Introduction to Big Data
Question:
Discuss about the Challenges of the Big Data in the Accounting.
Big data differs across the numerous scopes. Basically, big data is said to relate to widespread mass of the data which is progressively assembled and amassed using debit cards, social media, the internet, as well as d electronics tags[1]. Big data are described as the high velocity, variety and volume of information which is said to demand innovative and economical forms of the information handling; hence enabling better policymaking, process automation as well as insight. Big data is data that is complex and cannot be analysed by the traditional tools of analysing data such as spread sheet. Basically, it is usually the collection of various data management applications supporting numerous analytics use. Big data is classified into four that is;
- Volume: The quantity of the generated data is extensively compared to the traditional data sources. Measured in terabytes.
- Variety: The data originates from various sources that include both the machines and individuals.
- Velocity: This is the rate at which the data is created which is at a fast speed.
- Veracity: Due to the various sources that the data is derived it has to be evaluated for quality purpose due to its inconsistent, incomplete and inaccurate nature.
Big data would have significantly vital insinuations in accounting, whilst the premier types of the data are made readily available[2]. The audio, textual information and video information freely accessible via the big data could offer an opportunity for improved accounting. Besides, big data would contribute significantly to evolution and development of efficient management control as well as budgeting processes[3]. With these considerations, big data would have various opportunities in accounting. These opportunities are enjoyed in various branches of accounting which include financial accounting, taxation, auditing as well as management accounting.
Big data in accounting may appear to have two trends. First, the different sources of the accounting information are being combined and integrated into and accounting information system such as the video, audio and text data are linked to the traditional data[4]. For this reasons the accountants need to have advanced skills to analyse such huge information found in the accounting information system. Secondly, there is change in the fair value accounting which is worried on prizing of the assets. Consequently, big data would offer an opportunity to improve relevant and quality of the accounting information, hence, enhancing transparency as well as stakeholder’s decision-making. Due to the huge data, this could result in there being assumptions in valuing the assets and liabilities despite there being companies that can assist a business in the valuation of the assets and liabilities.
In auditing branch the big data has various opportunities such as producing audits that are data driven. In this the audit trail has data that contains details about the business and all that is to be audited[5]. The audit trail is well constructed by the auditor since the information to be audited is in form of data which is easier to be audited since all the information is there hence the auditor is able to produce the audit report in an easy manner. For the audit trail to be easy for the auditor the auditor must use the big data in following how their customers manage data. The big data also improves the relationship and experience for both the client and the auditor[6]. For the client, using the big data is able to compile and combine all the data to be audited in an easy way and thus stores the data in safe way.
Opportunities in Accounting
The big data improves the experience of auditor by having the population level being feasible, the role of the auditors will be changed from the statement-level assurance to the data-level assurance, the auditor will face less challenges in asserting the existence of fixed assets and the auditor will use text analytics to manage unstructured data[7]. It is also easier for the auditor to create a good audit trail and the auditing process is very fast and not tiring which will enable him or her to have sufficient time in making appropriate decisions about what to include in the audit report. It also reduces the cost of audit and enhances profitability. Big data also produce valuable insights such that the auditor gets to know more facts that will help him or her to make an audit report. The auditor is able to analyse both the organized as well as formless data[8]. The user is enriched with knowledge on how to collect, conglomerate and examine the data and ensure it is ready for auditing purposes as well as assess how to stock the data for future reference.
The big data is also involved in advisory services for accounting. In this branch it has the opportunity of providing assistance on how to screen and improve the business performance[9]. This is done by providing the ways that could be able to screen on how the firm is performing by checking on the profits for the previous years and observing its movement. Big data also offers the prototypes that could be used in analysing the performance of the business to help in support of improving the product produced by the business and the operational processes. Basically, it could assist with refinement and creation of the accounting standards, assisting in ensuring that accounting profession would continue to offer important or significant information as global, real-time and dynamic economy evolves[10].
In the branch of taxation, it is known that big data has several opportunities. One of the opportunities is that big data helps in identifying the areas in taxation that can be improved such as the mode of collection and calculation of taxes[11]. It can also help in identifying the opportunities in the world that are involved in taxation such as the best ways used in utilisation of taxes once collected in a country for the improvement of the life of the citizens in the country.
Big data in accounting also has the opportunity in management accounting which is that it helps in risk identification and management. It helps identify the risks within and without the business. It provides strategies that help in the management of the risks[12]. Provides information on where the business can invest despite the risk to help providing better products and services to the customers and consumers of its products and services. Big data has the opportunity of improving the performance of management systems. This could be done when the business adopts the big data techniques of analysing data which can lead to the traditional management being changed which is done by implementation of extensive and comprehensive monitoring and control systems. Basically, big data could contribute to evolution and development of effective budgeting and management control processes[13].
Trends in Big Data in Accounting
There is no doubt that bid data is considered as a disruption to the management and organizations which have widespread effect. Consequently, big data poses challenges as well as various implications for the theory in the information system resulting from big data disruptive impacts[14]. With these considerations, following challenges are observed with big data.
Many organizations fail to take into consideration on how the big data quickly project evolves. Constantly one is forced to add data so as to be able to analyse it[15]. The big data is huge thus making it difficult for one to classify and allocate the resources. This can be solved by using cloud which helps scaling in an easier and faster way.
