Big Data Analytics in the Accounting World

Blogger: Medha Bhasi

In an increasingly data-driven world, extracting actionable information from the data is becoming more difficult, and the question remains, are we able to exploit the data to our full advantage? To keep up with today’s rapidly complicated governance and risk management business model, progressive audit firms have started using technology to change the way in which audits are conducted. As the reporting and disclosure requirement is increasing, the auditors continue to gather more information from clients and operations, but knowing how to analyze and apply it is imperative. Business analytics shows us how to analyze the volumes of information obtained. For many of us, this term is comparatively new in accounting. Data Analysis is the process of extracting data from different sources and categorizing it to identify and analyze data patterns to enhance productivity with the aid of specialized systems and software. In the auditing world, it will enable the auditors to analyze both structured and unstructured data.

As companies like Amazon, Netflix and Target try to position themselves to reap the benefits from data analytics and harvest data about consumers’ buying patterns, similarly the use of analytics has the potential to help management and internal and external auditors conduct more effective and efficient audits. Data analytics can play a key role in different aspects of accounting. An accounting professional is now required to perform tasks with skills that will integrate analytics into the audit process and enhance audit quality by producing higher quality audit evidence. One of the significant trends after the integration of analytics in audit is permitting both external and internal auditors to look at the entire data sets rather than manually reviewing statistical samples. Using audit data analytics throughout the audit process will not only reduce repetitive tasks, but it will also help in discovering the best course of action.

Accounting professionals don’t need to have all the knowledge required to be a data scientist or computer engineer to benefit from the data revolution. However, it is important that they go beyond the traditional accounting concepts and build a strong background in the techniques and tools to evaluate data more effectively. This will aid in decision making and enhance the current audit practice. The leap from traditional audit approaches to one that fully integrates big data and analytics in a seamless manner is quite massive. Large accounting firms have already started embracing analytics in tax auditing consulting and risk management.

Analytics in External Auditing

Big data and analytics are enabling external auditors to better identify financial reporting, fraud and operational business risks, and tailor their approach to deliver a more relevant audit. Audit data analytics methods can be used in audit planning and for improving auditors’ knowledge about the transactions and balances underlying the financial statements. This will enable the auditor to assess the risk by analyzing data to identify patterns, relationships, and any variation from models. This will improve the quality of analytical procedures in all the phases of audit as these methods give auditors new insights about the entity and its risk.

Analytics in Internal Auditing

Internal audit plays a key role in ensuring that the company is operating under a sound internal control environment by carrying out various testing and internal control procedures. Internal auditors act as strategic advisors by analyzing data to produce actionable information. The value of integrating analytics into the audit will only be realized when used by auditors to modify and customise the scope, nature and extent of the audit. This will require auditors to develop new skills and techniques on knowing what relevant questions pertaining to the data are to be asked, and the ability to use analytics output to produce audit evidence and draw conclusions. As opposed to sampling a small percentage of data, the data analytics tools will allow the internal auditors to test 100 percent of various data attributes, which would help the internal auditors identify the potential business risk, such as fraudulent payments and payroll fraud.

Challenges in Analytics in Accounting

There are various issues and challenges. The biggest challenge is how to access the data and analyze it to produce actionable information. Sometimes access to audit relevant data can be limited. Multiple accounting systems within the entity contain different sets and types of data. The complexity of data and multiplicity of data sourcing for analytics remain one of the key challenges in seamless integration.

However, at the end of the day, big data analytics play a key role in audit by creating better business risks assessment, helping to derive new insights into risks, identifying frauds, errors in internal control and compliance failures. It helps transform the audit process for better financial reporting, and shifts the focus to information that counts rather than information overload.

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Ways to Effectively Manage Your Finances Before and After College

Blogger: Triza Nganga

As an accounting major enrolled in graduate courses and planning to sit for the CPA Exam soon, I fully understand the financial challenges faced by my peers to pay for our education. There are numerous opportunities that accounting majors could take advantage of before and after graduating to help us make sound financial choices.

