The effects of the development of big data on the accounting profession in the united states

Accounting will have to change in response to big data, and we are optimistic about its future. In fact, auditors have long provided assurance services which do exactly that. Accounting and Business Research 12 47 : — Chychyla, and T.

It is not only a technology disruption, it is a generational disruption that is occurring, causing us to rethink our cultures and our strategies for recruiting and retention, and forcing us to face uncomfortable questions about our purpose.

Today, extraction of data is primarily focused on general ledger data.

Big data in accounting: an overview

The remainder of this essay is organized as follows. Data Structured Unstructured Problem driven Problem driven Problem analysis on analysis on Driven structured data unstructured data Analysis pre big data post big data Analysis Approach Exploratory Exploratory analysis on analysis on Exploratory structured data unstructured data Analysis post big data post big data Figure 1: Data Analysis in a Pre and Post Big Data World 6 The dimension of analysis type can also be broken down into two subcategories: analysis can be either problem driven or exploratory. The advantage inherent in understanding the language of business is the ability to think holistically about the information presented rather than responding in a formulaic way. Many companies had to redesign and restructure financial systems to improve efficiency. A firm using big data analytics to differentiate itself from its competitors must be able to determine whether or not the data are reliable and valuable. First we will present a conceptual framework in which we identify the areas where accountants likely have an advantage in the coming world of big data analytics as well as the areas where they are better suited to playing a support role to data scientists. In short, this principle states that if the underlying data used in an analysis are flawed, then the results of the analysis will also be flawed. Techniques like mentoring will become key to developing additional understanding and skills needed to be successful. Validating the data used for analytics: As auditors receive information from the client, they determine its clerical accuracy and completeness, and whether it is appropriate as audit evidence. Our position has implications for firms hiring talent to leverage big data analytics demand side , universities and professional organizations charged with the training of the new generation of accounting professionals and the retooling of existing ones supply side , as well as accounting standard setting organizations, accounting firms, and vendors. By contrast, exploratory analysis, which is data driven, is best suited to those who understand data and can uncover knowledge encoded in the data i. Big Data and IS Research. With the help of accountants and their effective use of big data, decision-makers can arrive at decisions more efficiently. Executives who benefited when stock prices rose had no incentive to question the earnings increases that led to the price gains. Davis, the author of Ethics of Big Data, suggests that businesses align their data policy with their organizational culture and values Riglian,

Ezell, and L. In fact, we assert that big data analytics present opportunities for accountants to play a leading role in problem driven analysis of structured and unstructured data and to support data scientists in exploratory analysis to create value.

The important implication is that all professional accountants will be expected to look beyond the numbers, which will, in turn, enhance collaborations among members of multiple professions, including accountants, doctors, lawyers, environmental scientist, sociologists, and so on.

For decades, accountants have been involved with developing BSC metrics and devising techniques for monitoring performance. The State Auditors will objective and independent to the private and public auditees in performing the financial audit because the auditees are free from audit fee and the salary of the auditors have been paid by State or Government.

analytics and big data for accountants

In the model, the directional solid arrows represent problem driven analysis. Industrie 4. Journal of Information Systems 27 2 : 1— Unlike ever before, everyone now has easy access to unlimited data; this access is enabled by the information made available through the web and its vast network of users.

In what ways is big data affecting the roles of accountants and auditors?

Tabuena argues that data analytic techniques are not completely foreign to auditors, in particular forensic specialists, who already have experience dealing with large quantities of structured data in attempts to trace fraud. International Journal of Information Management 35 2 : — Tools, such as the sample Balanced Scorecard BSC depicted in Figure 3, provide a framework for examining an organization from multiple perspectives and seeing how factors in each perspective contribute to a firm attaining its strategic objectives. Roshan Ramlukan The value of integrating big data and analytics into the audit will only be realized when used by auditors to influence the scope, nature and extent of the audit. As auditors transition to working with big data, from testing samples to testing entire populations, the volume of data analyzed increases by several orders of magnitude, greatly increasing the number of exceptions that must be ruled out or examined. The fact that the government is getting involved and that there are some talks regarding regulation is a sign that privacy concerns are becoming a major issue. This means that accountants have opportunities to develop expertise in strategy formulation and implementation, monitoring the attainment of strategic objectives, as well as recommending and taking corrective action where required. Both of these traits are in short supply even separately let alone together. Second, continued globalization will create more opportunities and challenges for members of the accounting profession.
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The Accounting Profession