Consider the the type of analytics best suited to addressing the accounting problem.  Outline how you would conduct your chose method of analytics.

How you would conduct, and why this is the best approach:

  

EXHIBIT 3-2 Summary of Data Analytics Approaches Type of Analytic Descriptive analytics Summary statistics Data reduction or filtering Diagnostic analytics Profiling Clustering Similarity matching Co-occurrence grouping Predictive analytics Regression Classification Link prediction Prescriptive analytics Decision support systems Artificial intelligence Example in Accounting Understand what happened. Calculate the average and medium income, age range, and highest and lowest purchases of customers during the fourth quarter. Filter data to include only transactions within the current reporting period. Understand why it happened. Identify outlier transactions to determine exposure and risk. Compare individual segments to a benchmark. Identify groups of store locations that are outperforming the rest. Understand the underlying behavior of high-performing divisions. Identify related party and intracompany transactions based on the individuals involved in a transaction. Estimate a future value or category. Calculate the fixed and variable costs in a mixed cost equation or determine the number of days a shipment is likely to take. Determine whether or not certain demographics, such as age, zip code, income level, or gender, are likely to engage in fraudulent transactions. Predict participation of individuals based on their underlying common attributes, such as an incentive. Make recommendations for a course of action. Tax software takes input from a preparer and recommends whether to take a standard deduction or an itemized deduction. Audit analysis monitors changing transactions and suggests follow-up when new abnormal patterns appear.