Big data in the world of auditing and accounting

Lars Endter | Senior Manager | Advisory Service at Ernst & Young

Mr Endter used an example from the online games industry to illustrate the use of big data, defining the term in this context as a large mass of data (several terabytes) acquired from and by linking a range of different data sources. The challenge for EY in this situation, explained Mr Endter, was to audit the in-game sales generated (for example the purchase of gold ingots) using as realistic a model as possible. The solution was for the client to apply the item-based revenue model (IBRM) from the relevant IFRS standard. Revenue distribution (quantity structure) and recognition in the correct period was then possible on the basis of this information. Mr Endter launched a fascinating and engaging discussion. He was asked many questions about the process for that revenue distribution (quantity structure), for example whether a high level of complexity was absolutely necessary and whether certain types of item were more profitable than others for games programmers. The discussion was so animated that Mr Endter had less time for the second part of his lecture, which looked at accounting for discount contracts with drug manufacturers. However, he did have time to highlight how the analysis of big data can also offer useful new findings for clients in this field.