Critical Discussion on Big Data as a Development in Relation to Financial Reporting

Introduction 

Al-Htaybat & Alberti-Alhtaybat (2017) defined Big Data as the existence of extremely large size of data that involves multiple sources. In this regard, the data can be structured, semi-structured, or unstructured, which supports in gaining information. For instance, it can be organisational databases for transactions, recruitment, supply chain process & inventories, customer feedbacks, and financial reports among others. It can also be information stored in the social media. However, it is crucial to define the concept, as it does not only involve the set of large databases, but also the related techniques, tools, and framework for its analysis. This helps in gaining meaningful interpretation. It can also be defined as the procedure based on which the meaning and insights of the underlying data can be attained, when the traditional data handling techniques and mining process could not be performed effectively. Big Data involves the use of enormous parallelism and related hardware for its storage and protection (Bhimani & Willcocks, 2014). Al-Htaybat & Alberti-Alhtaybat (2017) further opined that the concept of Big Data has developed over the past decade with the extensive revolution in the digital world. In the present day context, it is associated with varied areas and is extensively used in the organisations for financial accounting and reporting. Al-Htaybat & Alberti-Alhtaybat (2017) also believed that it has a far-reaching utilisation in the future. They also conveyed that the concept of Big Data relates with volume, velocity, variety, variability, veracity, and value of a particular set of data that not only create opportunities but is also related to the pitfalls. Considering this aspect and the gain conception of Big Data, it is an opportunity to critically evaluate the advantages and disadvantages of the concept in relation to financial accounting. 

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Critical Discussion on Big Data in Relation to Financial Accounting

The emergence of the concept of Big Data has created a major area of debate regarding its benefits and drawbacks with respect to financial accounting in organisations. In this regard, it can be evaluated from the notion suggested by Al-Htaybat & Alberti-Alhtaybat (2017) about Big Data that “data is the new oil”. This implies that it is the most decisive asset and resource that an individual or the organisation possesses in the modern day context (pp. 850-851). The below subheadings further evaluate this notion in a critical way with regards to financial accounting. 

Analysis

Through the use of big data, financial statements and information of a large number of companies can be evaluated efficiently and effectively. This is especially relating to any global industry, which comprises large numbers of companies. The traditional method of financial accounting and reporting is not as effective and efficient to analyse the performance of large sectors or industries. Thus, big data, which involves digital technology, assist in storing and manipulation of the information that supports financial accounting and reporting of a small company. The specific organisation can evaluate the performance of the sector and accordingly plan and execute its own operational process. Moreover, it can be analysed that computers are integrated into the modern organisations for overcoming the traditional manual method of employing efforts. It significantly restricts organisations to lose financial information and the related chain of thoughts that an individual possess (Krahel, & Titera, 2015; Satyanarayana, 2015; Warren et.al., 2015). 

Thus, it greatly supports the development of innovative ideas and concepts, which in turn contributes to the financial prosperity of the respective organisation. In this context, the example of Google Analytics can be cited, which can be used to analyse different financial information relating to an organisation or an industry. It correspondingly supports in developing new strategies from the perspective of an organisation. Thus, it is apparent that Big Data is a great scope for witnessing millions of creative and innovative ideas, which contributes to the development of any business in the world. However, it can be counter-argued by stating the fact that there are many instances, wherein the analysis from Big Data has been deceitful. Nevertheless, it can be stated that the organisations should not blindly rely on the Big Data for financial accounting and creativity, rather it should also logically analyse it for cross-validation (Krahel, & Titera, 2015; Satyanarayana, 2015; Warren et.al., 2015). 

