October 20,2020

AUDITING
ANALYTICS
Management Accounting Definition - ICMA

CONTENTS
Skills to be acquired by a Management Accountant

Importance of implication of BA in Management Accounting

Managerial Accounting Data Analytics Framework

Balanced Scorecard

Highlights about the implications for management accounting /accountant in the

analytics movement

Audit Analytics

Implementing Big Data Analytics in Audits

Data Analytics-a game changer for public accountants

Areas where da can be used

Challenges in Auditing Analytics

Academic Research

Let’s dive in..

08/26/2021 Annual Review 2
 Management
Accounting
Definition - ICMA
“The application of professional
knowledge and skill in the preparation of
accounting information in such a way as to
assist management in the formulation of
policies and in the planning and control of
the operation of the undertakings.”

08/26/2021 Annual Review 3

Skills to be acquired by a Management Accountant

Intuition,
creativity and
communicatio
n skill.

Require
extensive
training in
modelling
Importance of implication of BA in Management
Accounting

Forecastin
Planning Budgeting
g

• For this MA need to

have sufficient data for Relevant
proper decision
Consistent and
making. So Data Should
be:-
Detailed
Reliable
Complete
Timely Accessibl
e Data can be internal and external
Accurate and this need to be Manged well.
For this, MA need to consider risk
and different techniques to
improve overall performance.

08/26/2021 Annual Review 5

 Managerial Accounting Data Analytics Framework

08/26/2021 Annual Review 6

 Balanced Scorecard

 It was first introduced in 1992 by David Norton and Robert Kaplan, who took previous
metric performance measures and adapted them to include non-financial information.
 It is a performance metric used to identify, improve, and control a business's various
functions and resulting outcomes.

08/26/2021 Annual Review 7

 Management
MAs must have Accountants
explicit relevant (MAs) must
skills for focus on holistic
business view on
analytics analytics
culture

HIGHLIGHTS ABOUT THE

IMPLICATIONS FOR
MANAGEMENT ACCOUNTING
/ACCOUNTANT IN THE MAs must focus
MAs must focus
ANALYTICS MOVEMENT on fact-based
on a visualized
decisions that
reporting
  create value and
process
impact

MAs must focus

on predictions
and forecasts
Audit Analytics
• Identifying and assessing the risks
associated with accepting or continuing
an audit engagement.
• Assessing the risks of material
misstatement of the financial
statements due to fraud.
• Performing preliminary analytical
procedures, as well as evaluating the
design and implementation of internal
controls and testing their operating
effectiveness.
• Performing substantive analytical
procedures in response to the auditor’s
assessment of the risks of material
misstatement.

08/26/2021 Annual Review 9

 Implementing Big Data
• Implementing Big Data analytics is not a trivial
Analytics
endeavour. Itin Audits
requires individuals with expertise
in data analytics, as well as appropriate
hardware and software resources.

The volume of Big Data introduces significant

computational challenges. Many common
analytical techniques used in auditing could not
be applied to Big Data.

Privacy is a potential concern when Big Data is

used. Some analytics may require clients’ non-
public information beyond that usually released
to auditors.

08/26/2021 Annual Review 10

Data Analytics-a game changer for
public accountants
 Big data is seen as the next
wave of future and those
falls behind will lag in the
long-run competition.
Surveys support to the fact
that CFO’s and CIO’s rely on
data for developing
business strategies (KPMG
survey)
08/26/2021 Annual Review
 For auditors, contents of big
Big data can be defined as
high-volume, high-velocity and
high variety information assets
that demand cost-effective,
innovative, forms of
information processing for
enhanced insight and decision
making.
data refers to collection and
arrangement of multiple
types of data, including a mix
of traditional structured
financial and non-financial
data, logistics data, sensor
data, emails, telephone calls,
emails, and other internal as
well as external data.
11
 

Areas where DA can be used

To analyze financial activity and make Advisory services

decision that will ease burden of tax
department while conducting year-
end compliance tasks.

Tax related purposes- reducing tax

Maintain audit records errors, finding tax-saving
opportunities.

08/26/2021 Annual Review 12

 Training and
expertise of
Challenges in
auditors
Auditing
Data availability
Analytics
relevance and
integrity

Expectations of
regulators and
financial statement
users.
Academic Research
o Should analyze how the adoption DA
impacts business risks
o Research into investor expectations
o Board of directors perception level on
adopting DA
o Research on to analyze client’s
transaction errors
o DA tools could flag suspicious accounts
relationships

08/26/2021 Annual Review 14

 Future auditors could utilize
the merits of DA without any
doubt. Even though there are
challenges as mentioned
earlier, proper researches
and precautions with regard
to the same will prove the
effectiveness of using DA in
auditing field.

THANK YOU!