Big Data Practice Essay PDF

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Big Data Practice Essay What impact and relevance does big data have to the accounting profession and what challenges, risks or opportunities exist as a result of big data? Big data is the storage and analysis of huge amounts of information that without modern systems would have been previously difficult to store, transport or analyse. This data was previously unstructured and did not conform to the models of analysis used. There is said to be the four V’s of big data being, Velocity, Veracity, Volume and Variety which sums the concept of big data up. Volume is the size of data collected by a business, velocity is the speed in which big data is adapting and evolving, variety is the variety of how data is captured, stored or analysed and veracity is the uncertain data or imprecise data included within big data. Many believe that a fifth V of big data exists being Value in that the where and how data is being used to add value is crucial to its importance. With data now playing an ever more prevalent way in how businesses operate with the widespread use of video and images, audio and textual data being used to analyse consumers and highlight patterns or trends. Big data has a multitude of uses when applied to a business context such Netflix who use a variety of data analytics to evaluate consumers watching habits and promote the most relevant shows or movies for the individual user. As a result of big data this has created many challenges and risks to the accounting profession as well as opportunities. This essay will look to evaluate these threats and risks with regard to the accounting profession and how the profession can move forward with big data. One of the main threats to the profession is the automation of accounting and auditing tasks in particular, this has been highlighted across numerous studies such as Richins et. al 2017 and ACCA studies. They highlight that accounting reporting functions and auditing sampling could be replaced through big data systems that would in fact allow a real time flow of financial information. The systems can be able to create and collate accounts on a real time basis and also be able to analyse far vaster amounts of information for the auditing function. With Richins highlighting a 94% chance of these roles becoming automated in the future. To an extent this has already began with BDO one of the largest accounting firms globally now using and implementing big data analytics into their auditing process to highlight risks and potential frauds. Additionally, HMRC have implemented the use of big data to analyse tax fraud making an additional £1.4bn in tax during the first year of using analytics. However, the contrast of this is that the entire accounting process is subject to automation by its nature. This provides opportunity for accountants to use their current skills base and adapt to evaluate and analyse big data and the business effects of such. Accountants hold an indepth knowledge and understanding of a business and see a fuller picture compared with other professionals which is invaluable when it comes to planning and strategic focus. Many highlights that the automation of mundane tasks would be beneficial to accountants as this would allow them more time to carry out skilled tasks that provide add value oppose to the previous tasks which were very ad hoc. A further opportunity big data holds is the possibility of expanding accounting services to provide more robust and real time risk assessments for clients and allow them to improve budgeting techniques through incorporation of big data. It can allow new previously unknown consumer insights to be gained such as Capital One which uses big data as a

marketing tool to ensure offers and products advertised to consumers are customised. These opportunities would allow accountants as a profession to be far more analytical and strategically focused for their clients to ensure the optimal business choices are being pursued. Warren et al. 2015 also highlights that big data in this respect can allow for the combination of financial and non-financial data sets previously thought to be useless or incomprehensible for strategic use. Through accumulating and evaluating big data if carried out correctly it can be an area of strategic and competitive advantage. As highlighted in Warrens study which showed companies using data analytics receive around 5-6% financial benefits, with big data use being seen as valuable as a company’s brand. This highlights an opportunity for accountants as a profession, as the greater value big data adds to a business the greater its importance. Currently accountants have many of the skills required which could be transferred over or used in conjunction with data analytics such as their business acumen, ability to identify relevant content and data interpretation on a large-scale basis. With such skills accountants would be able to maximise the potential of the data analytics and present such information in manageable and understandable amounts. One way in this can be completed is through the use of data visualisation, this is the process of condensing vast amounts of information down into visual representations to highlight patters, trends or focuses. These allow for complex information to be understood easily by the human brain. To conclude, Data analytics is a fast-paced evolving area of business analysis. The amount of data being collected and analysed is growing vastly each day with hundreds of businesses now operating or investing in data analytics to provide in-depth market analysis of consumers and gain a competitive advantage. This new area of business does however have many risks when linked with the accounting profession, the main being the automation of a traditional accountant’s role. However, if accountants are able to adapt their skill set and use data analytics to their advantage it can allow the profession to add another dynamic area of analysis to the already robust information an accountant can provide businesses with. This automation of mundane tasks will see a shift in accountant’s skills and allow them to become highly skilled professionals focusing only on value adding activities. The use of data analytics will see the development of a hybrid accountant, proficient in accounting, business and data analytics to meet the needs of 21st centaury clients and consumers. FEEDBACK: Hi Oliver You caught me on a coffee break so have had a quick read through. This is a very good essay, well structured and good reference to examples - well done. There are some additional points you could further expand on - skills gap, issue of cyber security, role of accountant in terms of governance and valuation of data. Also, you refer to a new generation of ‘hybrid’ accountants which is good, but maybe explain what this means a little further. Overall though this was a very good effort. Hope that helps....