BigDataScalability.com – Big data in accounting crack huge growth possibilities through valuable insights. It helps leaders in the field create better decision-making in finances, risk management, and compliance. The estimation of data generated from daily activities reaches 44 zettabytes. It requires advanced technologies to analyze.
Big data analysis provides valuable insights for business growth. Businesses should use analytics tools to help them transform the collected data into actionable insights. Now, big data create a big shift in the finance sector including accounting. Big data help the accounting process to run more efficiently.
Besides promoting better accounting processes, big data helps accountants to make data-driven decisions that will benefit the business. If you work as an accountant, the following information will give you an idea about the challenges, opportunities, and impacts of big data in this industry.
Table of Contents
The Aims of Big Data in Accounting
Big data in accounting aims to capture, organize, and convert data from multiple sources to obtain real-time business insights. The presence of big data makes accountants not just depend on the monthly financial reports.
Instead, they access the latest information from different locations using the network connection. Below are examples of how accountants work with big data.
- Accountants can use unstructured data like images, emails, text files, video, audio, website content, social media posts, and other information from mobile devices. Previously, there is a limitation in the accountants’ work because they only can convert to structured data like a spreadsheet.
- Accountants use visualization software to enhance data analysis. It allows accountants and clients to have unique data views to support decision-making.
- Big data in accounting enables accountants to do faster and more accurate work. Besides, auditors can process massive accounting data in various formats at once.
- Big data promotes better risk analysis by allowing accountants to access more appropriate data. They also can use advanced analytics tools to accelerate data processing.
Opportunities Offered by Big Data in Accounting
Big data brings opportunities to advance accounting service quality. Three primary areas are directly affected by the work of big data as follows:
1. Business Insights
There is a need for collaboration between accountants and business managers to know well about the functions and processes they should depend on. It will help them make a better business decisions.
2. Data governance and privacy
Big data uses personal information extensively so accounting firms must monitor if it follows the security regulations. Besides, it is obligatory to ensure that sensitive information in big data processing is under appropriate use.
3. Risk management
Accountants must have a good understanding of external forces affecting operations. They are regulations, threats, and disruptions. They must be aware of obstacles that impact product strategies and growth plans.
The Role of Big Data in Accounting
Big data in accounting bring opportunities for accountants to provide high-quality services to clients in these three primary areas.
- Highly accurate predictions toward industry trends and market future development.
- Regular tasks automation to cut down operational costs and enhance accounting accuracy.
- Deeper and wider perspectives related to financial business and accounting operations.
Big data applications in the accounting industry depend on advanced techniques to support firms in capitalizing on large collected data. The aim is to generate value and growth by using three developing technologies:
- Data sources are broadly available. They may come from mobile apps, social media platforms, internet service providers, public sensors, government devices, and open sources.
- Computing work and cloud storage have developed massively. They produce large and complex data sets international web services to come with ascendable processing and automatically expandable storage to meet different needs.
- The presence of digital infrastructure mostly depends on open-source software. Data specialists benefit from open networks to make their work much easier. They use it to communicate with domain specialists who understand well about accounting.
Impacts of Big Data in Accounting Practice
Big data assists accounting firms in modernizing data processing and providing better services to clients through their actionable insights presented in real time. Here are several areas that receive significant help from big data analytics.
An audit is a key task in the accounting industry. It works by analyzing the performance and financial assets of any company. Yet, applying traditional accounting processes requires a long time and produces less valuable insights.
Big data in accounting swap the sample-based audit process into a data-based process. It results in information regarding all primary areas of the business. It allows the leaders or company owners to understand well about their business through more detailed information.
Big data can monitor expenditure precisely in real-time which is beneficial for regular auditing processes. Working with big data and advanced analytics tools allows automation in the auditing process and error reduction that usually happen during manual auditing processes.
Therefore, big data offers better compliance and accuracy compared to conventional audits.
Big data enable businesses to make their financial operations remain under control. That is why business leaders create better decision-making for business growth. By using real-time data, leaders can generate both long-term and short-term financial plans more accurately.
Therefore, big data in accounting acts like a trustworthy advisor that helps accounts to deliver better quality services for clients. Besides, big data provides multiple advantages for the accounting industry. However, in its application, big data still require a combination with other advanced technologies.