Data Access through Surveys 

Big Data also reflects the use of surveys through the use of digital and online tools for collecting financial information, which can be correspondingly used for reporting and accounting. One of the major tools for conducting primary surveys is the online social media, the use of which has expanded in the recent years to a significant level. Thus, a large amount of primary survey results can be gained within a considerably short time and less effort. The information gained is also authentic and relevant. It can be critically evaluated that Big Data can be used for gaining information relating to financial positions of the clients or customers. This would reflect their purchasing power. This, in turn, supports in analysing the possible revenue collection and profit level of the organisation. However, it can also be critically analysed that it is a complex task to attain proper insight from the surveys conducted through digital and online tools. This is mostly associated with the attainment of large amount of data in which they vary and contrast from each other. Thus, the attainment of proper insight is difficult. In this regard, it can be further counter-argued that the data can be quantified and the majority of people conveying similar information can be considered (Griffin & Wright, 2015; Satyanarayana, 2015; Vasarhelyi et.al., 2015). 

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Speedy Updates

Another decisive aspect relating to Big Data is the speedy updates, wherein, every second or its fraction financial information is reported and accounted in the databases. This significantly supports in attaining information, which are related and relevant to this particular point in time. It is crucial, as the financial data relating to an organisation and its industry is changing on a daily basis. Thus, the organisation to enhance its efficiency and effectiveness needs to update the financial reporting at every point of time, which is only feasible with the concept of Big Data. In this regard, the example of any brokerage company of share market can be cited, which significantly needs the updated financial information of every second. This is to ensure that they deal efficiently, wherein, the market fluctuates constantly. On the other hand, from the perspective of stock exchange organisations, it is also crucial to report the financial information constantly. This has been largely feasible with the emergence of Big Data. However, it can also be criticised by stating the fact that there are certain instances wherein the reporting has been wrong due to the demand for speedy updates. Thus, with respect to the errors in the speedy update, the subsequent actions or consequences takes place immediately that creates a major issue for the organisations. Nevertheless, it is accepted that there are certain instances of mismatch, but the number is extensively low. The organisations should take precautionary measures such as cross-validation to reduce the possibility of information mismatch (Payne, 2014; Schroeder et.al., 2013). 

Answering Data 

Big Data also has another crucial area of contribution with respect to financial accounting and reporting is the answering of data. Huge financial data are reported in the databases of an organisation, which can be correspondingly accessed easily. For instance, the arrival of balance in the accounts of the customers is an example. The organisation can immediately access the information and answer the required data. This has been feasible due to the reporting of the financial information organisational digital or online databases. Thus, it justifies the importance in the modern day context. However, it can be counter-argued by disclosing the fact that easy access to information through digital and online media creates the risk of unauthorised access to the account. This in turn can cause financial losses. The financial information of an organisation is highly confidential and can be lost through unauthorised access. Nonetheless, it can be critically evaluated that the organisations need to ensure maintaining the security of its databases through strong passwords along with anti-virus and anti-hacking software (Gandomi & Haidar, 2015; Moffitt & Vasarhelyi, 2013; Schroeder et.al., 2013). 

Big Data is Enormous 

The digital and online technology for financial reporting and accounting supports in accessing information in a customised and codified way through the use of search options. For instance, the search keywords such as ‘assets’ can be used to access to all the information. This is related to the assets of the organisation in its financial statements. However, it can be criticised that the search keyword does not highlight or give access to its synonyms that also provides similar information. In this regard, it can be counter-argued that although this has been its limitation with respect to digital and online platforms, it would be soon resolved with the further technological development (Satyanarayana, 2015; Lohmeier, 2014; Chen et.al., 2012). 

Conclusion 

From the overall critical discussion, it is apparent that Big Data has some major benefits. These include effective analysis of the financial information, data access through surveys, speedy updates, reporting, answering, and access to the required data along with the specific search from the enormous data. However, there are some drawbacks, which include misleading analysis, complexity in gaining information, mismatches in the updates, and absence of search through synonyms of the keywords. Nevertheless, these issues can be resolved in the financial accounting and reporting through further development of technology, cross-validation, and integrating precautionary measures. Thus, it is expected that Big Data would further contribute organisations in its financial accounting and reporting to develop a better world.