Question

Explain how big data and data analytics can impact the accounting profession.

250Words

Answer 1

There are two noticeable trends of big data in financial accounting. Firstly, different data sources are being integrated into accounting information systems. For example, text, video, and audio data are gradually being linked with traditional data. Accountants need to enhance their data analytic skills to deal with large volumes of available data, including automatically mined data (such as customer purchases, URL click through tracking, and content engagement data). Secondly, one area where big data may affect substantial change is fair value accounting. Data service companies specializing in collecting and evaluating designated data from various sources could emerge, such that big data pertaining to the fair value of assets and liabilities can mitigate subjective assumptions in fair value estimates. For example, Thomson Reuters Valuation Navigator currently provides market data for valuation by collecting scattered financial data into a single, searchable repository, which can automate daily pricing and valuation workflows.