The rise of data analytics

Written on Jan 29, 2018

Data analytics

By Laura Hay, CPA, CAE

The computerization of financial information is not a new concept. But improved access to complete datasets, increased availability of analytical software, and capabilities and expectations for real-time and predictive information are driving a rapid cultural shift in auditing and financial reporting.

With the rapid pace of data creation, the integration of data analytics has become a requirement for relevance, rather than a competitive advantage for CPAs. Data analytics makes possible:

•Testing 100% of a population.
•Incorporating external information.
•Automating routine procedures.
•Improving the effectiveness of auditing and reporting processes.
•Broadening the understanding of the entity’s environment.
•Accessing new sources of evidence…while some traditional sources disappear.

•Reducing some risks…while introducing new types of risks.

Monitoring, reporting and auditing can be conducted on more of a continuous and real-time basis. In this environment, has the profession kept pace in its practices, professional standards, and education and training?

A new graduate study model
The first class of students are testing a new model for preparation in a Master’s of Accounting with Data and Analytics program initially launched by KPMG LLP, The Ohio State University Max M. Fisher College of Business, and Villanova School of Business. The program integrates technologies used in practice with accounting and auditing, and with each school's curriculum. Tuition, room and board are fully funded by KPMG for 135 successful applicants, who work as interns on KPMG audit teams and join the firm’s audit practice after graduation.

“Right now, the profession is going through tremendous change and disruption,” said Roger O’Donnell, CPA, global lead partner for KPMG’s D&A initiative. “Our Master's program is an opportunity to provide a set of skills needed for the future generation of CPAs.”

O’Donnell notes that the program doesn’t create data scientists, but a set of skills that all CPAs will need for the future, including a better understanding of:

•Client or employer systems and how they interact.
•The different elements of data and how information is being generated.
•What is good data? – Is it complete, accurate and reliable to support reporting or audit conclusions?

“The desired outcome is an appreciation of where information is coming from, what are the populations, and how do they tie into conclusions and judgments,” he said.

The program is being expanded to nine universities, including one focusing in tax.

“Tax professionals will require these same skills to assess that the vast amount and the quality of data are being reported correctly,” O’Donnell said. “Making information richer, with visualization capabilities, will assist all professionals in better articulating positions and reporting.”

“This partnership provided the opportunity for The Ohio State University to revisit curriculums and incorporate skills faculty already possessed which had not been traditionally reflected in the curriculum,” said Tzachi Zach, faculty director, master of accounting program, The Ohio State University. “Data analytics is an increasingly important skills set that auditors and accountants will need.”

Zach noted that the program has also been an opportunity to increase the diversity of students entering the major and the profession, including geographic, educational background and social diversity. “There is high excitement among both faculty and the students,” said Zach, and OSU will continue to explore the addition of data analytics content in various curriculums.

Zach urged prospective students to examine both tracks – sponsored and non-sponsored for its competitive advantage. The new programming is available to all Masters of Accounting students at all the participating universities, as these skill sets become critical to the profession and workplace more broadly.

“Our belief is that it helps the entire population: financial planning and analysis, investment decision-making, supply chain – I can go on,” O'Donnell said. “Each providing synergy to financial reporting and the CPA’s effectiveness in driving business.”

A potential new pathway to CPA
The National Association of State Boards of Accountancy (NASBA) and the AICPA are currently studying an alternative curriculum pathway to the CPA, reported NASBA President Ken Bishop at the December meeting of the Accountancy Board of Ohio. CPAs currently rely upon supplemental work of data scientists. As this need grows, should there be a CPA specialization that looks more like a technologist pathway, without replacing the current curriculum path?

Resources are being devoted in 2018 to study the issue and consider model laws. States would still need to adopt the recommendations as laws or rules for licensure in their state.

Higher order skills
Automation of the routine and the availability of advanced tools and resources for analysis are providing new views for CPAs on business risks, operations, and potential issues, allowing for the application of higher order and higher value skills for employers and clients. Strategic insight, professional judgment, evaluation and critical thinking are now demands for the CPA, in addition to a depth of knowledge on professional standards or an industry.

University curriculums are evolving to address the acquisition of higher order skills in graduate study and experience. The CPA exam is evolving to reflect these skills as requirements for certification. But a high current strategic priority for the profession is how we are addressing this evolution in culture, training, standards, and processes. Although significant work is being done, the pace of change is rapid, and has implications for all sizes of employers and areas of practice.

Laura Hay, CPA, CAE, is executive vice president of The Ohio Society of CPAs and staff liaison to the Accounting & Auditing Committee. She can be reached at Lhay@ohiocpa.com.

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  1. dan bayer | Feb 06, 2018
    very very helpful thank you

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