Question

How does data analytics relate to Big Data? Why should accountants incorporate data analytics into their work? Provide at least one unique example. (DQ 9-1)

Answer 1

Big data is the collection of data sets that are so large or complex they cannot be analyzed by traditional databases or tools, such as spreadsheets.

Big data impacts nearly every aspect of accounting. In audit, big data can produce more data driven audits, providing a better experience for the client and the auditor. It can also produce more valuable insights. In advisory services, big data can identify questions, help monitor and improve business performance, and build analytical models that support a variety of product or operational improvements. In tax, big data offers the opportunity to analyze efficiencies more easily, identify tax related opportunities for improvement, and aid in evaluating global opportunities. Finally, in managerial accounting, big data can help with risk identification and management.

Decision Models

One of the ways data and analytics are frequently used is with decision models. These are mathematical representation of a problem or business situation used to analyze and make a decision. Decision models typically contain some controlled data, such as the number of sales people. And, they often include some uncontrolled data, such as interest or unemployment rates. If you were in the mortgage business, a decision model might be used to estimate the ideal number of mortgage processors to employ given the number of sales people and an estimation of interest rates.

Data Visualization

Data visualization is another way in which analytics are used in business and industry. Simple graphs are one example, however, in the last several years a whole field has emerged to help analysts provide more visualization into data and information. Dashboards are a great way to visualize many different metrics quickly, with drill down capabilities to explore concerns or questions more deeply. A whole category of software specializing in the visualization of big data has emerged alongside the growth of the big data industry