Big Data in Accounting
Essay Preview: Big Data in Accounting
Report this essay
Big Data in AccountingBig Data in AccountingIntroductionThe goal of accounting is to provide useful information for both internal and external decision makers. Traditionally, accountants tried to gather and analyze data by using available analytical tools, no matter if it comes from paper-based system or computer-based system. Since the term of Big Data emerged, Big Data offers an exceptional level of various and huge datasets and sophisticated analyses. With this Big Data, accountants have access to voluminous and diverse data which would help accountants to provide valuable information to intended users.   What is Big DataBig Data is fairly new phenomenon but seems to be applied in almost every aspect of human activity at the moment. Big Data can be defined as high volume, high velocity and huge variety information that requires cost-effective and innovative means of information processing in order to provide enhanced insight and decision making (Janvrin, 2017). Some suggests that veracity is also one of characteristics of Big Data. Big Data records, measures, captures human events digitally and thereby turns into data. It could track thousands of simultaneous activities in real time. For example, Big Data traces more than one million customers’ transactions every hour at Walmart. (Cao, 2015)  Organizations use these data to improve its performance and profitability. Gathering and evaluating Big Data becomes key elements in establishing and retaining competitive advantage.
Big Data in AccountingAs described above, Big Data is changing business and this phenomenon has also impact on accounting practices. Big Data consists of structured and unstructured data which includes soft information such as emails, phone calls and website traffic. These different types of data supplement and enhance traditional financial information. Video and Image DataAs video and image storage and analytic methods have improved, attempts to extract objective information from video augment the feasibility of video-enhanced accounting records. These video data particularly related on internal controls. For instance, surveillance camera would detect when and how many times a restricted-access area has been entered (Warren, 2015), and would help company to control their asset assurance. In addition, an interview video could also play an important role in accounting. Analyzing interviews of management and the board of directors to derive contents and emotion would provide non-verbal information regarding business and audit risks.Audio Data  Audio data, includes quarterly conference calls, customer calls and shareholders and board of directors meeting, could enrich quality of financial information (Warren, 2015). For example, in-depth analysis of customer calls could provide product quality information and improve estimation of warranty liability. Textual DataTextual data includes emails, web pages and social media. Social media is one of the fastest growing data. Data extracted from social media would be used to increase business performance. Email data is already in use to mitigate fraud losses in the United States (Warren, 2015). Enhanced analysis of emails could allow a company to detect dissatisfied employees who have opportunity and motivation to commit fraud.