In previous articles, we had the opportunity to address the issue of Big Data under other types of industries and combined with other technological tools that can greatly help businesses. On this occasion, we want to talk about how Big Data can be a great ally in the area of Accounting and Finance, especially in everything related to accounting audits, development of financial models and even the timely detection of financial fraud.
To start, it is important that we define what Big Data is. Very briefly we could say that it is a larger and more complex data set, especially from new data sources. Both Big Data and data analysis (the process to evaluating data using analytical and logical reasoning to examine each component of the data provided) have grown exponentially and are estimated to reach $ 156.72 billion by 2026, with a growth of 13.3% during the forecast period. Currently, more than 98% of the stored information is digital, compared to 25% of all information stored in digital format in the year 2000.
However, the application of this technology in accounting has advanced very little, but it is also a great opportunity to improve tactics in accounting and auditing. For example, a report by Chartered Global Management Accountant noted that 86% of professionals surveyed agree that their businesses struggle to obtain valuable information from the data.
Audit companies should continue to operate in a harsh and unequal economic climate, which should be expanded to include the analysis of relevant data for their exercise like transaction activity and key master data in business processes. A clear example of how Big Data can be a great ally is the financial firms, where the cases of credit cards frauds are a common headache, but thanks to this technology they can build credit risk models, analyze transactions and use machine learning to improve default rates for delinquency and poor account management, which helps increase financial predictions by 30%. Financial firms can even prevent frauds within a company, focusing on the actions of internal employees, transactions or phone conversations.
Thanks to this tool we will be able to fill the base with information to analyze reports of known fraud companies and obtain a list of words to distinguish the causes of fraud and non-fraud. In a second phase, machines can be used to predict the state of fraud in financial reports and assign a probability of truth, generating correct classification rates of more than 80%.
In particular, some of the most important benefits that Big Data provides to accounting firms are:
- Evaluate data assets through the expansion of evaluation techniques
- Convert data into more relevant, safe and vicious information
- It will help to make more specific decisions in real time
- Expand the functions of accountants as decision makers
- Automate some processes to facilitate the detection of information errors or financial fraud
- Improve the cost/benefit ratio based on internal audit
Are you interested in learning more about what Big Data can do for your company? Let’s talk about how this technology works and how other of our specialized services can help your company to be more competitive, obtain greater profitability and optimize its services in a simple and advanced way.