Big data techniques in auditing research and practice: Current trends and future opportunities

• Published in: Journal of accounting literature 2018-06, Vol.40 (1), p.102-115
• Main Authors: Gepp, Adrian, Linnenluecke, Martina K., O’Neill, Terrence J., Smith, Tom
• Format: Article
• Language: English
• Subjects: Accounting; Auditing; Auditing profession; Audits; Big Data; Data analytics; Data mining; Data models; Datasets; Fines & penalties; Genomes; Genomics; Literature reviews; Statistical methods; Statistical techniques; Velocity
• ISSN: 0737-4607; 2452-1469
• DOI: 10.1016/j.acclit.2017.05.003

[Display omitted] •Auditing is lagging behind in the use of valuable big data techniques.•There are many opportunities for greater use of big data techniques in auditing.•More research is needed to further align theory and practice in this area.•Research suggests combining multiple big data models with human expertise. This paper analyses the use of big data techniques in auditing, and finds that the practice is not as widespread as it is in other related fields. We first introduce contemporary big data techniques to promote understanding of their potential application. Next, we review existing research on big data in accounting and finance. In addition to auditing, our analysis shows that existing research extends across three other genealogies: financial distress modelling, financial fraud modelling, and stock market prediction and quantitative modelling. Auditing is lagging behind the other research streams in the use of valuable big data techniques. A possible explanation is that auditors are reluctant to use techniques that are far ahead of those adopted by their clients, but we refute this argument. We call for more research and a greater alignment to practice. We also outline future opportunities for auditing in the context of real-time information and in collaborative platforms and peer-to-peer marketplaces.