LITERATURE REVIEW

There is developing literature describing the challenges of big data in financial reporting and
accounting. This recent literature also identifies broad problem areas of financial accounting
and reporting in the era of big data. Many researchers study how big data technology and big
data analytics (BDA) help to solve problems between users and preparers of financial reporting
and accounting because data sets become more accessible and new data types emerge such as
real-time contents (Al-Htaybat and Al-Htaybat, 2017; Krahel and Titera, 2015; Bhimani and
Willcocks, 2014; Sun et al., 2018; Coyne et al., 2018; Griffin and Wright, 2015).
Relation between big data and company reporting has been investigated, including its impact to
the company reporting. This investigation was carried out qualitatively and quantitatively by
finding out the subject's perceptions (25 participants) about the relationship between big data and
corporate reporting. Based on the investigation, the results were obtained that big data is an
important element in company reporting, because it can improve prospective financial
statements. (Al-Htaybat and Al-Htaybat, 2017)
This is strengthened by the statement of Bhimani and Willcocks, 2014 who suggested that big
data can even help management make decisions based on information obtained from big data
analysis, while still considering the company's strategy, organizational structure, and information
systems implemented in the company. In addition to the benefits of BDA implementation, there
will also be challenges to information literacy as company reporting information.
Moffitt and Vasarhelyi, 2013 mentioned that there are two types of data obtained from
companies, namely structured data and unstructured data. Structured data means clean and
reliable data such as financial records from time to time. While unstructured data usually
comes from external, noisy like commercial data, or data from social media.
Big data in the field of accounting is managed by accountants, so the role of accountants
becomes important. These accountants are required to have qualified abilities so that they can
identify information and process that information so that it can be used as a basis for decision
making. (Coyne et al. 2018)
On the other hand, many companies later realized the importance of this big data analysis, but
apparently some of them did not understand what they needed for it. Then this gap is resolved
by the BDA solution provider. They have a solution to bridge the gap between the needs of the
company and the implementation of the BDA itself.
Following are questions related to:
Q1. What is the role of the institutional pressures on the change of the Accounting Information
Systems in the age of BDA?
Not many publications discuss about the role of BDA in management accounting. Information
systems should be transformed because the speed of data, the amount of data, and the
variation of data increases in the digital age. (Chen et al., 2012). This information system
transformation enables information to be spread globally to international companies. In this
case, it is clear that accountants have a strategic role in the company if they have the ability to
develop and process BDA. This condition is very beneficial for the company because in terms of
operational costs can be reduced, as well as providing ease in accessing data or information
needed as a basis for decision making. (Lacity & Willcocks, 2012).
With regard to the conditions mentioned above, the role of management accountants no
longer only reports historical financial information because it may not be needed for
managerial decision making. But more to the availability of future-oriented data to help
managerial strategic decision making so that the company becomes more superior and
competitive. (Nielsen et al., 2014)

Q2. Does BDA augment the accuracy in fair value of assets and liabilities and how?
According to Donald Warren Jr.,Kevin C. Moffitt, and Paul Byrnes (2015) Big Data has
increasingly large implications for accounting, both for develop managerial accounting, financial
accounting, and financial reporting practices.
In managerial accounting, big data can make a positive contribution in terms of budgeting of
cost as well as in terms of effective management control. Meanwhile in the financial accounting
section, big data is able to improve the quality of accounting information due to increased
transparency and relevance of financial information. And in terms of financial reporting
practices, big data has a role in perfecting accounting standards, also assist accountants in
gathering useful information in real-time.
Big data has succeeded in changing systems in various companies, especially financial services.
Financial institutions that use BDA can maintain excellence and competitiveness. With BDA,
structured data and unstructured data can be processed into useful information. Data accuracy
in financial services also becomes important, so sophisticated statistical methods are needed.

