Accountants Dealing with Big Data and Other Big Issues
Mo Data stashed this in Big Data in Financial Services
CPAs working in the forensic and valuation areas listed “big data” as the top issue facing them in the next two to five years, according to a new survey from the American Institute of CPAs.
In addition, 85 percent of respondents to the 2014 AICPA Survey on International Trends in Forensic and Valuation Services anticipate an increase in the amount of time they spend on electronic data analysis in the near future.
Twenty-five percent of the survey respondents selected electronic data analysis—better known as “big data”— when asked, open-endedly, to name their top five issues over the next two to five years.
“Big data presents a real opportunity for businesses to glean actionable insights from information,” said Jolene Fraser, who chaired the survey committee. “However, the downside is that it also presents a risk because the more data available, the harder it is to spot fraudulent activity, such as the creation of a fictitious employee or an improper payment to a vendor. To combat this risk, businesses rely on forensic accountants for their expertise digging deep into the data, unraveling the work of criminals and detecting that fraud.”The frequency with which big data was cited reflects a business culture with an increasingly sophisticated understanding of the potential of this information, according to the AICPA. However, the sheer volume of data has created an environment where fraud can become more difficult to detect.
After electronic data analysis, the other top issues that forensic and valuation professionals cited as ones they anticipate facing over the next two to five years are:
• increased complexity and scrutiny in engagements (20 percent) • competition and fee pressure (14 percent)• regulatory changes (11 percent)• attracting and retaining qualified staff (7 percent).
The survey found that a 76 percent majority of forensic respondents expected to experience increased demand over the next two to five years. Specifically, 30 percent expected demand for their services to increase up to 25 percent, and an additional 33 percent expected growth of up to 10 percent. On the higher end of the spectrum, nearly 13 percent of forensic accountants expect demand to spike by 50 percent or higher. Twenty percent forecast no change in demand, and 4 percent expected a decrease in demand.
Steady growth was expected in the valuation area as well, with 54 percent of the survey respondents expecting more demand for their services in the next two to five years. Specifically, 28 percent anticipate the demand to increase by up to 10 percent, with an additional 18 percent anticipating a bump in demand of up to 25 percent. More than 6 percent expect demand to increase by 50 percent or higher. Forty-one percent forecast no change in demand, and 6 percent foresee a decrease in demand for their services.
“The increasing demand we’re seeing for forensic and valuation services performed by CPAs shows the growth in these areas is poised to continue in the near future,” said AICPA vice president of member specialization and credentialing Jeannette Koger in a statement. “Businesses and consumers realize that the CPA combined with the AICPA’s Certified in Financial Forensics (CFF) and Accredited in Business Valuation (ABV) credentials signifies a highly qualified professional with the skill-set to get the job done.”
When respondents were asked which credentials they require of those providing forensic accounting services to possess, a CPA was the most frequently cited credential. The CPA, coupled with the CFF credential, provides the most desirable combination of credentials in the areas of: fraud prevention, detection and response; financial statement misrepresentation; damages calculations; bankruptcy; and electronic data analysis, according to the survey respondents. In addition, the CPA coupled with the ABV credential was the most widely desired combination of credentials for valuation engagements.
The 2014 AICPA Survey on International Trends in Forensic and Valuation Services was open to members of CPA Canada, in addition to AICPA members, for the first time. The survey was conducted from Sept. 12 to Oct. 25, 2013, and received a total of 182 qualified responses. The complete survey is available online.
2 CommentsInteresting details. Fraud at any level needs to be nipped in the bud to ensure there are no losses or at minimal. Companies can leverage data analytics which will help them in prevention of fraud. I work for McGladrey and there's a very informative whitepaper on our website that readers of this article will be interested. @ Data analytics is a powerful fraud prevention and policy enforcement tool http://bit.ly/VSs1Mx
Posted by: joelazer27 | July 23, 2014 10:50 AM
Spot on article. I can tell you based on the discussions Manzama is having with accounting firms, specifically their forensic accounting and tax divisions, this is a growing concern. "Big Data" either internally or externally will be a problem and a solution like Manzama can help you filter through a lot of the noise for relevant and actionable content.
Posted by: [email protected] | July 23, 2014 7:43 AM