Data Analytics: Shaping the Future of Audit
There can be different methods of auditing, which depends on the auditors themselves or their company’s ways of doing things. But as we go forward, technology catches up with us that requires us to mold our techniques to embrace the new technologies that can help us in doing our jobs better. In light of this, auditing is not an easy job as it deals with various data and information, requiring full focus. In this case, data analytics come into the picture, bringing with it four types of analytics that are aiding professional auditors in giving businesses the information for them to make better decisions for the good of their company. Audit firms in UAE are using data analytics that is simply the process of analyzing, gathering, and examining sets of data for the auditors to produce conclusions from that information, using them for the purpose of decision-making.
A couple of years before, everything is done manually and it takes a team or even teams of accountants to go through dozens of financial information piled up on a desk. Since there are always data that keep on coming, the methods of accountants or auditors have been improving in order to meet the needs of businesses efficiently. It is indeed essential that as we receive more and more information or data, we must let go of traditional routines and evolve into an advanced way of dealing with things, seizing the new technology tools that can aid the auditors to continuously provide useful and effective information that can help businessmen in decision-making with regard to the financial side of things.
Most of the Auditing firms in UAE are using this developed technology called data analytics to supply a kind of auditing and assurance service that is cost-effective for businesses in need. It is believed as well that the auditing is being revolutionized by this one.
What is Data Analytics?
The meaning of data analytics is simply the process of analyzing, gathering, and examining sets of data for the auditors to produce conclusions from that information, using them for the purpose of decision-making.
Types of Data Analytics
There are four types of data analytics in searching useful information for the betterment of businesses. It is believed that the more complicated the way of analyzing the data is, the more value it can bring to the table.
1. Descriptive Analytics
This kind of analytics is often used for assessing credit risk, sales cycle (to group customers with accordance to their preferences), etc. Since the question “What happened?” is answered by descriptive analytics, it does give valuable information regarding the past, which is pulled out from the examined data coming from multiple data sources. This helps in finding out if something is wrong or if it is right although there is no explanation on why so. In light of this, some companies find it more helpful when it is paired up with another analytics.
2. Diagnostic Analytics
Diagnostic Analytics is used for establishing the reason on the question “Why did something happen?” by analyzing the past data or performance. There are also techniques involved in this analytic such as drill-down, data discovery, data mining, and correlations. This kind of analytics provide deep insight to problems that arise, and for that reason, some companies use this one. More details regarding a report are available, which help more in making smarter decisions and better business outcomes.
3. Predictive Analytics
This kind of analytics informs people the answer to the question “What is likely to happen?” Predictive Analytics can be said to be about forecasting for it identifies the past patterns in order to predict the future. The likelihood of an event to happen in the future, estimating a measurable amount, or predicting something to happen in a point in the future can all be done through Predictive Analytics. When the latter is properly tuned, it is useful in the fields of sales, marketing, or for other types of forecasts that are quite complicated. Although it sounds advantageous, it should be remembered that Predictive Analytics can only offer an estimate on the accurate details since it still depends on the quality of the data. However, it is still helpful in making better decisions since we are surrounded by uncertainties in this world.
4. Prescriptive Analytics
Prescriptive Analytics is about prescribing what action to take in order to prevent a problem to happen in the future or grasp the opportunity of a promising trend. This aids the person or businessman to determine which course of action is best to take in order to have better decisions.
Why is Data Analytics Important in Investigation Financial Fraud?
Financial reporting, fraud, and operational business risks are identified in an improved manner as the data analytics permits the auditors to do so and even have their approaches tailored to deliver a more relevant audit to the above-mentioned situations.
It is also believed that data analytics could provide improvements to the way auditors perform their audits by having a complete set of data tested instead of just samples, using identification of anomalies or comparison to industry data and trends to aid risk assessment, which points the auditors to investigate further on certain items, and having the organizations’ general ledger systems be analysed in order to provide audit evidence.
As one of the leading audit firms in Dubai having certified auditors in team, FAR – Farhat Office & Co. is situated in Dubai is willing to aid you with regard to this kind of method that will help you to further improve your decision-making skills for the growth of your company. Some of the best auditors in Emirates are with us so we can assure you with good quality service to help you all the way through.