Get on the big data bandwagon

Traditional accounting is set to be completely automated within the next 15 years.

The future of traditional accounting is dead, thanks to robotics and automation. That was the message delivered by Paul Juniper, director of the Queen’s University Industrial Relations Centre, at CPA Ontario’s annual conference in Toronto last year. “If you’re in a job where you’re reporting historical facts, or you’re doing analysis that is based on certain algorithms, your job is at risk because you can teach a computer how to do that, and at some point it’s going to be economic to do so,” he said, citing an Oxford University study that predicts those functions will be completely automated over the next 30 years.

I think it’s closer to 10 to 15 years, thanks to the emergence of big data. In the last issue, we established that everything in your personal and business life is being tracked. Big data includes structured, semi-structured and unstructured information — everything from social media posts and financial records to music and videos. And all of this is automatically recorded. On the individual level, smartwatches, Google Glass, pedometers and browser cookies are all re-creating your life digitally. You can’t escape it. For business, the history of real-time transactional trends is increasing exponentially using sensors that track production, deliveries, inventory life cycles, warranties and replacements.

When it comes to the accounting profession, big data is accelerating a shift of our expertise from after-the-fact reports to real-time reports tied together with unstructured information. Better decisions are made when numbers and trends are matched to common language explanations and comments. This shift allows us to mature into strategic partners who help clients and the C-suite make better decisions for the future.

It’s a big transition and one that’s full of opportunity — if we embrace it. As accountants, we’ve grown used to defining minimum levels of transactions to be collected in order to provide a relevant, cost-effective report. We are now seeing the automated collection and recording of much more detailed data at no additional cost. We are gaining access to a large pool of explanations and comments as our ability to search and tag common language continues to mature. Plus, we have access to much more information and much longer histories from which to draw comparisons and identify trends.

Of course, more isn’t always better. The American Accounting Association has rightly pointed out that much of this data is useless. It’s our job as business report specialists to try and find the gems. It’s a new frontier and we’re figuring it out as we go, but we have to get out of our comfort zone and use the technologies now available to better understand big data. For example, we now have the processing power to check the assertions of 100% of a population instead of relying on limited statistical sampling. It’s time to start investigating continuous monitoring/auditing techniques and data analytics using market- leading software apps such as CaseWare Analytics and ACL. We should be looking at how we can use XBRL (extensible business reporting language) and EDGAR (electronic data gathering analysis and retrieval) tags to tie together numbers and words for comparison. Look for articles that speak to the collection of information and how to value it and filter through it. Talk with your marketing department about what the team is gleaning from social media. Ask your stakeholders what they want to know and give it to them.

I’d argue that most sophisticated decision-makers/investors are desperate for a way to make use of all the information without having to wade through it. They want dashboards that use a baseline and a set of standards for assigning value to this data in order to filter out the noise so they can make good decisions. Your future as a CPA is boundless so start to rethink what information should be included in your reports.