Importance of Analytics in Audit
19

Jun 2020

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.

Benefits of Analytics

The various benefits due to which analytics is so important in the audit are:

●Accurate and Correct Information

All the technological processes of the company will generate data that is recorded for analysis later. This data is to the point and is accurate. With further advancements in technology, more and more ways are being developed to gather more accurate data of the company which will allow the management to predict and plan the future of the business more precisely.   

●Data Never Lies

The data which is collected cannot be tampered with. This makes data analytics an accurate and perfect source of information which will help the management plan ahead for the future of the company and perform the precise audit of the company.  

●Enhances the Confidence of Investors

The data gathered through analytics is unadulterated and pure, which provides a sense of transparency to the investors. These people can study these data without a doubt and can make informed decisions.

●Paves way for Automation

A huge amount of data is gathered which is a very difficult process manually. Thus we need systems and processes which take comparatively lesser time to process. It is very important to process the whole data to get a better picture of the current conditions as well as the future.

●Better Risk Analysis

The use of technologies and software helps the company in collecting the overall data as the software will affect various departments of the company. this is the reason a software can pool the complete data of the company and collate them. This feature of the software will provide the management with the ease of the data being present at a single place. This will allow for the analysis of the data without any hindrance or stop.

●Making the Business Future Proof

Analysis of all the data of the company will allow the management to understand the future trends of the industry and work according to the future needs and requirements of the business. This will also include upgrading the technology which is being used at regular intervals.

These benefits of Data Analytics provide a great reason for businesses to use Analytics in the day to day activities of the company. Whether the business is new or has been already established, data analytics can help every kind of business.

If you require financial services for your businesses such as Accounting Services, Auditing Services, VAT and Tax related services then you should look into the services provided by JAXA Chartered Accountants. The experts at JAXA will utilize the state of the art technologies and Data Analytics to figure out what is best for your business. For more details on the services provided by JAXA, Contact Us. We will be happy to help.