{"id":251148,"date":"2023-06-23T13:27:33","date_gmt":"2023-06-23T13:27:33","guid":{"rendered":"https:\/\/imarticus.org\/?p=251148"},"modified":"2024-04-02T06:26:00","modified_gmt":"2024-04-02T06:26:00","slug":"a-step-by-step-guide-to-using-data-analytics-in-management-accounting","status":"publish","type":"post","link":"https:\/\/imarticus.org\/blog\/a-step-by-step-guide-to-using-data-analytics-in-management-accounting\/","title":{"rendered":"A Step-by-Step Guide to Using Data Analytics in Management Accounting"},"content":{"rendered":"

Data analytics and <\/span>management accounting<\/span> go hand in hand with one another. Accounting not only helps in storing the financial accounting details of a company, but it also serves as a great source of data that can be used for deriving meaningful insights.\u00a0<\/span><\/p>\n

With accounting software, it has become possible to go through and analyse accounting data and interpret valuable information. This information is used for making informed business decisions. With accounting data analytics businesses have become more competitive, efficient and profitable.\u00a0<\/span><\/p>\n

What do you mean by data analytics in accounting?<\/strong><\/h2>\n

There is no specific definition of data analytics. Data analytics is inclusive of sourcing relevant data and performing the analysis of the data. The insights gained from the research are used for informed decision-making by a business.\u00a0<\/span><\/p>\n

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Cost management<\/span> professionals and management accountants use data analytics to discern various patterns in customer spending, predict regulatory reactions, identify market behaviour and anticipate market trends.\u00a0<\/span><\/p>\n

Many accountants have a specialisation in data analytics. They develop skills in managing, analysing and mining various streams of data. This helps them in gathering the minutest of details which are used for identifying patterns, answering questions and making fact-based predictions.\u00a0<\/span><\/p>\n

What are the different types of data analysis for management accounting professionals?<\/strong><\/h2>\n

With the help of analytics, a proficient accountant can make a business use a continuous data-monitoring model instead of static representative samples for decision-making. This not only helps in providing a holistic view and also empowers the business management to take timely and more accurate decisions.\u00a0<\/span><\/p>\n

Let us take a look at the different types of data analysis used in accounting:<\/strong><\/p>\n

Descriptive Analytics<\/strong><\/h3>\n

In this kind of analytics, the accountant has to answer the basic question \u2018what is happening\u2019. For this, the accountant has to consider all important and available data points and create perfect and accurate reports. The reports must reflect the business reality. Descriptive analytics is mainly used by accountants for creating financial reports and statements.\u00a0<\/span><\/p>\n

Diagnostic Analytics<\/strong><\/h3>\n

The question that the accountant answers in this analytics is \u2018Why\u2019. Accountants depend on historical data and current information for providing insights and reasons for the known results. This analytics is mainly used for creating dashboards of completed business periods.\u00a0<\/span><\/p>\n

Predictive Analytics<\/strong><\/h3>\n

In predictive analytics, accountants try to understand \u2018what\u2019s next\u2019. Accountants are often endowed with the responsibility of creating business forecasts. With access to Big Data and analytics, accountants can now predict the various patterns which drive the forecasts.\u00a0<\/span><\/p>\n

Prescriptive Analytics<\/strong><\/h3>\n

Accountants cannot just predict where businesses will go in the future but can take the businesses there in real time. With the use of data analytics, accountants can generate fact-driven reports, which can be transformed into actionable steps. This analytics is used while building data-supported business plans.\u00a0<\/span><\/p>\n

Accountants can choose to specialise in one kind of analytics, but in the long run, they will need to learn all the types for working across various categories.\u00a0<\/span><\/p>\n

How do accountants use data analytics for helping a company?<\/strong><\/h2>\n

There are many ways in which an accountant uses data analytics for helping a business organisation. Some of them are as follows:<\/span><\/p>\n