How big data is impacting the accounting profession
Big data is revolutionising the way businesses operate and make decisions. Accountants worldwide are being affected as the accounting profession’s role transforms to embrace big data. Those with the skills to effectively manage and interpret this data are in high demand as businesses strive to make sense of the ever-growing pool of data. We will discuss what big data is, how it is changing the accounting profession, and some of the challenges accountants face.
What is big data?
Big data has come about from advances in technology that have enabled data to be collected and stored at an unprecedented rate. The enormous volume of data is so large and complex that it cannot be processed using traditional methods and requires specialised data analysis tools.
There are three main characteristics of big data: volume, velocity, and variety.
- Volume refers to the enormous amount of data that is now available; advances in technology have led to an explosion in the amount of data that businesses can collect and store.
- Velocity refers to the speed at which data is generated and collected. With the rise of IoT (Internet of Things), social media, and e-commerce, data is being created exponentially.
- Variety refers to the different types of data that are now available, which can be structured or unstructured. Structured data is organised and formatted in standardised databases, whereas unstructured data is not organised and has no pre-defined format. Examples of unstructured data may include text, images, videos, sensor emails, transactional data, Facebook posts, and Twitter tweets.
How is big data changing the accounting profession?
Big data has a significant impact on the accounting profession. Accountants can now gather and analyse data in ways that were once impossible and are increasingly being called upon to make sense of big data to enhance decision-making, risk management, financial reporting, forecasting, auditing, and fraud detection. Accountants can also use big data to identify trends, optimise processes, and draw insights from non-financial data to support decision-making. Big data can be used to develop new products and services, such as predictive analytics and real-time financial reporting and forecasting.
Big data is also changing the landscape for auditing. Traditional auditing approaches are being phased out, favouring new, more thorough methods that utilise big data, such as audit analytics rather than sampling methods. Audit analytics refers to reviewing and analysing an organisation’s financial data to assess risk and detect fraud using data mining, predictive modelling, and other statistical techniques.
What will the future of accounting look like?
The future of accounting looks very different from the past as big data becomes a game-changer for accountants. Accountants are no longer just number crunchers, they are now strategic advisors who use data to draw valuable insights to open up business growth opportunities. The future of accounting is data-driven, and accountants who are able to harness the power of big data will be in a strong position to thrive.
What are some of the challenges of big data that accountants face?
As businesses continue to generate and collect more data than ever before, the challenge for accountants is to find ways to reveal insights and use them to their advantage. This is no easy task, as big data can be overwhelming and difficult to manage. We list some of the challenges that accountants face when dealing with big data:
- Data overload – With so much data being generated, it can be challenging to know where to start and what is important.
- Data quality – Not all data is accurate or reliable, and it can be hard to determine which data sources are trustworthy.
- Data security – With sensitive data being collected and stored, there is a risk of being hacked or leaked.
- Data privacy – There are concerns about how personal data is being used and collected and whether it is safe from abuse.
- Complexity – Big data can be complex, making it difficult to understand and use.
How can accountants overcome these challenges?
There are a number of ways that accountants can overcome the challenges of big data:
- Education – Accountants must learn about big data and what it can do for business, including understanding how to collect, store, and analyse data.
- Invest in technology – Accountants need to invest in the right technology to help them collect, store, and analyse big data.
- Develop a plan – Accountants should develop a plan for using big data in a business. This includes setting goals and objectives and determining how they will measure success.
While big data presents challenges, it also provides opportunities for accountants to add value to organisations. Big data is changing the accounting profession, and there is no doubt that it will continue to do so. Accountants who can use big data effectively will be in high demand and can play a vital role in helping businesses.