Big Data, impact on accounting

Research and consulting firm Gartner describes big data as "high-volume, high-speed

and/or high-variety information resources requiring cost-effective, innovative types of

information processing that allow improved insight, decision-making and process automation."

About 2.5 Exabyte of information are produced each day (an exabyte is 1 billion

gigabytes) and the sum comes every 40 months. According to the 2016 Global Forensic Data

Survey from EY, 79 percent of the firms surveyed use more than 10 million documents that are

typically outside the spreadsheet domain and require more advanced analytical instruments.

Accountants need to improve their data analytics abilities to handle big quantities of accessible

data, including automatically extracted information (such as client purchases, URL URL click

through tracking and content engagement data). Data service firms that are specialized in

collecting and evaluating assigned information from different sources could arise so that large

information related to fair value assets and liabilities could mitigate subjective assumptions in

fair value estimates.

Auditing

Auditors are now facing the challenge of large quantities of both structured (e.g. general

ledger or transaction information) and unstructured information (e.g. email, speech or free-text

fields in a database, Wi-Fi sensors, digital tags, etc.) along with an growing number of non-

traditional information sources such as third-party watch lists, news media, free-text payment

descriptions, email communications, and social media. Auditors use big data because they need

to be able to see how their clients manage their own big data. As a result of latest data analytics

instruments that have become accessible, auditors can use big data to decrease audit

expenses and improve profitability.

 Confirmation.com offers an example of confirmation of an automated audit. For over

14,000 accounting firms, 100,000 auditors, and 700,000 organisations, the firm offers secure

audit confirmation services. Confirmation defines its services as "offering an all-in - one solution

that helps minimize fraud and increase effectiveness throughout the process of audit

confirmation." Big data allows auditors to analyze both structured and unstructured information

to identify prospective transactional anomalies (e.g. unauthorized disbursements), behavioral

patterns (e.g. split payments to bypass transaction limits) and trends (e.g. enhanced pre-big

holiday fraudulent transactions). As a result of using automatic data collection and rule-based

analytical methods to detect mistakes, auditors may change duties from identifying mistakes in

information judging which errors are worth investigating further.

The American Institute of CPAs (AICPA), CPA Canada and Rutgers Business School

collaborated in 2015 to create the Rutgers AICPA Data Analytics Research Initiative, which

aims to help integrate data analytics into the audit process to improve audit quality. AICPA also

established Audit Data Standard working group to create a uniform data model that could be

used by management, internal auditors and external auditors for enhanced analytics to further

enhance the timeliness and efficiency of the audit process. Audit Data Standards ' first issuance

includes the base standard, general ledger standard, and sub-ledger standard receivable

accounts. Since July 2013, the U.S. Securities and Exchange Commission (SEC) has used big

data in fraud audits when SEC published an analytical accounting quality model, the nickname

"RoboCop" to detect violations of securities law, reporting and disclosure of issuers, and audit

errors by taking advantage of around one billion documents per day from each of the 13

domestic equity exchanges.

Accounting standards

Big data have the potential to significantly change accounting standards. Many argue

that current accounting standards are artefacts of an era subject to elevated transmission
expenses and slow information collection speeds; however, they have become obsolete.

Accounting standards need to concentrate on information rather than on presentation to be

applicable. In 2015, U.S. academic John Peter Krahel and retired EY partner William R. Titera

proposed, "accounting standards will have to cope with database material and allowable

extraction sets, but not with specific account disclosure regulations." Because accounting

standards will offer users more accountability for requiring accessible information in the era of

big data, it is essential that future accounting standards balance the need for disclosure with the

need for data protection.

Data Privacy Concerns

People are now getting concerned about the handling of personal data by several

businesses. Rainie and Duggan (2016) surveyed 461 U.S. adults in their study entitled "Privacy

and Information Sharing" and found that there are conditions for many Americans to follow

whenever they share personal information. These are the following conditions that they follow:

1. They would share personal information given that they will get something with value.

2. They would share personal information if there is an exchange system that happens.

Rainie and Duggan (2016) indicated that there is a high level of concern about the

security and security of their personal information because there are many instances that have

already occurred where data has been breached. Apart from that, Americans have expressed

anger as some businesses send unwanted messages, advertisements, and other stuff. They

therefore wanted full control over how their personal information is being used and retained by

the companies.

