How can Data Science Help Accountants?

Data has become a buzzword in business, impacting every job role including accountancy. In accounting, a basic knowledge of technologies like cloud accounting and big data is expected as it is now seen as a driver for improved performance. This means accountants are having to step up in this new work environment which is both dynamic and demanding. 

The Journal of Accountancy repeatedly focuses on why accountants need to be prepared for an AI and data-powered world. They have also put emphasis on making the curriculum for accountants more inclusive of technology. As accounting firms prepare for a more competitive and advanced market with the help of new technological tools, professionals have to aim towards acquiring data analytics skills.

If you work as an accountant or are planning to pursue this field, then a data science course can make your day-to-day tasks more effective and make you a more valuable asset. Read on to find out how harnessing data could be crucial to your professional development.

A new league of accountants 

Data is growing at an exponential rate and, with this vast amount of accessible information, gaining new insights becomes imperative. As a result, an increasing number of companies now expect accountants to go beyond their role of documenting and analysing financial transactions to add value to business decisions. Those who are well-versed with data science skills will be able to carry out these new responsibilities with ease. 

Use of data 

The impact of data is evident within the world of finance and accounting. Accountants make use of data analytics to help businesses discover insights and identify process improvements.

Firms that are increasingly data reliant can serve their clients effectively by better understanding their needs. Time spent on tedious entries can instead be used to promote clients’ businesses and future growth.

Big data can be used to dig out behavioural patterns in consumer and market trends which accountants can use to assist in identifying profitable investment opportunities. 

Types of data analysis in accounting:

Knowledge of the key data types can help you better understand how analytics work and how you can make your work more insightful.

1. Descriptive analytics – Descriptive analytics in accounting looks at data in depth. It helps in the accurate collection, categorising and classification of a vast amount of information to make accurate reports. 
2. Diagnostic analytics - Data science facts provided from this analysis are used for monitoring any changes in data. They serve as valuable indicators based on which one can evaluate future performance by understanding past results. 
3. Predictive analytics - Predictive data analytics in accounting deal with ‘what’s going to happen and focuses on future forecasts and outcomes. Through this, accountants can advise clients to stay better prepared and plan accordingly.
4. Prescriptive analytics - This analysis focuses on identifying the best option to achieve the desired objective. The focus is ‘what should happen’ and accountants identify the course of action from there. 

How can accountants make the most of a data science course? 

The required skills of an accountant will increase in the future to meet the new demands of the industry.  A data science course can help accountants become more versatile and dynamic with their work. We expect to see the role of the accountant to widen, accommodating the role of a data scientist and financial advisor as they directly impact business dealings and decisions. In fact, there are many ways in which accounting and data science go hand in hand. For instance:

• Technical knowledge: While many would hesitate at the prospect of collecting a vast amount of data, accountants acquire excellent quantitative skills meaning they can easily aggregate and summarise information with precision.  
• Troubleshooting: Working with numbers and volumes of information mean accountants often have an organisational and inquisitive mind-set. While they can store information easily, they can also use it for making relevant and informed decisions. This ability to transition, required for various types of analytics, is part of an accountant’s regular job role. 
• Larger picture: An accountant also has a greater vantage point allowing them to see larger business implications. Making valuable decisions using data insights is essential and this requires understanding the overall business context which comes naturally to accountants. 

Combining data analytics with accountancy could be the key to success in your professional journey. You can combine your ACCA course with a free data science course to enhance your earning potential. These insightful programmes could be instrumental in helping you reach your career ambitions.

This article is written by Nandita Kaushal and edited by Amelia Hayward-Cole.

Find out more about Data Science and Accountancy from our Director of Professional Qualifications here.

Sources:

https://www.journalofaccountancy.com/newsletters/extra-credit/technology-in-accounting-education.html