Importance of Analytics in Audit

Auditing is an age-old procedure of understanding the position of your company. An auditor will try to analyze the performance of a company by evaluating the data produced in performing the various activities of the business. In older days, an audit comprised of systematic and regular checks to understand the present condition of the business and to change any situation if needed.

There have been various advancements in the field of finance and audit. The most recent and biggest leap of technology in the field of auditing is the introduction of Data Analytics and Big Data.

Data Analytics

In the recent business scenario, there is a popular trend of using technology and auditing software for performing all the business activities and to reach maximum efficiency. The use of technology allows for the generation of huge amounts of data. This data can be collected and analyzed to enhance the performance and increase the profitability of the business.

Data Analytics technology can help the management of a business to understand the trend which is being followed and also help prepare for the future. Data analytics is an amalgamation of business, information technology, and statistics.

Types of Data Analytics

Data analytics is a huge field and is still growing. The base of all business is the generation, collection and the analysis of data in which data analytics can play a huge part. There are different types of analytics that can be used by a business. These are:

1.Descriptive Analytics

This is one of the first stages of data analytics. This type of analytics mostly relies on Business Intelligence expertise. Descriptive Analytics helps in setting up the desired goals, collect the data and then process the data for a better future.

2.Diagnostic Analytics

The Diagnostic Analytics allows the management to analyze the historical data of the company and find patterns, anomalies or dependencies in the various business procedures.

3.Predictive Analytics

Predictive Analytics utilizes various data analysis models and other software and technologies to forecast the future of the business and also to figure out the future trends in the industry. The predictive analytics may not be exactly right but it will provide a path to the business for the future.

4.Prescriptive Analytics

Prescriptive Analytics is a very complex type of analytics that is being used by a business. This type of analysis requires very complicated and sophisticated analytic tools and help in suggesting the proper method to be used by a business to achieve a goal.

The type of activity being performed by the business plays a major role in deciding which type of analytics will be used by the management. A business may use all the types or select the types which will be more beneficial for the company.