Accounting firms offer different financial benefits and incentives to their employees. The following are some of them that I would like to share:

  1. CPA Bonus: Some firms reward employees with bonuses of up to $5,000 for passing all four parts of the CPA exam within a certain period of time. Firms strongly encourage obtaining a CPA license for career development, management opportunities, financial services experience and more. This is a great way to be rewarded for all your effort in preparing for the exam.
  1. Student Loan Reimbursement: Firms may assist employees in reducing their student loan debt through different benefits. For example, PwC’s Student Loan Paydown benefit will pay $1,200 a year towards the loans of associates and senior associates.
  1. 401(k) Retirement Plans: Employees can contribute a portion of their wages to their 401(k) Retirement Plan and often receive a matching contribution from their employer. Many firms encourage employees to participate in their 401(k) plans to have a financially secure retirement with the financial assistance of the firm.

In addition to post-graduate financial benefits, accounting majors could also reap financial benefits and opportunities while in school. Through firsthand experiences combined with my observation of how other students tackle student loan debt and save money, here are a few tips I would like to share:

  1. Scholarships: Apply, apply, apply! Billions of dollars in scholarships go unclaimed each year because students are not applying for them. If you come upon a scholarship that you are eligible for, don’t be shy. Go ahead and apply! You can find scholarships through the university website, accounting-related organizations and other organizations you are involved in, the financial aid office, where you work or have previously worked, scholarships search websites, and more.
  1. Discounted purchases: Our school has arrangements with various local vendors for discounts to students for a variety of purchases including auto services, dining, housing, and entertainment. All you need is your student ID. Other universities may offer similar programs to their students.

You will definitely enjoy these discounted savings!

  1. Open a savings account: Banks and credit unions offer savings accounts geared towards students that are cheaper to open and have lower fees. Save the money you have remaining from your earnings as soon as you have paid your immediate expenses. In case of emergencies, such as extra tuition or student-related fees, car breakdown, and injury, having a savings account helps fund these unexpected situations. As a result, you can avoid incurring late fees or borrowing money with interest that increases your debt.
  1. Minimize credit card balance: It is not as easy to pay off a credit card as it is to have access to one. Therefore, it is essential to make your payments on time and only charge what you can afford. Paying the full balance on time each month will help you avoid the interest on your remaining balance and late fees. Another advantage to this is you will improve your credit score in time for future purchases that perform credit checks.
  1. Use campus amenities: Check the university website to see upcoming events and activities held right on campus. Doing this before spending money off campus can save you money since most of the events and activities at school are free. For example, movie nights, comedy shows, and fitness classes are held on campus among many others.

I hope these benefits and opportunities will help you effectively manage your finances before and after graduation.

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The Importance of Finding a Passion Outside of Your Major

Blogger: Pablo Juarez Herrera

You may seek to excel in your field of study by earning good grades or strive to gain applicable real-world knowledge through eager learning. However, your major shouldn’t be your one and only passion. In fact, it doesn’t even have to be one of your passions. You can simply be curious about it.

I don’t live and breathe accounting every moment of my life, but I can wake up and be curious about new standards being passed and how accounting affects our daily lives. Let me be clear, you should enjoy the work you do and, as long as that curiosity I mentioned exists, then you’re on the right track. So, rather than viewing the choosing of your major as this process of searching for “something” that will ultimately define and complete you, enrich your college experience by picking up an activity or joining a club outside of your major that you enjoy simply because it’s fun.

During my first year of college I wasn’t very involved in any extra curricular activities. In my second year I became slightly more involved, but only in organizations related to accounting. It wasn’t until my junior year of college that I decided to join an organization outside of my major. For me that was UTD’s student-led newspaper The Mercury. I always had an affinity for sports and the journalism behind it intrigued me so I decided to give sports writing a chance. The benefits ended up being two-fold.

Helped me expand my network

Although having business connections can be beneficial, especially in a business-oriented field of study, there can be great value in having connections in other areas of expertise. Through the newspaper I was able to interact with colleagues from various majors. It made me more aware of my surroundings and allowed me to view certain situations in a different manner. I became more appreciative of others people’s talents and ideas.

Provided me with a conversation starter

As I was in the process of searching for an internship, I can’t tell you how many times interviewers brought up the fact that I was a part of a publication and proceeded to ask me about it. They were genuinely interested, and they could see that it wasn’t something I joined just to pad my resume. As I went through the recruiting process, it continued to be a topic of conversation and I was able to share my experiences, which lead to more genuine conversations. I didn’t have to bring up the weather or robotically ask them questions they’ve heard a thousand times.

