Visualization of Big Data in Financial Statement Audits

What is it about?

This paper is the first to look at how visualizations of Big Data affect financial statement auditor judgments and decisions. The study involves an experiment with auditors from Big 4 international accounting firms. Using insights from behavioral science, the research looks at how visualizations of Big Data can be effectively deployed by audit teams. The study finds that auditors need to view visualizations after they have analyzed more traditional audit evidence because auditors fail to see patterns in Big Data before they have made initial hypotheses about management claims and assertions.

Featured Image

Why is it important?

The study is important because audit firms are spending enormous resources to investigate the use of new data sources and new visualization techniques to improve audit efficiency and effectiveness. However, auditors may completely ignore Big Data visualizations or fail to recognize the important patterns in visualizations that are contrary to management assertions if the visualizations are not properly employed in practice. If these new audit tools and techniques cause auditors to ignore or miss important patterns in data, then auditors could fail to detect significant threats to the quality of financial reports. By conducting an experiment with practicing and experienced auditors from the major public accounting firms, this research directly examines how visualizations affect auditor behavior and audit effectiveness.

Perspectives