Clint Eastwood’s character “Dirty Harry” Callahan, in the 1970’s-1980’s Dirty Harry film series, once famously uttered the line “a man has to know his limitations.”
The 36th Annual SEC and Financial Reporting Institute Conference hosted by the University of Southern California on June 8 challenged Callahan’s notion, helping to propose the question: what limitations still exist for accountants in the age of analytics? What once seemed inconceivable is now possible.
Traditionally, auditors test a sample of randomly selected sales transactions to perform their audit procedures. However, it is now possible to evaluate one hundred percent of sales activities for each period by matching transactions in revenue to relevant information per the customer order, shipping document, and sales invoice.
This new capability will affect multiple areas within an entity. The corporate investor relations department will be able to leverage analytics to explain to analysts the underlying drivers of past business performance (e.g. impact of weather on sales). Financial planners will be able to develop predictive models using internal and external data to create more accurate forecasts and planning models. Entities will be able to identify consumer tastes and trends by monitoring data and social media for use in product development and revenue forecasts.
According to the CFO annual IT survey 2017 “Data and Analytics: The CFO’s Evolving Role,” sixty percent of CFOs plan to improve the analytical skill set of their existing finance team during the coming year. Accountants in the information age will be empowered with data and analytics skills, while still maintaining a firm foundation in accounting, auditing, tax, financial reporting and business acumen by embracing change and the application of advanced technologies. To help facilitate that transition, KPMG is developing a Master of Accounting with Data and Analytics Program at both The Ohio State University Max M. Fisher College of Business and Villanova School of Business.
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