Taught me how to build relationships

Through my time with The Mercury I’ve done countless interviews. But the first time I had to contact a coach and interview them I was pretty nervous. As time went on, I got to know the players and coaching staff better. I would sometimes see them in the hallway and have a brief conversation with them. As we became more comfortable around each other our interviews just became casual conversations. I learned how to deal with various personalities and really got to know others on a more personal level.

So I encourage everybody, if time permits, to find an organization or hobby outside of your major that you can have a passion for. Don’t do it just because you think it’ll make your resume look good. Chances are that there can be relevant life lessons learned that will make you a better individual and can be applicable to any field of study.

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Last-Minute Guide to the Updated CPA Exam

The updated CPA Exam makes its debut at the start of this month with an adjusted focus designed to continue to ensure that the candidates who pass it have the required knowledge and skills to protect the public interest. This article from Journal of Accountancy details everything you need to know about the updated exam.

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What VITA Means to Me

Blogger: Rachel McKenna

Signing up for the VITA Program, I had the expectation that I would be assisting families prepare their tax returns. I had heard about the program from my friends and read about the requirements through a previous TXCPA2B blog posting, but this was all new to me. Attending the training and hearing that other students had paid money to earn course credit for this was surprising, but little did I know they were not necessarily paying for the knowledge—they were making an investment in the experience.

Though sitting through 12-hours of training is not exactly my idea of ‘fun,’ I did come away with the basics that have given me a foundation for my volunteer shifts. I tutored other UT Dallas students in preparation for our certification exam in hopes that I could help them see that the certification was within reach. Additionally, as a campus VITA Representative, I have gotten valuable feedback on why some students do not finish the certification and why others will not stop until they do.

Personally, I completed all of the steps necessary to begin volunteering because my purpose in joining VITA as a first-year tax preparer was to simplify the process for families seeking our help. The trainers dedicated their time and the government is sponsoring the VITA Program for a reason—they have seen the ROI for the families that use this program. In my interactions with the clients I serve, this fact is evident.

Each client and I had something in common, and the similarities between our stories clarified that there was a reason I was there helping them. Though I feel as though I am just beginning this process as a VITA tax preparer, this experience has been an indispensable part of my college learning. Giving back in a way that allows me to use my skillset for the good of the community and serve in a meaningful way makes the time investment worth the effort.

Persevering and finishing what I started to become an IRS Certified Income Tax Preparer is one of the decisions I most pride myself in during my time in college. I recommend the program not for the purpose of having an extra line of content on your resume, but for the relationship-development aspect. As a VITA volunteer, you are part of a nationwide effort to improve the lives of other individuals, all while having fun! What more could you ask for?

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Network, Network, Network!

Blogger: Angie Wong

Networking is key. When I started college, I convinced myself I didn’t have to make new friends or talk to anyone else because I already knew so many people here. However, my group of friends was always changing. In addition, I found a student organization that I enjoyed participating in. Initially, when the officers in the student organization stressed how much networking could help a student, I was hesitant. I did not like the idea because I was comfortable in my little “box” and feared putting myself out there. As I progressed in my college education, I had friends who started pushing me to talk to professionals. Not only did I start making connections with professionals, but I also made new friends.

Networking in college can benefit you in many ways. For example, the more you speak with professionals, the more confident you become in speaking with other peers and other professionals. You will gain the confidence you will need when you graduate and start working full time anywhere. It may seem intimidating at first, but the more practice you get and the more people you talk to, the more confident and comfortable you will be.

Another way networking is beneficial is that you create these connections that you may continue to speak to throughout your career. They may come to your aid later in your career; for example, if you are looking for a new job, looking to connect a colleague to a specific company, field, or position, or if you want to learn more about other professions. These connections you create may also become close friends you keep in touch with in the future.

What is the first step you should take to start networking? You could join a student organization that allows you to make different connections, from your peers to professionals. This will give you the practice to become more comfortable with speaking to others.

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TXCPA2B Named One of the Top 100 CPA Blogs by Feedspot

Congratulations to TXCPA2B for being named one of the Top 100 CPA Blogs by Feedspot. A huge “thank you” to our wonderful University of Texas at Dallas student bloggers who continue to submit insightful, informative and well-written content for our blog. This honor wouldn’t have been possible without you! Also, thank you to our readers/subscribers for helping us make this list!

The full list of the Top 100 CPA Blogs can be found here.

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