Guide to an Accounting Analytics Degree
The rapid rise of technology has given rise to the generation and collection of massive quantities of information, most commonly known as Big Data. Every day, 2.5 quintillion bytes of data are generated across industries, including in finance and accounting. As the quantity of data grows, so does the need to gather, analyze, and interpret it in order to make smart business decisions. Within the accounting sector, this established market demand has led to the creation of specific academic programs in Accounting Analytics.
It turns out, most accountants are lacking in advanced data analytics skills. A 2015 report titled Building a Team to Capitalize on the Promise of Big Data and commissioned by Robert Half and the Institute of Management Accountants (IMA) found that 87 percent of accounting and finance managers are looking for their teams to have skills related to business analytics for financial analysis. However, many of these same managers have found that their teams have difficulty with identifying key data trends, data mining and extraction, and statistical modeling and data analysis. As the need to interpret data becomes increasingly important across all fields, the need for proficiency in Accounting Analytics will increase, too.
What is Accounting Analytics?
While accounting professionals already work with data, especially related to taxes, revenues, and expenditures, accounting analytics takes it one step further by applying data science technologies to uncover new insights and patterns. This exciting field combines industry knowledge with statistics and computer programming to give accountants a better way to understand and forecast financial trends. Accounting analytics can also be used to determine corporate strategy, detect fraud, predict consumer behavior, manage risk, and more.
Current Role of Analytics in Accounting
Accountants use data every day in their budgeting, planning, and auditing tasks. There are four main types of analytics used in accounting, with each one requiring progressively more advanced skills and technology. In order of difficulty, these are descriptive analytics, diagnostic analytics, predictive analytics, and prescriptive analytics.
Descriptive Analytics
In simplified terms, descriptive analytics talks about the what behind the data. Accountants use descriptive analytics when they summarize and interpret raw data, usually to generate routine reports for operations, finance, or sales. This data is usually expressed as sums, averages, and percent changes. For example, an accountant would use descriptive analytics to determine and express a company’s revenue changes over time, such as YOY.
Diagnostic Analytics
If descriptive analytics is the what behind the data, then diagnostic analytics is the why. In diagnostic analytics, accountants use data analytics and data mining software to search for patterns that determine how what actually happened is different than what was expected. For example, accountants can use diagnostic analytics to learn how a department’s initial budget for the fiscal year differed from what it actually spent.
Predictive Analytics
While descriptive and diagnostic analytics deal with the data for events that have already happened (such as the most recent quarter), predictive analytics use historical data and patterns to predict what will happen before it actually does. Accountants who use predictive analytics gather information from technology such as enterprise resource planning (ERP) systems, point-of-sale (POS) software, and customer relationship management (CRM) systems to create financial forecasts, trend analyses, budget predictions, and more. Compared to descriptive analytics and diagnostic analytics, predictive analytics require greater critical thinking skills and technological knowhow.
Prescriptive Analytics
Prescriptive analytics combines all three of the above along with interpersonal skills to use Big Data in decision-making. After conducting research with predictive analytics, accountants can use prescriptive analytics to compare various “what-if” scenarios and advise management on the best way to move forward with a given topic or problem. Prescriptive analytics will also rely on technology like machine learning, optimization algorithms, and computational modeling in creating the scenarios. Accountants must be able to distill and visualize this data for senior-level management to understand their recommendations and take the appropriate course of action.
Specific Accounting Roles that Can Benefit from Analytics Expertise
Any accounting professional can benefit from expertise in data science. Here are a few ways that accounting analytics might specifically impact your role.
Auditors
Auditors can use accounting analytics for large-scale monitoring of financial activities. For example, Big Data technology can automatically collect and analyze large quantities of information about transactions, payments, and other monetary exchanges. From there, auditors can create reports, update internal audit plans, or offer financial predictions for business executives and stakeholders.
Tax Accountants
According to Deloitte, tax accountants can use accounting analytics to aid in ensuring tax compliance, making comparisons over time, and predicting how taxes will change based on new laws or asset acquisitions. For example, tax accountants can create data visualizations showing the taxes that a company paid for the past five years and forecast what future taxes might look like based on company decisions. For independent tax accountants who work mostly with individual clients, accounting analytics can also be used to review a subset of firms in the area to determine competitive pricing for the upcoming tax season or analyze previous years’ reporting to figure out staff needs.
Financial Planning
Contrary to the name, financial planning is about more than what’s on the balance sheet. Financial planning relies heavily on predictive analytics and prescriptive analytics to help businesses increase their bottom line and remain competitive in the marketplace. This includes understanding the company’s current financial data, as well as non-financial information like corporate strategy and a SWOT analysis to make recommendations for best business practices, such as investments in resources, labor, and equipment.
Forensic Accounting
The terms “forensics” sounds like something out of a crime novel or detective drama. Forensic accountants deploy data analytics to detect illegal financial activities (like fraud or money laundering) and aid in litigation. Data analytics enables forensic accountants to quickly sift through a mountain of data to find financial discrepancies. Forensic accountants can also aid in implementing risk reduction procedures within an organization to deter illegal activity at the outset.
Educational Opportunities in Accounting Analytics (including example coursework)
To keep up with growing market demand, a variety of educational providers have started offering specific programs in Accounting Analytics. Most of these programs are at the Master’s level so professionals who already have an educational background and work experience in accounting can further develop their skill set. For professionals who already have a master’s degree, or are unable to take time off from work to pursue a full-time degree program, short courses are also a viable option.