Q3. What is the role of BDA in key accounting and audit matters, such as revenue recognition
and complex accounting estimates?
BDA is used by accountants to help businesses uncover valuable insights in their finances,
identify process improvements that can improve efficiency, and better manage risk.
Accountants will be increasingly expected to add value to business decision making in their
companies and for their clients. Furthermore, BDA used by tax accountants to quickly analyze
complex taxation questions related to investment scenarios. In turn, investment decisions can
be expedited, which allows companies to respond more quickly to opportunities to beat their
competition and the market.
Accountants who help, or act as, investment advisors use big data to find patterns of behaviour
in consumers and markets. These patterns can help businesses build analytic models which, in
turn, help them identify investment opportunities and generate higher profit margins.
It is stated that BDA is a Big Data modeling process to find and communicate useful information
and patterns, produce conclusions, and assist in decision making. Big Data has been used for
advanced analytics in many domains by auditors. They hypothesized that BDA can improve the
efficiency and effectiveness of financial statement audits. They explain how BDA applied in
other domains might be applied in audits. They also mentioned the characteristics of BDA,
which distiguish it from traditional audits, and their implications for practical implementation.
(Cao et al 2015)
For accountants, new ways to manage working capital have become possible. The current
conditions of inventory and products sold can be monitored and taken more action. Because
real-time information was not previously available, the accounting function can perform a new
role as a receptor and assessor of working capital information for constant analysis and decision
making. (Bhimani & Willcocks, 2014).
According to Bhimani and Willcocks (2014), management accountants do not have to be
technical data analysis experts, but they need to understand its opportunities and their
implications for the financial intelligence they produce. Big data requires skills in analyzing
structured and unstructured data from various channels. With the ability to utilize more
sophisticated and widely sourced data, accountants can play a central role in restructuring and
strategy formation. (Bhimani & Willcocks, 2014)
Q4. Can BDA provide improved financial reports transparency and their usefulness for decision-
making?
The opportunities brought by big data for management accountants to contribute to strategic
decisions. For example, predictive analytics from internal sources such as company databases
can provide predictions for the future development of material supply cost. With these results,
prescriptive analytics can find optimal solutions and possible outcomes for decision-making
situations, such as vendor choice. As more information is available about various vendor
alternatives, a management accountant can suggest the most beneficial vendor for the
company in the long run. (Appelbaum et al., 2017).
Big data can also be used to improve budgeting processes. Traditional budgeting may not be
flexible enough in a fast-moving information economy. For this reason, companies have begun
using budgeting techniques. This includes using alternative information sources for operational
planning, goal-setting, and strategy formation. (Warren et al., 2015).
According to Warren et al. (2015), big data will help the accounting profession remain relevant.
However, companies need to BDA to turn data into packaged information. Knowledge of
management accountants is only useful after experts in data analytics have mined, transformed
and analyzed the data. After this, management accountants can prove their value by using the
information to develop management control systems and budgeting processes. (Warren et al.,
2015).
Al-Htaybat, K. and von Alberti-Alhtaybat, L. (2017), "Big Data and corporate reporting: impacts
and paradoxes", Accounting, Auditing & Accountability Journal, Vol. 30 No. 4, pp. 850-873

Alnoor Bhimani & Leslie Willcocks (2014) Digitisation, ‘Big Data’ and the transformation of
accounting information, Accounting and Business Research, 44:4, 469-490

J. Donald Warren, Jr.,Kevin C. Moffitt, and Paul Byrnes (2015) How Big Data Will Change
Accounting. Accounting Horizons: June 2015, Vol. 29, No. 2, pp. 397-407

Min Cao, Roman Chychyla and Trevor Stewart (2015)

Big Data Analytics in Financial Statement Audits Accounting Horizons: Jun 2015, Vol. 29, No. 2
(June 2015) pp. 423-429

Appelbaum, D., Kogan, A., & Vasarhelyi, M.A. (2017). Big Data and Analytics in the Modern
Audit Engagement: Research Needs. Auditing: a journal of practice & theory,36(4), 1–27,
doi:10.2308/ajpt-51684