Fraud is a big deal for organizations, and the threat isn’t just from inside your organization anymore. Hackers and cyber theft have added to the possible risk pool. Each year financial fraud is responsible for organizations losing 5% of their revenues. Imagine where we are headed for 2020.
Forensic fraud accounting is similar to being a member of the detective squad. There is a set of fundamentals that forensic accountants will always use to guide their work, but those accountants and auditors also know that getting to the bottom of a case requires focusing on solid numbers and not relying on hunches or gut feelings. When you follow the facts of the crime scene, eventually, it reveals the true story and hopefully catches the person or persons responsible.
We can be thankful for the tools and techniques cloud computing have made available for detecting financial fraud. The next several years are bound to bring greater changes in the accounting and auditing fields. Keep reading to learn more about three trends that will impact forensic auditing.
Artificial Intelligence (AI) Takes Center Stage
The change in our relationship to technology is resulting in a huge impact on labor bigger than the impacts of the Industrial Revolution.
Imagine being able to take thousands of pages of financial data to enter it into a database in a matter of hours. Those mountains of paper are quickly turned into something useful to the forensic accountant, without spending hundreds of hours manually inputting the data. Financial data is transformed quickly and efficiently, and the forensic accountant can quickly map out the flow of functional patterns, create charts and graphs that show entities and transactions of interest, and create customized reports.
That is the power of artificial intelligence. AI is great news for forensic auditors because instead of having to sort through those mountains of papers to dig out key details in an investigation, artificial intelligence and accounting programs can filter through electronic files faster, and with machine learning patterns anomalies are more quickly and easily identified.
Client Demand For Digital Technology Will Grow
According to a Forbes Insights/KPMG report, “Digital Transformation: How Advanced Technologies Are Impacting Financial Reporting and Auditing more than one in four executives surveyed (27%) listed “real-time insights into areas of heightened risk and in internal controls” as one of the most important benefits of advanced technologies in financial reporting. More and more organizational leaders will be demanding the technology that will protect against fraud and other financial risks.
Continuing advancements in data analytics will also continue to play a major role in organizations for the future. Speed is a primary benefit of machine learning and AI. With today’s data analytics, 100% of transactions can be analyzed at a speed and pace unimaginable a decade ago. This means businesses have access to more real-time insights so they can protect against financial risks and make more informed decisions.
Planning and Preparing Takes on Greater Importance
Most businesses understand the need to be ready for a cybersecurity breach, internal threats, and fraud. All demand a high degree of planning and preparation to be ready in the event of an attack. A disciplined approach to planning and preparing for challenges an organization faces is critical. Organizations need to understand the various accounting choices they have for avoiding fraud.
Forensic auditors will want to increase their own preparations by staying up to date on the latest industry trends and developments with courses, conferences, and online research. Auditors need to step outside the workday flow and take time for learning because advances in auditing that used to unfold over a decade or longer have been compressed into months and even weeks.