According to a recent report in the Journal of Accountancy, the need for data analytics, and systems that support accurate data, has never been greater for CPAs and accounting firms. Today’s CPAs are as likely to be reviewing complex data reports as they are preparing tax returns. Data analytics has become especially important for auditors, and new initiatives are underway to research and support best practices for auditors. For those working at nonprofit organizations, these skills are also quite relevant.
The Importance of Data Analytics Skills
A survey by Robert Half and included in the previously cited article indicates 61 percent of CFOs believe that data analytics skills are mandatory for at least some of the accounting staff at an organization. Most finance and accounting professionals at both for-profit and nonprofit organizations, understand the importance of using data to build their organizations’ business plans and help them achieve their KPIs.
The Need for Data Analytics
CPAs today must have data analytics skills for several reasons:
* They must be able to use data to enable practices such as continuous monitoring, continuous auditing, and full data set analysis.
* Complete data sets can be used to analyze past trends and make recommendations for future plans.
* Data can be analyzed to uncover patterns and trends in customer, donor, and member behavior that can lead to new marketing programs, improved customer communications, and better materials for members, donors and the public.
A joint AICPA Assurance Services Executive Committee/Auditing Standards Board Task Force is developing a new Audit Data Analytics Guide, which will supersede the current Analytical Procedures guide. The AICPA has also partnered with Rutgers University to form a new research initiative into the use of data analytics for auditors. The new partnership seeks to test the effectiveness of new approaches to auditing using data analytics.
Four Types of Data Analytics Skills
Data analytics is an often misunderstood term. It is helpful to understand the four discrete skillsets included in the umbrella term “data analytics.”
1. Descriptive analytics: Data that provides insight into what is currently happening in the organization. This is commonly found in percent changes, sums, and other simple data records.
2. Diagnostic analytics: The practice of using analytics to examine and explain the causes of past results.
3. Predictive analytics: Helps predict and understand future patterns from past data.
4. Prescriptive analytics: Assists in identifying the best option to choose from among several options. Uses data to identify choices and best course of action.
Among these four skillsets, the first is the one with which most people are familiar and comfortable. Expanding your skills to encompass diagnostic, predictive, and prescriptive analytics can help you use data from your organization to improve outcomes.
Accessing and Managing Data
Nonprofits seeking the benefits of data analytics can benefit from better software to manage their accounting. Good data begins with accurate data collection. The right software ensures that data flows seamless into your accounting system and throughout your organization. MIP Fund Accounting, for example, is a software package designed for nonprofit organizations. Abila MIP Fund Accounting offers several core modules including General Ledger, Accounts Payable, Accounts Receivable, Budgeting and more to provide nonprofit organizations with the data and accounting support they need to be successful.
Within these modules, you will find reports that facilitate data analytics. Using this data, you can provide accounting support throughout your organization so that it can better achieve its mission.
At Welter Consulting, we are committed to helping you find affordable, useful technology, and to learning how to use that technology to its fullest capacity. We work exclusively with nonprofits and government agencies to help them find and use technology solutions. For more information, please contact us or call 206-605-3113.
Recent Comments