D7R1

Requirements:

Instructions: Respond to the discussion topic post below.

· Responses must be substantial (several paragraphs each) Responses should have proper support with at least 1 different source as applicable.

Discussion Topic covered:

This week we are looking more specifically at how big data is used in accounting.   Using authoritative sources, select one accounting related agency like the IRS, SEC, FASB, ACFE, etc.  and research and discuss how the agency you selected is using big data and data analytics.  Be sure to provide specific examples to support your ideas.   Also discuss if you think there could or should be other applications of data analytics associated with the agency you selected.   Try and select a different agency from your classmates.

Respond to this post:

Big data and data analytics have been used in business processes increasingly to optimize operations, manage risks, and improve services. Today, most accounting firms have incorporated the systems into their core strategies to strengthen evidence-based decision making. Specifically, the Financial Accounting Standards Board (FASB) is one of the organizations that have adopted big data and analytics. Established in 1973 and headquartered in Norwalk, Connecticut, the agency forms financial accounting and reporting frameworks for public and private institutions, including non-profit enterprises. FASB uses big data and data analytics to integrate different structured and unstructured data into bookkeeping information systems and promote fair value accounting.

            The agency incorporates different data sources into accounting information systems to improve financial reporting. This way, it can guide establishments regarding proper frameworks for improving services. For instance, big data analytics significantly enhance data sets’ detection that organizations can analyze deeply to retrieve useful information (Rembert). FASB uses the systems to guide public and private businesses, including non-profit companies, to integrate process automation so that they can disclose and reconcile financial statements for compliance purposes. Therefore, such technologies play a considerable role in the agency.

            Since FASB establishes financial reporting standards, it uses big data to promote fair value accounting for firms. For instance, Rodríguez-Pérez et al. argue that the information-based fair value of financial investments has higher explanatory power than historical cost data. In this regard, the agency uses analytics to gain new insights and examine entire data sets, such as recognizing new relationships and patterns. These efforts help institutions to avoid relying on assumptions and guesswork since they can access accurate standard procedures to follow during financial reporting processes.

            FABS can also use a data lake to support its activities. According to Chessell et al., this analytical system facilitates the storing and processing of structured, semi-structured, and unstructured data. The agency can easily obtain information from multiple systems, such as license data sets from external partners to analyze patterns and trends. For example, in the exploration stage, retrieved data from analytics tools are used to produce new critical models that companies can employ in improving their activities. Thus, a data lake can strengthen the financial accounting and reporting procedures.

Big data and analytics play a crucial role in organizations. FASB uses such systems to enhance fair value accounting and bookkeeping information frameworks. The agency can also rely on a data lake to gather and process records in real-time. Overall, the organization should use updated databases to keep relevant and current financial and reporting standards.

 

Chessel, Mandy, et al. “Architecting to Deliver Value from a Big Data and Hybrid Cloud Architecture.” Software Architecture for Big Data and the Cloud, 2017, pp. 33-48. https://doi.org/10.1016/B978-0-12-805467-3.00003-X

Rembert, Ludovic. “How Accounting Teams Can Leverage Big Data.” Tdwi, 3 Mar. 2020, tdwi.org/articles/2020/03/03/adv-all-how-accounting-teams-can-leverage-big-data.aspx. Accessed 9 Dec. 2020.

Rodríguez-Pérez, Gonzalo, et al. “Assessing the Impact of Fair-Value Accounting on Financial Statement Analysis: A Data Envelopment Analysis Approach.” A Journal of Accounting, Finance, and Business Studies, vol. 47, no. 1, pp. 61-84. doi:10.1111/j.1467-6281.2011.00331.x