Master’s of Accounting Analytics
A master’s degree is the most comprehensive course of study in Accounting Analytics. Some universities will have a defined “Master’s of Accounting Analytics,” but the field is so new that other programs will name the degree some variation of “Accounting with Data Analytics.” Furthermore, some universities will offer a graduate concentration in data analytics as part of a regular master’s of accounting degree, rather than an entirely separate program. Which program you should choose will depend on your current experience and career goals.
The curriculum for a Master’s of Accounting Analytics degree might include subjects such as:
- IT Governance
- Systems for Data Analytics
- Statistical Computing & Data Visualization
- User-Oriented Financial Statement Analysis
- Financial Reporting Fraud Detection and Analysis
- Data Warehousing
- Business Intelligence
Regardless of course titles, you will want a program that is highly focused on technical skills as well as soft skills so that both “man and machine” can work together to accurately analyze data and apply it to business decisions.
Short Courses
Don’t have the time to pursue graduate school? Short courses such as those offered by Coursera are usually conducted online to maximize flexibility for working professionals. These courses are part-time and don’t result in a formal degree.
Examples of Accounting Analytics coursework within a short course might include:
- Ratios and Forecasting
- Earnings Management
- Big Data and Prediction Models
- Linking Non-financial Metrics to Financial Performance
A short course will not go into the same level of depth as a master’s degree, but can give a good overview of the fundamentals and help you pinpoint your strengths and weaknesses within Accounting Analytics. From there, you can pursue additional training as needed.
Things to Consider When Choosing an Accounting Analytics Program
Education is always an investment, and you will want to take a few factors into consideration when choosing an accounting analytics program. A few of these factors include the curriculum, employment prospects, your prospective classmates, experiential learning, and your work experience.
For the curriculum, you will want to understand the types of data and information systems you will gain experience in, such as ERP applications, auditing analytics tools like IDEA and ACL, and computer-assisted audit techniques (CAATs). Does your company use some programs but not others? Are you familiar with one type of software, but need experience in another? Make sure you choose a program that is best aligned with your professional goals.
You will probably also want an idea of the class profile. Will most of your classmates have work experience? If so, how many years on average? Are they from one geographic area, or did they move across the country specifically for this program? While a lot of the learning takes place in the classroom, you will also want the opportunity to network with your classmates and want to choose a program that will expand your professional circle.
It’s also helpful to find statistics on student outcomes, such as median salaries and major employers. If you choose a master’s program at a university, what resources are available to help with job placement–career fairs, lunch and learns, recruitment days? Is the university a “feeder” for the Big 4 accounting firms–Deloitte, Ernst & Young, KPMG, or Pricewaterhouse Coopers? If you have a clear understanding of where you want to work, look for programs that have a record of placing students at that company.
Finally, if you currently work in accounting, you should see if your employer offers tuition reimbursement for graduate or professional education. If not, you may wish to focus more on the types of experiential learning activities, co-ops, or internships you will be able to get through the program in order to gain more experience in the field. You may also wish to know if you will have a portfolio or other clear deliverable that you can use to showcase your new abilities.
Experience in Accounting Analytics can set you apart from your competition while delivering even more value to your clients. If you are interested in pursuing an Accounting Analytics program, here is a good starting point for your school research:
School Listings
Arizona State University – Tempe, Arizona
Master of Accountancy – Data and Analytics Track
- Program Length: 9 months
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $31,000 total program cost ( Arizona resident), $50,100 total program cost (Non-resident)
- Course Offerings
Columbia University – New York, New York
Masters of Science in Accounting and Fundamental Analysis
- Program Length: 30 Credits
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $68,706 per year
- Course Offerings
Lehigh University – Bethlehem, Pennsylvania
Master of Science in Accounting and Information Analysis
- Program Length: 30 Credits
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $1,280 per credit
- Course Offerings
Marquette University – Milwaukee, Wisconsin
MS in Accounting Analysis
- Program Length: 31 Credits
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $1,170 per credit
- Course Offerings
Rochester Institute of Technology – Rochester, New York
Master of Science in Computational Finance
- Program Length: 36 Credits
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $1,980 per credit
- Course Offerings
University of California-Davis – Davis, California
Master of Professional Accountancy – Audit Data Analytics Specialization
- Program Length: 9 months
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $49,824 per program
- Course Offerings
University of Delaware – Newark, Delaware
Ph.D. in Financial Services Analytics
- Program Length: 45-54 Credits
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $825 per credit (Delaware resident), $1,000 per credit (Non-resident)
- Course Offerings
University of Illinois at Urbana-Champaign – Champaign, Illinois
Master of Accounting Science – Data Analytics in Accountancy
- Program Length: 32 Credits
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $24,560 per program (Illinois resident), $38,146 per program (Non-resident)
- Course Offerings
University of Pittsburgh – Pittsburgh, Pennsylvania
MS in Accounting and Business Analytics (STEM)
- Program Length: 43.5 Credits
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $14,626 per term (Pennsylvania resident), $20,250 per term (Non-resident)
- Course Offerings
University of Southern California – Los Angeles, California
Master of Accounting with emphasis in Data and Analytics
- Program Length: 12 months
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $57,197 per year
- Course Offerings
Villanova University – Villanova, Pennsylvania
Master of Accounting with Data Analytics
- Program Length: 30 credits
- Delivery Method: Campus
- GRE: Required
- 2020-2021 Tuition: $1,435 per credit
- Course Offerings
