis
- Effective DA searches the ff to discover unknown patterns or - Improves quality of estimates and valuations
relationships: 4. Tax
o Structured data ( adheres to a predefined data model in - Predictive analytics
a tabular format) - predict the potential tax consequences of a potential
o Unstructured data (does not adheres to a keme) international transaction, R&D investment, or proposed merger
- the process of Data Analytics aims to transform raw data into or acquisition in one of their most value-adding tasks, that of tax
knowledge to create value. planning.

BIG DATA IMPACT CYCLE

- datasets that are too large and complex for existing systems to - Data analytics model by Isson and Harriott
handle
- FOUR V’s
o Volume – size of dataset IDENTIFY THE QUESTIONS
o Velocity – speed of data
- Business problem that needs addressing
o Variety – number of types
- Concrete, specific question potentially answerable by data
o Veracity – quality of data
o AUDIENCE – who will use the result
o SCOPE – is the question too narrow or too borad?
o USE – how will the results be used?
HOW DATA ANALYTICS AFFECTS ACCOUNTING:
MASTER THE DATA
1. AUDITING:
- Embrace technology - Knowing the available data
- Technology will enhance quality, transparency, and accuracy of - Does the data help address the business problem
the audit. - How to access, availability, reliability, frequency of updates
- Need to consider:
 o Review data availability in a firm’s internal systems - Iterative process
- Slice, dice, and manipulate data, find correlations, revise and
rerun the analysis
PERFORM TEST PLAN

- Extract knowledge from the data to address questions and

Communicate Insights and Track Outcomes
problems.
- Identify relationship between the response variables - Insights are formed and communicated
(dependent) and those items that affect the response (predictor, - Some outcomes are continuously tracked
explanatory, independent variables) - Executive summaries, static reports, digital dashboards
- Model, simplified representation of reality - Back to step 1

Provost and Fawcett – eight different approaches

1. Classification – assign each unit in a population into a few categories DATA ANALYTICS SKILLS NEEDED
2. Regression – predict a specific dependent variable based on
1. Clearly articulate the business problem
independent variable inputs using statistical model. Basta
2. Communicate with the data scientists about specific data needs
relationship inaassess. Cost driver to allocate overhead as par5t of
3. Draw appropriate conclusions tp the business problem
activity-based costing.
4. Present results in an accessible manner
3. Similarity Matching – identify similar individuals based on data
known about them. Find new customers that resemble their best
customers.
4. Clustering – divide individuals into groups in a useful meaningful SKILLS ANALYTIC-MINDED ACCOUNTANTS SHOULD HAVE
way. Groups of similar data elements and underlying drivers of those 1. Developed analytics mindset – know when and how can DA address
groups. questions
5. Co-occurrence grouping – discovers association between individuals 2. Data scrubbing and data preparation – process to clean and prepare
based on transactions involving them. Amazon who bought this the data before analysis
item. 3. Data quality – completeness, reliability, validity
6. Profiling – characterize typical behavior of individual, group, or 4. Descriptive Data analysis – basic analysis to understand quality
population. Understand typical behavior to identify abnormal 5. Data analysis through data manipulation - diagnostic, predictive, or
behavior. prescriptive
7. Link prediction – predict connections between 2 data items. FB 6. Statistical Data analysis competency – approach that will use
kineme friend suggestions. statistical data analysis to draw conclusions and make
8. Data reduction – nirereduce yung amount ng info to focus on most recommendations
critical part. 7. Data Visualization and data reporting – report result of analysis

ADDRESS AND REFINE RESULTS

 CHAPTER 2: MASTERING THE DATA o location (mean)
o range (standardard deviation, minimum,maximum)
o shape (quartile)
INTERNAL SOURCES:
o size (count)
- Accounting IS
- Supply Chain MS
- Customer relationship MS
- Human Resource MS

ENTERPRISE RESOURCE PLANNING (ERP) – enterprise System

- Business management software that integrates applications

from throughout the business into one system.

ACCOUNTING INFROMATION SYSTEM

CHAPTER 3: PERFORMING THE TEST PLAN

4 Types of Data Analytics

1. Descriptive Analytics – summarize existing data to determine what

happened in the past
2. Diagnostic Analytics - explores current data to determine why
something happened the way it was
3. Predictive Analytics – Procedures used to generate a model that can
be used to determine what is likely to happen in the future.
4. Prescriptive Analytics - to identify the best possible options.
- Data Reduction / Filtering – papaliitin number of observations
to focus on relevant items.
Data Analytics model depends on the question trying to answer and access o Identify the attribute you would like to reduce or focus
to the data needed. on
o Filter the results
o Interpret the Results
DESCRIPTIVE ANALYTICS - help summarize what has happened in the past o Follow up on results

- Summary Statistics - describe a set of data in terms of: DIAGNOSTIC ANALYTICS

- Profiling - identifies the “typical” behavior of an individual,
group, or population. BY understanding the typical behavior,
we’ll be able to identify abnormal behavior more easily.
- Clustering – identify groups of individuals that are common
underlying characteristics.
- Similarly Matching – grouping technique used to identify similar
individuals based on data known about them.
- Co-occurrence Grouping – discovers associations on individuals
based on transactions.