Chapter 1. Data Analytics in Accounting and Business

Tax compliance deals primarily with filing tax returns. In contrast, tax planning primarily helps

minimize the amount of taxes paid.

An attempt to estimate or predict, for each unit, the numerical value of some variable using some type of statistical model would be called the _____________ approach.

regression

In a significant paradigm shift, data analytics will allow auditors to:

stay engaged with clients beyond the audit

The Forbes Insight/KPMG report, "Audit 2020: A Focus on Change.", found that the vast majority of survey respondents believe that technology will enhance the quality, _____, and accuracy of the audit.

transparency

Asking colleagues what they think of the analysis would be considered to be part of which stage of the IMPACT cycle.

Address and Refine Results

Which would NOT be considered as one of the seven skills that analytic-minded accountants should have?

Become a data scientist

The process of evaluating data with the purpose of drawing conclusions to address business questions is defined as:

Data Analytics

Which would NOT be considered as one of the seven skills that analytic-minded accountants should have?

Data description

True or false: Data analytics involves only the analysis of unstructured data.

False

_____ data might be used to address many of the questions facing financial reporting.

Internal and external

_____ discovered from past archives enable business to identify opportunities and risks and better plan for the future.

Patterns

The 3 V's describing Big Data include: Volume, Variety and _____.

Velocity

The real value inherent in data comes from _____, discovering the various buying patterns of customers, investigating anomalies that were not predicted in firm operations, forecasting future demand and supply and so on.

data analytics

Audit firms are increasingly considering operational data such as manufacturing logs, customer relationship management data and supply chain data primarily to _____:

help companies refine their operations

According to the textbook, Data Analytics can be applied to taxes by helping to predict the tax consequences of a potential international transaction, a proposed merger or acquisition or _____.

investment in R&D (research and development)

Traditional audit approaches tested data _____ of the transactions; in contrast, audits that fully integrates big data and analytics will test the full _____ of data.

sample; population

McKinsey Global Institute estimates that Data Analytics could generate up to $3 _____ in value each year.

trillion

Which would not be considered as one of the seven skills that analytic-minded accountants should have?

Ability to house huge data sets

In which step of the IMPACT cycle do data analysts slice and dice the data, find correlations, ask ourselves further questions, ask colleagues what they think, and revise and rerun the analysis?

Address and Refine Results

Slicing and dicing the data, finding correlations, revising and rerunning the analysis would be considered to be part of which stage of the IMPACT cycle.

Address and Refine Results

Which testing approach would be considered to be an attempt to discover associations between individuals based on transactions involving them?

Co-occurrence Grouping

After data analysts slice and dice the data, find correlations, ask ourselves further questions, ask colleagues what they think, and revise and rerun the analysis, what comes next in the IMPACT cycle?

Communicate Insights

Data Visualization would be part of which step of the IMPACT cycle?

Communicate Insights

Asking questions like "Are our customers paying us in a timely manner" would be the first step in which of the following processes?

IMPACT cycle

Due to its iterative nature, what comes next in the iterative IMPACT cycle after outcomes are tracked?

Identify the questions

Reviewing data availability in a firm's internal and external systems would be an example of which step in the IMPACT cycle?

Master the Data

ETL (Extraction, Transformation and Loading) would be an example of which step in the IMPACT cycle?

Master the Data (Step 2)

Which testing approach would be considered to be an attempt to identify similar individuals based on data known about them?

Similarity Matching

Data Analytics may use what source to assess the probability of a goodwill write-down, warranty claims or the collectability of bad debts?

Social media

A digital dashboard would be part of which step of the IMPACT cycle?

Track Outcomes

True or false: Data Analytics can impact Financial Accounting by helping evaluate estimates and valuations.

True

True or false: Data analytics expands auditors' capabilities in services like testing for fraudulent transactions.

True

The Forbes Insight/KPMG report, "Audit 2020: A Focus on Change.", found that the vast majority of survey respondents believe that technology will enhance the quality, transparency, and _____ of the audit.

accuracy

Data sets that are too large and complex for businesses' existing systems to handle are called _____.

big data

An attempt to assign each unit (or individual) in a population into a few categories would be called the _____ approach.

classification

The firm practice of monitoring competitors, customers and suppliers to better understand its opportunities and threats is called _____.

data analytics