Influence of big data on financial accounting

Due to radical changes and development in industry, most production will soon be achieved mainly by machines, with a low share of labour work, or without the use of a human factor. This situation will affect many macroeconomic and microeconomic factors, activities, and processes, including financial accounting. Production will happen in smart factories, where the machines will create and share information. All information will be part of the companies’ information systems, where big data will be collected. Due to its exponential growth, it will be important to filter the relevant data and use it for the purposes of financial accounting. 

Industry 4.0 is based on individualized mass production in smart factories. This can bring many savings in energy consumption, wages, and other operational costs. On the other hand, companies will be forced to invest in the new technologies: machines that will be able to cooperate and share information. The production process will be much faster, cheaper, more effective, and optimized in accordance with the requests of the customers. It is a big challenge for the companies, the market, the customers and the economy. Unfortunately, it is assumed that a lot of companies will not be able to adapt themselves to the new upcoming changes and conditions, resulting in bankruptcy or competitor buyout for those unable to survive on the market.  The radical change in the production process will influence financial accounting (among other areas), very soon. The big data created by machines will be part of the information system, and these data will be used for the processing of all accounting transactions. It is predicted that we will see exponential growth in data created by machines in the next few years.

This paper presents primary research regarding the phenomenon Industry 4.0 and its essential component: big data.  We use interviews with managers in financial and cost accounting, controlling and financial management in conjunction with literature review and brainstorming methods to identify the the possible impacts of big data on financial accounting and reporting.  Identification of issues is based on interviews and brainstorming with employees of six companies operating in the automotive industry in the Czech Republic. These findings will pave the way for for future applied research and model development for Industry 4.0 analysis, and may affect upcoming accounting legislation in the Czech Republic.