Big data has become one of the big focuses in the business industry today. Traditionally, the problem that businesses had, was that there was a lack of access to it. Big data has fixed that problem for a wide range of industries and has led to the development of numerous best practices, as it has an impact on nearly every aspect of accounting. From auditing and advisory services to tax assistance, it can produce more data-driven outcomes than ever before in the accounting world. This information can allow accounting firms to predict things like a deduction or a penalty. It also has the ability to influence algorithms to identify questions and problems. Let take a look at these how these large sets impact on accounting firms.
Big data helps produce better data-driven actions and creates a better experience for all stakeholders. Simply stated, it refers to extremely large data sets, that can be analyzed to influence algorithms and reveal trends, patterns, and associations. As an example, we can look at the data that could be taken from an automobile. Time a car was driven, the speed at each time, GPS location, dashboard settings, gas and brake pedal pressure, and tire pressure are just a few of the things that you could analyze. But if this data on your car was collected as is, then it would be difficult to gather it all up and analyze it accordingly. Now, imagine an automobile maker having to do this for 10 million cars in each minute of the day to deliver a slew of new data. The enormity of the dataset is almost unfathomable.
The concept of big data emerged in the early 2000s, when the data science process combined volume, velocity and variety with data. The important thing to know about these datasets isn’t really its enormity, it’s what can be done with it. Data science can analyze the information to gain insights, which lead to better decisions and strategic business or financial moves.
Modern accounting practices mandate that tasks are accomplished strategically within a given time frame. But, the traditional record-to-report methods limit the visibility of data, and can make it difficult to complete tasks before the books are closed. Having real-time access to the accounting data keeps firms in sync with the business calendar, instantly corrects errors in reports, and increases efficiency. As a result, accounting firms save both time and money with real time access to information.
Providing risk-free financial services to customers is essential for firms. As data comes with a large number of security threats, using more at once enables accountants to proactively identify issues. With real-time access to the raw data, accounting businesses can base more of their decision making on hard evidence and facts. Data science is allowing firms to cut out guesswork and assumptions about customers, employees, and vendors.
With the help of visualization software, accountants gain the ability to see large amounts of raw data. This large amount of data exploration makes for easier identification of patterns, flows, irregularities, and exceptions more easily. These tools are helping accountants to see data in ways that were not previously possible. Visualizations have made it easier to bring together data from various sources, to provide new insights into the reports. Firms can now predict future deduction and tax return info to better inform advisory and tax services. They have also made it possible for accountants and CPAs to conduct advanced analysis of data points by using more variables, real-time data, and advanced modeling.
Auditors have been at the forefront of the use of big data in the accounting industry by engaging in exploratory data analysis. Today, the traditional approaches to auditing, which required analyzing billions of transactions in a ledger, are no longer used. While auditors still work with large data sets, audit analytics allows them to see the large range of financial and non-financial data. This data storytelling can help identify exceptions and pressure points so to allow for a greater focus on areas of risk to predict outcomes that will improve forecasting.
With the ever-increasing amount of data, accounting firms must have the ability to utilize the latest technology and tools to analyze financial data.
A firm that can advertise the use of big data on their accounting business cards is sure to attract numerous potential clients as the benefits are widely known. It will help them improve client experience, provide greater assurance over financial statements, and increase the decision support that firms can give.
Ultimately, using big data and analytics in any industry can be challenging, but if used correctly, accounting firms can take their services to the next level.