Effective Data Analytics Starts With an Effective Data Strategy

Congratulations! You’ve decided to make your engagements more efficient and effective by adopting analytics. Now you just need to figure out how to get from where you are today to a state where you’re able to effectively use an analytics solution to deliver deeper insights to your clients. 

Fortunately, adopting analytics into your accounting practice doesn’t need to happen overnight. You can take a gradual approach to make sure you get the maximum benefit from your analytics package.

This blog will look at how to develop an effective data strategy. We will outline how you will use the data and how the data will help achieve business objectives, such as boosting client retention or improving decision-making. 

You should identify a team member who will champion the analytics implementation. The champion should be a member of the executive team or a senior manager who will drum up support for the analytics project. You should also identify all key stakeholders — departments and employees — who will be impacted by the analytics solution and make sure they are kept up to date as the implementation develops. This will help minimize opposition and ensure your project proceeds as smoothly as possible.  

A good data strategy should also identify:

• technology requirements
• how data will be gathered
• how the data will be used to generate insights
• which employees will create and share the data
• how the data will be shared within your organization and externally
• the steps and timelines related to implementing the data strategy

Building out a solid data strategy takes time, but it will ensure you get the most value from your investment.  

Quality data is key to analytics success

Data capture will be an important factor for many organizations. Data extracted from ERP solutions, financial accounting systems and other sources may not be ready for analysis immediately. It’s important to make sure collected data isn’t corrupt, incomplete or inaccurate. Accounting and IT teams should work together to understand the data an organization is collecting and evaluate its quality before it undergoes analysis. 

Insights derived from incomplete or incorrect data can lead to faulty conclusions, so data quality needs to be a priority. You should start by cleaning up the data that’s most important to achieving your organization’s business goals and then adding other data sets over time.

If your organization is deploying analytics for the first time, it will need to invest in specialized staff and/or training for existing accountants and auditors, depending on their role. Businesses will need to know how to source the data they require — whether internally or from external clients — and how to perform an accurate data analysis. Staff will also need to know how to use the insights gained from analytics to perform better decision-making. 

Once your organization has gained experience in analytics, in-house analytics experts can train other staff. Employees should also be encouraged to continue upgrading their analytics skills, stay on top of trends and look for new learning opportunities. 

Getting started with analytics

As with any new technology project, it’s typically best to start small, even if your organization has big analytics dreams. Your project lead should have a good understanding of what data sources are available and how applying analytics will be beneficial to each data set. Picking a process with a lot of manual work, such as journals testing, is an ideal starting point because it’s easier to show a good return on investment and highlight the benefits analytics delivers. 

Once your organization has completed its first analytics project, it should evaluate the results to determine how effective the solution was. Did it deliver accurate results? Did it save time? Are there areas for improvement? If staff determine the project was a success, they can add analytics to other processes and consider automating some procedures.

Having some training is important to the success of any analytics project. Accounting and audit staff should take some basic analytics courses if they haven’t already. Courses are available from a wide range of institutions, as well as from accounting organizations such as the American Institute of Certified Public Accountants, the Institute of Internal Auditors and CPA Canada. 

Staff should be trained on the basics of how to use analytics in accounting and auditing, as well as receiving instruction on the specific analytics tools they will be using. For instance, Caseware and its partners offer training on its Caseware IDEA analytics platform for both new and experienced users. 

A new era in accounting and audit

The accounting and auditing industries are transforming. Manual processes and spreadsheets aren’t able to take advantage of all the valuable data that’s now available. To deliver better forecasts, conduct more thorough audits and provide meaningful advice to clients and senior executives, accountants and auditors need to turn to analytics solutions capable of examining data in real time. 

Having access to real-time information allows you to provide a complete, up-to-date picture of an organization’s financial health. And if an anomaly is detected, it can be flagged for resolution immediately. Real-time information also allows you to offer more insightful advice to clients and executives, boosting client loyalty and raising your department’s profile.

Switching from spreadsheets and manual processes to analytics solutions and automated artificial intelligence-based scripts won’t happen overnight. It requires an investment in time and resources to build a thorough data plan, train staff in analytics and implement and test the analytics systems. But the payoff can be enormous, giving accounting firms an advantage over their competitors and transforming corporate accounting teams into trusted advisors. 

Discover how analytics can help transform you into a trusted advisor to your clients by downloading our white paper, Your Guide to Using Analytics Software in Audit and Accounting.