Big data is a handy term used to describe the abundance of information the digital age is producing and the speed with which it multiplies. To put the term "big" in perspective, about 90 percent of the world's digital data in 2015 was generated in the two years prior, so imagine the data scope we're dealing with today. Simply put, harnessing big data means using information that computers, the internet and emerging forms of technology are capturing. But, what for?
In the accounting field, the rise of big data has been transformative, fundamentally changing how financial transactions occur, earnings projections are forecasted, money is managed, and business is conducted.
Here's a quick look at some of the ways accounting firms and departments are using big data, and how technology is reshaping the role of accountants and financial managers.
Automation and Analytics
Increasingly, paper records and money are becoming the quaint artifacts of a pre-digital world. While many of us hold on to these familiar ways of exchanging funds and information, the fact remains that many aspects of the financial world now exist primarily in digital formats. For this reason, automation and analytics have revolutionized the accounting field.
Automation simplifies all manner of transactions and saves countless hours of work on data entry, reporting and quality assurance. Some examples of automation's impact on accounting include:
- Integrated banking and financial systems that can exchange information and process transactions at lightning speed with great accuracy.
- Automated data entry processes that have simplified or even eliminated the need for the manual addition of account, invoice or payment information into accounting systems.
- Software that can review and analyze financial data for errors or suspicious activity, flagging incorrect items or potentially fraudulent transactions.
- Operational and mechanical data on pricing, sales, accounts payable and other business functions captured by an array of devices (smartphones, registers, computers, tablets, wearable technology and more) and automatically processed into accounting systems.
Accounting analytics refers to the way information is tracked, reported and aggregated to provide insight about business trends and operations. It is a powerful interpretive tool that allows accountants to review specific data sets within the bulk of information they collect and store to identify client needs and solve problems. Accounting firms are also using analytics to improve financial forecasting and inform their approach to investments and tax preparation.
While analytics does not provide accountants with a crystal ball, many firms rely on this form of big data analysis to see the future more clearly and make data-suggested projections about their business prospects.
One of the most important applications of big data in accounting over the coming decade will be to help develop new technologies that address the threat of financial fraud -- and data theft in particular. As the tools used to commit financial crimes continue to improve, fraud becomes much easier and cyber criminals get better at covering their tracks. The work of accountants who understand both analytics and forensic accounting will be critical to this effort. While protecting the funds and the data for which they are responsible, they can help develop defensive tools and processes, and stop fraud by gaining a level of technological sophistication on par with data thieves.
Big Data Studies at USC Aiken
USC Aiken's Master of Business Administration with a Specialization in Accounting offers students the chance to work with big data, and study its financial applications. Courses such as Information Systems and Analytics for Accounting and Finance give MBA grads a comprehensive look at information technology from an accounting perspective, including data collection and reporting, its role in investment and credit decisions, and the interesting patterns it can reveal.
Accounting students who understand big data are valuable to employers because their expertise gives the clients they serve a competitive advantage.
Learn more about USC Aiken's online MBA program with a specialization in Accounting.
Sources:GMAC: 2018 Corporate Recruiters Survey Report
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