How does data analytics relate to Big Data? Why should accountants incorporate data analytics into their work?.
Data analysts and Big Data
Big data is different from other data “by whether these data push the limit of capabilities of information systems that work with these data.” Stated simply, Big Data is data that exceeds the capabilities of the information systems that store and analyze it. Companies must design and build networked systems, hardware, and software to store, process, and manage Big Data and usually leverage cloud technology to do so.
Data analytics is the process or activity of cleaning, exploring, organizing, and analyzing data to make inferences about the data. An example in accounting would be the analysis of a population of retail transactions to discover trends in customer purposes. Another example would be examining web traffic for a large global retailer to make inferences on the most popular items and customers’ propensity to purchase these items. Data analytics help decision makers within and outside a business make decisions by giving them information drawn from data collected.
Accountants must incorporate data analytics in their work to conduct audits, compile financial statements, analyze transactions, and perform other accounting and finance related transactions. Accountants use these transactions to ensure the accuracy of financial statement line items. In an audit, data analytics can be used to test assertions made by management in the financial statements. When testing internal controls, data analytics can be leveraged to get a good sample or an analysis of the entire population can be explored to test the strength of the internal controls. For example, retail stores make millions of sales of products per day. With the use of data analytics, accountants can take this big data and draw inferences on inventory levels, sales data, customer trends, potential leakage/spillage, and potential fraud. Big data and data analytics allows them to analyze each
As computing power increases, the ability to perform 100% audits of transactions will become less cost prohibitive and likely the preferred method of conducting audits. Accountants should be versed in simple data analytics techniques such as gathering data, cleaning data, sorting data, and converting data. These skills will allow them to conduct their duties with efficiency.