Unit 3

Unit Introduction
• Understanding Data, Information, and
Knowledge in Organizations
• The Role of Accountants in Managing
Organizational Data
• Impact of Data Analytics on Business Decision-
Making
• Data Modeling for Efficiency and Effective data
management
 Importance of Data for Accountants
• Enhances Financial Reporting Accuracy
• Supports Compliance and Risk Management
• Improves Business Insights and Decision-
Making
• Enables Automation and Process Efficiency
 Impact of Data Analytics on
Organizations
• Enhances Decision-Making with Real-Time
Insights
• Detects Fraud and Ensures Regulatory
Compliance
• Improves Customer and Market Analysis
• Optimizes Business Operations and Cost
Efficiency
 Business Process Modeling
• Helps Identify Inefficiencies in Business
Operations
• Supports Process Standardization and
Optimization
• Ensures Alignment with Organizational Goals
• Facilitates Automation and Digital
Transformation
Data Modelling and Analytics in
Accounting
Unit 3
 Learning Objectives
• Understand the difference between data and
information
• Learn about different types of databases
• Explore the importance of database design
• Understand data analytics and its impact on
accounting
• Discover tools used in data analytics for
accounting
 Importance of Data in Accounting
• Enhances financial reporting accuracy
• Helps in fraud detection and prevention
• Improves business decision-making
• Ensures compliance with regulations
• Supports predictive analytics for future trends
 Importance of Data for Accountants
• Enhances Financial Reporting Accuracy
• Supports Compliance and Risk Management
• Improves Business Insights and Decision-
Making
• Enables Automation and Process Efficiency
Colossus Computer in 1948 at Manchester University, UK

Source: Cambridge Science Universe, Measuring and Computing (1984) p.43

 Colossus Computer
• Colossus was the world's first electronic,
digital, programmable computer.
• Used by British code breakers to help read
encrypted German messages during World
War II
• It had no internally stored programs. To set it
up for a new task, the operator had to set up
plugs and switches to alter the wiring
•
 Databases
• Today our computers more portable
• Focus is on dealing with data and information
• Hardware and software are only as useful as
the practical information management tasks
we can do with them.
• So let’s start with data and information.
Data, Information, and Knowledge
• Data: Raw facts and figures (e.g., transaction
records)
– Must be properly formatted for storage,
processing and presentation

• Information: Processed and structured data

(e.g., financial statements)
• Knowledge: Insights derived from information
(e.g., investment decisions)
 Data vs. Information
• Knowledge
– Body of information and facts about a specific subject.
 Data Management
• Discipline that focusses on the proper
generation, storage and retrieval of data

• Core activity of any business, government

agency, service organisation or charity
 Transforming Raw Data into Information

Database Systems: Design,

Implementation, &
Management, International
Edition, Rob, Coronel &
Transforming Raw Data into Information
 Transforming Raw Data into Information

Database Systems: Design,

Implementation, &
Management, International
Edition, Rob, Coronel &
 Impact of Data Analytics on
Organizations
• Enhances Decision-Making with Real-Time
Insights
• Detects Fraud and Ensures Regulatory
Compliance
• Improves Customer and Market Analysis
• Optimizes Business Operations and Cost
Efficiency
 Data Management
• Proper generation, storage, and retrieval of
financial data
• Helps maintain data accuracy and
completeness
• Supports regulatory compliance and reporting
• Facilitates audit trails and internal controls
 Types of Databases
• Operational Databases: Store day-to-day
transactions (e.g., sales records)
• Analytical Databases: Store historical data for
financial analysis
• Centralized Databases: Store all company
financial data in one place
• Distributed Databases: Store data across
multiple locations
 Other Classifications of Databases
• Number of Users:
– Single-user (e.g., personal accounting tools)
– Multi-user (e.g., enterprise financial systems)

• Location:
– Centralized (All data stored in one location)
– Distributed (Data spread across multiple
locations)
 Other Classifications of Databases
• Intended Usage:
– Operational Databases (Daily transactions, sales,
payroll)
– Analytical Databases (Historical data for decision-
making)

• Type of Data Stored:

– General-purpose (e.g., Google Drive, ERP systems)
– Discipline-specific (e.g., accounting software like
QuickBooks)
Why Database Design is Important
• Poorly designed databases lead to errors in
financial reports
• Inaccurate data can cause compliance issues
• Well-structured databases improve efficiency
and reporting
• Helps accountants access reliable and timely
financial information
 Data Analytics in Accounting
• Extracts valuable insights from financial data
• Helps detect patterns in customer
transactions
• Assists in risk assessment and fraud detection
• Improves strategic financial planning and
forecasting
 Uses of Data Analytics in Accounting
• Evaluating financial performance
• Identifying market trends and business
opportunities
• Mitigating financial and operational risks
• Structuring business improvements for
profitability
 Tools for Data Analytics in Accounting
• Excel: Data analysis and financial modeling
• Power BI: Data visualization and reporting
• Tableau: Business intelligence and interactive
dashboards
• AI & Analytics: Advanced financial data
processing
• IDEA: Audit and forensic accounting analysis
Data quality and governance
 Data Quality and Governance
• • Data Quality:
– Accuracy: Data must be error-free
– Relevance: Data must be useful for decision-making
– Completeness: No missing or incomplete records
– Timeliness: Data must be up-to-date
– Uniqueness: No duplicate entries

• Data Governance:
– Policies to manage data integrity and security
– Ensuring compliance with financial regulations
– Managing access control to financial information
Accounting & Data Analytics: What You
Need to Know
• The volume of financial data is growing rapidly
• Accountants must develop data analytics skills
• Benefits of integrating data analytics in
accounting:
– Identifying patterns in financial transactions
– Predicting future market and regulatory changes
– Making data-driven financial decisions
 Key skills for accountants:
• Data analysis and visualization
• Risk assessment and fraud detection
• Business intelligence and strategic planning
Big Data and Its Impact on Accounting
• Definition: Big Data refers to extremely large datasets that
cannot be processed using traditional methods.
• In accounting, Big Data includes massive volumes of
financial transactions, market data, and operational
records.

• Examples of Big Data in Accounting:

– Millions of daily bank transactions globally.
– Real-time stock market and cryptocurrency transactions.
– Large-scale tax filings and financial regulatory records.
– Customer purchase patterns and business revenue trends.
– Audit logs and compliance records from multinational
corporations.
 Big Data Impact on Accounting
• Helps in detecting anomalies and potential
fraud by analyzing vast amounts of
transactions.
• Supports real-time financial decision-making
with instant insights.
• Enhances forecasting and predictive analytics
for budgeting and investment planning.
• Requires integration with AI and machine
learning for automation and efficiency.
 Ethical Considerations in Data
Analytics for Accounting
• Ensuring transparency in financial data reporting
• Protecting client and company financial data
privacy
• Avoiding data manipulation and
misrepresentation
• Complying with financial regulations (GAAP, IFRS)
• Ethical use of AI and automation in financial
decision-making
 Future Trends in Accounting and Data
Analytics
• Increased reliance on AI and machine learning in
accounting
• Blockchain technology for secure financial
transactions
• Cloud-based accounting systems for real-time
data access
• Predictive analytics for financial risk assessment
• Automation reducing manual financial tasks,
increasing efficiency
 Conclusion
• Data analytics is essential for modern
accountants
• Strong database management leads to better
financial understanding
• Mastering data analytics tools enhance career
opportunities
• Accountants must adapt to data-driven
decision-making processes