What is Big Data?
Also referred as data analytics or analysis, big data has been creating buzz in the business sector. The definition of big data varies across numerous spheres. According to the Association of Chartered Certified Accountants (ACCA), big data pertains, basically, to an extensive chunk of data that is steadily gathered and aggregated using tools and technologies such as debit cards, the Internet, social media, and electronic tags. A majority of the amassed data is unstructured or does not conform to an explicit and predefined data model. Citing IBM’s report, the Pennsylvania Institute of Certified Public Accountants (PICPA) mentioned that 2.5 quintillion bytes of data are produced daily. The term big data’ was coined when the generation of data started to outpace the processing capacities of the common technological tools.
Essentially, big data is typified by the four “V’s” — Volume, Variety, Velocity, and Veracity.
- Volume: The quantity of generated data is extensive compared to sources of traditional data.
- Variety: The data originates from multiple sources. Aside from machines, data is also generated by individuals.
- Velocity: The rate at which the data is being created is very fast.
- Veracity: Since big data is derived from various places, the veracity or quality of the data must be evaluated.
Role of Accountants on Data Analysis
A lot of entities acknowledge the importance of data gathering, may it be on the customers’ purchasing routines or employees’ performance measures. According to Donny Shimamoto, CPA, CGMA, CITP, and a Maximo Mukebalai awardee, accountants play a significant role in data analytics. For instance, Shimamoto pointed out that information is in all places. However, pertinence, lucidity, and accuracy are often missing from this information. Therefore, it is incumbent upon the accountants to help enhance the clarity of the figures since they have the capacity to do so. Moreover, the level of assurance placed on information that originates from accountants is very high. Shimamoto asserted that the function of accountants as stewards of truth and as corroborators of the quality of data has become progressively significant.
Impact on Accounting
Big data can support entities in appraising their data assets by expanding vigorous assessment techniques. In doing so, accountants and finance professionals have to determine which data is valuable, choose an established valuation technique, and identify key suppositions. There will also be furthering of data value through stewardship and control. The idea here is that accountants and similar professionals can assist in turning internal data sets into more important, secure, vigorous, and in-demand.
Utilizing big data in making decisions will result to a more specific support in real-time. The nature of services that accounting professionals provide, as well as their liaison with the decision makers of the corporate world will totally vary due to the advancement of self-service data recovery. Furthermore, the roles that accountants assume will not just be limited to reporting financial data. By evaluating various data-sets, they will be able to determine the alternatives that decision makers can use.
Data sharing will result to created values. Both the internal and external movement of data can be bettered by the accounting professionals. This will save time and money and will escalate efficiency. However, there are certain challenges in using big data. Since more and more new data is becoming accessible, big data can depreciate rapidly. More so, the data value diverges depending on its usage. Moreover, self-service and automation can erode the demand for a definitive internal reporting while cultural impediments can disrupt the internal distribution of data.
In terms of internal auditing, PICPA reported that data analytics is transforming the audit’s program by instituting -to entities that seek ways on how to better the cost/benefit ratio of their internal audit function -the idea of “continuous auditing.” It is a compilation of audit evidence and gauges by an internal auditor on information technology processes, systems, controls, and transactions and integrates a continual risk assessment process.
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