In her study "Public Perceptions of Privacy and Security in the Post-Snowden Era,"

Madden (2014) indicated that Americans are well conscious of the government's efforts to

regulate and monitor communication. Americans are concerned about the American
government's monitoring of their personal information. Americans also have little trust in the

safety of channels of communication such as internet. Therefore, the Americans express their

intention to have control over their private data and want the government to have less use of

their personal data. It can be seen in the research that Americans now have little trust to be as

safe in storing data on the various internet platforms. Therefore, with this note, the various

businesses and even the government must regain the people's confidence.

However, even though there is a great problem that most Americans have Mastroaini

(2016) in his research entitled "Survey: More Americans Concerned about Data Privacy than

Income," he said that few Americans really know how businesses share their private data and

there is a lack of understanding about how businesses use private data and what consumers

can do to protect it. It can therefore be seen that there is a need for more understanding and

dissemination of knowledge on ways in which the user can have full control and maintain his

private data secure. Age can be a factor affecting the understanding about maintaining private

data revealed when using internet platforms.

As regards the privacy of their personal information, Europeans share the same

concern. Tresorit (2017) indicated that 92% of European consumers are worried about their

internet information safety. The concerns include hackers, government oversight, and online

service provider lack of transparency.

In the case of China, according to the Economist (2018), the Chinese have not

previously had any concerns about the privacy of their data. The word "privacy" has a negative

connotation in their culture, but because of the prevalence of identity theft cases and the

growing concern for data protection by China's largest Internet companies, the Chinese are now

beginning to want control over the protection of their personal information and the prevention of

misuse. In the case of the Philippines, 37 million Filipino adults are already Internet users. 18

million Filipino adults have been doing different online activities for more than an hour, such as
getting news and sharing information online. (National Privacy Commission, 2016) With these

numbers, it can be seen that many Filipinos are very active on the Internet.

The recent survey by the National Privacy Commission (2017) shows that many Filipino

adults attach more importance to their data privacy rights. 94 % of Filipino adults who are also

Internet users surveyed are very concerned about how personal information will be used in

transactions and 85 % of Filipino Internet users say that their privacy rights are important.

Mendoza (2018) stated that there are 140 cases filed by the National Privacy Commission with

respect to the Data Privacy Act. Given these numbers, it can be said that the Filipinos are very

concerned about their data privacy rights. Filipinos are now concerned with the privacy of the

way in which their personal information is used.

Importance of Data Protection

Today, data is recognized as a valuable corporate asset and the organization's

investment in data storage has an impact on the bottom line, which is why it needs to be

safeguarded all the time (Balooja, 2005). As Oracle Technology Networks put it (2007), data is

the company's most critical asset – whether it is payroll / employee information, customer

records, valuable research, financial records, historical business information, etc. If a business

loses its data, it can not be replaced, and rebuilding / regenerating that data is likely to be an

extremely expensive, if not impossible, task. A company that has lost its business data will find it

very difficult to remain in business. Organizations are flooded with data. The growth in

unstructured data and the increasing dependence on e-mail for communication and exchange of

documents are key contributors to the increasing importance of data protection and

management (Mehta, 2006). With the spread of e-business, an enterprise now operates in an

extremely complex and highly networked global economy and is more susceptible to disruption

than in the past. The cost of such interruptions or downtimes may be unplanned (which may be

due to hardware or system failures, data / storage failures, human errors, computer viruses,
software glitches, natural disasters and malicious acts) or planned (due to scheduled

maintenance such as system upgrades or data transformation) or both (Oracle Technology

Networks, 2007).

Data protection is based on the right to privacy. This right is to be valued for a number of

interrelated reasons. Privacy is closely linked to the concepts of inherent human dignity, human

freedom, autonomy and self-determination. It is an organizing principle of civil society and is

closely linked to the democratic life of the political party.