Accounting Analytics

Financial Accounting: Collecting and analyzing business performance information for external decision-makers, such as stockholders, banks, investors, and suppliers.

Generally Accepted Accounting Principles (GAAP): Common set of financial accounting principles, rules, standards, and procedures issued by the standard-setting bodies. Allows for easy comparison of companies

Managerial Accounting: Focuses on collecting and analyzing business performance information for internal decision-makers and management

Auditing: Investigates accounting and financial records to help determine whether they conform with GAAP and other

Internal Auditors: Company employees who independently and objectively evaluated the organization’s financial and operational business activities

Tax Accounting: Focuses on collecting and analyzing transactions to ensure they conform with tax law

Obtaining the Data

  • Financial accounting data: Materials prepared by a company to assist decision-makers external to the company

    • General Journal: Record of business transactions that have a financial impact on the company

    • General Ledger: Record-keeping system used to summarize journal entries

    • Financial Statements: Collection of reports that communicate a company’s financial results, condition, health, and cash flow

      • Balance Sheet: Statement of company’s assets, liabilities, and equity at a specific point in time

      • Income Statement: Statement of company performance summarizing revenues and expenses to determine how much money the firm earned or lost over a period of time

      • Statement of Cash Flows: Statement summarizing cash inflows and outflows over a period of time

      • Statement of stockholders’ equity: Statement of the increases and decreases in stockholders’ equity

  • Securities and Exchange Commission (SEC) Filings

    • Form 10-K: Annual disclosure of accounting information from publicly traded companies to ensure that everyday investors have all pertinent information needed to make an investment decision

    • Form 10-Q: Quarterly disclosure of accounting information from publicly traded companies. Abbreviated version of a 10-K

    • Form 8-K: Form used to notify investors about important events or announcements not made ordinarily.

  • Managerial Accounting Data

    • Standard Cost: Estimated or expected cost of one unit of production

    • Point-of-sale system data: Stream of transactional data

    • Supply chain management system data: Interactions with suppliers to coordinate the flow of goods and services from production to customer delivery

    • Customer Relationship Management System Data: Information about interactions with customers

    • Human Resource Management System Data: Information about interactions with employees

Descriptive Accounting Analytics

  • Common-size financial statements: Each line item is expressed as a percent of net revenues or of total assets. Helps to compare different companies or time periods through standardization

Diagnostic Accounting Analytics

  • Fuzzy Matching

  • Sequence Checks

  • Duplicate Transactions

  • Benford’s Law

  • Variance analysis (predicted vs actual)

  • Reconciliation of balances

  • Internal controls testing

Predictive Accounting Analytics

  • Classification

  • Regression

  • Time-Series Analysis

Prescriptive Accounting Analytics

  • Marginal/Incremental Analysis

  • Cash Flow Analysis

  • Scenario Analysis

  • Goal-Seek Analysis

  • Sensitivity Analysis

Report Results

  • Visualizations

  • Tables