For instance, computer vision and artificial intelligence boost the work of big data to its top potential. It becomes a crucial consideration for accounting firms that want to invest in big data in accounting. They need to include other technologies to optimize big data advantages.
3. Risk Management
Big data provides valuable insights that are beneficial to determine financial risks and solving them easily. The presence of large data sets insists accountants conduct predictive analysis. Hence, they can forecast potential business risks that may happen in the future.
They can inform clients and suggest taking the required steps in preventing those problematic financial issues. Big data in accounting also can help business to detect potential fraud. However, big data need to pair with other technologies like blockchain or artificial intelligence to identify this problem.
Collaboration with those technologies enables the business to track expenditure and assets in more detail to identify if any irregularities occur.
The Risks of Big Data Analytics to Aware
Aside from the advantages of big data in accounting, any business process that includes collected customer data requires the protection of privacy and customers’ rights. One ethical issue associated with AI-based algorithms is the lack of awareness about private data that was previously unavailable.
For instance, an algorithm that directly links everyone’s bank account transaction with its location and call history was taken from a person’s phone. However, nowadays, there is a code of ethics designed for web analysts that focuses on personal accountability and honesty.
It aims for privacy protection, transparent operations, and education for web users when doing their work. Besides, there is also a code of ethics for data analysts that serve as a guide for people who work in this position.
- If you find bad things in the analytics results never hide them. Instead, elaborate on the reasons why those bad things happen.
- Never manipulate the analytics results for the sake of specific outcomes.
- Never falsify the data to highlight unimportant things or neglect crucial things that require more highlights.
- You must provide rigorous protection for customers’ personally identifiable information.
- You must be honest and always fix any mistakes immediately to protect the client’s trust.
- You must inform clients about the results although they are unreliable or the data quality is questionable.
- You have to make the value of the client’s business to be more appealing and allow them to get total ownership of their data.
- You must obey the entire data governance rules on paper and make sure your clients and employees also know about them. It enables them to use the customer’s data appropriately without sacrificing privacy and rights.
Besides those ethical analytics guides, the code of ethics also mentions three areas that accountants must pay attention to when using big data in accounting. They must consider these essential things when doing their work in big data analytics.
1. Testing and iteration
Those are inevitable processes of data analytics. The results from those processes are beneficial to conduct a continuous experiment and implement the lessons obtained from each test. It allows mistakes at the beginning of the process to reduce the number of errors in future applications.
2. Positive impacts
Data analytics aims to give a positive impact on the profitability of accountants, clients, and other professionals involved in the process. The process of transforming data into insights enables to create more effective decision-making in any business. Hence, accountants work together to improve the business.
3. Accountability and transparency
Accountants must be accountable when working with the data and transparent about any potential problems and mistakes that happen during the analytics process. They need to pay attention to the technical details to see the analytics process and results using the client’s point of view.
How Big Data Analytics Transform the Accounting Industry?
The development of new technologies has reinvented the accounting industry. This condition leads to a cultural shift in accountants’ work. The shifts are distinct in business services, hiring practices, accounting approaches to data analytics, and advanced technologies used.
These big shifts provide more opportunities for accountants to deliver services to clients and improve the quality of the service they have now. The changes in accounting affect numerous areas in the accounting work, some of them as follows:
- Technologies applications and integration towards previous processes and procedures in data analytics.
- Skills and training applied to sort of people for accounting positions that can support their successful works.
- Better client expectations regarding the types and quality of accounting services provided.
Another effect of big data in accounting is the increasing number of candidate recruitments conducted by companies without traditional backgrounds. This change expects to create better representation for clients and accounting firms allowing various skills to serve business customers.
Now, the number of accounting firms that recruit candidates without traditional backgrounds has reached more than 80 percent. Meanwhile, accounting firms that look for candidates with accounting industry experience are less than 50 percent.
New technology adoption is also a major issue in accounting. More than 80 percent of people believe that new technology adoption helps this industry develop faster and remains competitive among its counterparts.
Big data in accounting practices can run successfully if accountants deeply understand the opportunities of data analytics for the industry and clients. That is why accountants with good data analytics backgrounds are eligible for higher career positions in the accounting industry.
The evolving uses of data analytics in accounting firms come with more responsibilities for this position. Moreover, it makes data analytics has a significant role in decision-making in the business. So, becoming a big data analyst in the accounting industry can be the best career choice in the future.