In business there is shortage of the people with skills to handle big data. Big data requires skilled people with knowledge of identifying valuable insights[16]. This challenge is solved by the big data vendors who tend to provide their own educational resources.
A lot of data leads to a challenge of identifying a clear business goals as well as suitable data sources to be collected and analysed in order to meet such goals[17]. This challenge is solved by identifying key patterns and thus the business is prepared to make the more appropriate changes to develop the most appropriate business values.
Quality of the data is not necessarily a big issue but the issue of how to stockpile every single portion of the data that an organization creates in its unique form shams the challenge[18]. Unclean data is aid to be costly to different firms and they are caused by input errors, incorrect link as well as duplication of data. In this case to solve this solution the data is cleaned by using big data algorithms.
Security of the big data poses challenges such as recording of data and there are no restrictions of accessing data[19]. These challenges can be solved by most appropriate utilization of encryption on the data and limiting access of such data based on the user’s needs.
According to researches, it is hectic to estimate the costs or expenses of the big data scheme provided the manner in which to scale and utilize the resources[20]. The main challenge lies in considering costs incurred in the project from obtaining or getting new hardware, payment of the cloud supplier and hiring extra workers. This challenge is solved by determining the usage of bills and additional fees.
Conclusion
To sum up, big data is an emerging issue in the accounting process. It can be used for decision making for different branches of accounting. Big data has more opportunities which well utilised can improve the financial performance of business. Big data can cause a potential shift permitting events to be sketched and assessed early enough and deeper. For the business the best solution is to use big data. Furthermore, big data would have significantly vital insinuations in accounting and would contribute significantly to evolution and development of efficient management control as well as budgeting processes. As such, it can be concluded that big data offer various opportunities in accounting. For instance, big data would offer an opportunity to improve relevant and quality of the accounting information, hence, enhancing transparency as well as stakeholder’s decision-making. It can also be concluded that big data improves the relationship and experience for both the client and the auditor. For the client, big data is compiled and combined to be audited in an easy way and thus stores the data in safe way. Additionally, it can be concluded that big data helps in improving the experience of auditor by having the population level being feasible, the role of the auditors will be changed from the statement-level assurance to the data-level assurance, the auditor will face less challenges in asserting the existence of fixed assets and the auditor will use text analytics to manage unstructured data. This is because it offers valuable insights such that the auditor gets to know more facts that will help him or her to make an audit report. It has the opportunity of providing assistance on how to screen and improve the business performance. It also offers the prototypes that could be used in analysing the performance of the business to help in support of improving the product produced by the business and the operational processes. Besides, it can be concluded that big data helps in identifying the areas in taxation that can be improved such as the mode of collection and calculation of taxes. Finally, it can be stated that big data has the opportunity of improving the performance of management systems. It contributes to evolution and development of effective budgeting and management control processes. Despite these opportunities, it can be concluded that big data has its share of challenges. For instance, it can be concluded that big data has numerous challenges such as security, data quality, lack of experience, actionable insights as well as cost management. In spite of these challenges, opportunities associated with big data outweigh the challenges; hence, business and accounting officials in particular do not have an option but to integrate big data in their operations.
Benjamins, V. Richard. “Big data: From hype to reality?.” In WIMS, pp. 2-1. 2014.
Bhadani, Abhay Kumar, and Dhanya Jothimani. “Big Data: Challenges, Opportunities, and Realities.” Effective Big Data Management and Opportunities for Implementation, IGI Global, Pennsylvania, USA (2016): 1-24.
Cao, Min, Roman Chychyla, and Trevor Stewart. “Big Data analytics in financial statement audits.” Accounting Horizons29, no. 2 (2015): 423-429.
Forsyth, Chris. “For big data analytics there’s no such thing as too big.” The compelling economics and technology of big data computing. White Paper (2012).
Krahel, John Peter, and William R. Titera. “Consequences of Big Data and formalization on accounting and auditing standards.” Accounting Horizons 29, no. 2 (2015): 409-422.
Mohanty, Soumendra, Madhu Jagadeesh, and Harsha Srivatsa. ““Big Data” in the Enterprise.” In Big Data Imperatives, pp. 1-24. Apress, Berkeley, CA, 2013.
Richins, Greg, Andrea Stapleton, Theophanis C. Stratopoulos, and Christopher Wong. “Data Analytics and Big Data: Opportunity or Threat for the Accounting Profession?.” (2016).
Richins, Greg, Andrea Stapleton, Theophanis C. Stratopoulos, and Christopher Wong. “Big Data analytics: Opportunity or threat for the accounting profession?.” Journal of Information Systems 31, no. 3 (2017): 63-79.
Tripathi, Rashmi, Pawan Sharma, Pavan Chakraborty, and Pritish Kumar Varadwaj. “Next-generation sequencing revolution through big data analytics.” Frontiers in Life Science9, no. 2 (2016): 119-149.
Vasarhelyi, Miklos A., Alexander Kogan, and Brad M. Tuttle. “Big Data in accounting: An overview.” Accounting Horizons29, no. 2 (2015): 381-396.
Warren Jr, J. Donald, Kevin C. Moffitt, and Paul Byrnes. “How Big Data will change accounting.” Accounting Horizons 29, no. 2 (2015): 397-407.
Yoon, Kyunghee, Lucas Hoogduin, and Li Zhang. “Big Data as complementary audit evidence.” Accounting Horizons 29, no. 2 (2015): 431-438.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
