2 Chapter 2: Accounting Data
Learning Objectives
- Identify sources of accounting data
- Identify uses of accounting data
- Describe characteristics of accounting data
Chapter content
In this course, we are primarily concerned with accounting data and accounting applications for data analytics. Accounting data is unique in that it is structured in a way that is different from other types of data and has features that create challenges when analyzing data. The structure and features are due to the nature of accounting and the way it is collected and reported. In this chapter, we will discuss some of the key characteristics of accounting data and how they impact analysis.
Sources
Accountants and data analysts working with accounting data may encounter a wide range of data sources. These sources include information collected and reported by accounting systems and information not captured by accounting systems.
Uses
Accountants have historically been a primary provider of information for managers, regulators, investors, and other stakeholders. Because of the broad applicability of accounting information, the questions that rely on accounting information may be broad and also be classified as marketing, finance, operations, or other types of questions. Some examples of questions relevant to data analysis are provided below for different users of accounting data.
Characteristics
Accounting data results from transactions occuring for the same or different entities at different points in time. For example, a data set that might be used by an internal auditor could include transactions over a fixed time period where the transactions happen at different times for different products and services and with different suppliers, customers, and employees. The accounting data may relate to decisions that managers, employees, or executives make.
Many characteristics of data used for analysis depend on the data set. However, some characteristics are common to many accounting data sets. Some of these common characteristics of accounting data sets present challenges to the data analyst.
Conclusion
Accounting data includes data input into, included in, or coming from an accounting system. Accounting data also exists outside of the accounting system in documents, presentations, and reports. Some non-accounting information is relevant for accounting data analysis.
Accounting data is used by many decision makers including managers, investors, regulators, and other stakeholders.
Accounting data often has characteristics that present challenges to data analysis. These include missing data, indirect measures, different scale of observations, and unstructured data.
Mini-case video
Bernard, C., & Boyle, P. (2009). Mr. madoff’s amazing returns: An analysis of the split-strike conversion strategy. Journal of Derivatives, 17(1), 62-76,5. Mr. Madoff’s Amazing Returns: An Analysis of the Split-Strike Conversion Strategy – ProQuest
Review