Three out of five senior executives across nine different industries, including the financial sector, plan to increase spending on forensic data analytics over the next two years, according to a survey by EY.
Eighty three percent of the 665 business leaders surveyed by EY consider that cyber breaches and insider threats, including malicious insider’s stealing, manipulating or destroying data, are the fastest growing fraud risks to their company.
EY’s findings compiled in the report entitled Global Forensic Data Analytics Survey, Shifting into high gear: mitigating risks and demonstrating returns, also noted the use of advanced FDA is becoming more mainstream.
Sixty-nine percent of surveyed business leaders said they need to do more to improve their current anti-fraud procedures, including the use of financial data analytic tools (FDA).
FDA tools are used to monitor and manage risk within variously formatted information documents, such as financial statements, email and high volumes of data transactions.
"Given the level of pressure organizations are facing on fraud prevention, it is no surprise that the majority of respondents are expending more effort on proactive initiatives," EY global leader for forensic technology and discovery services (FTDS) David Remnitz said.
The United States Securities and Exchange Commission (SEC) Financial Audit Task Force has led the way in deploying FDA tools to uncover fraud and liaise with whistle blowers to uncover financial reporting and disclosure problems, according to EY.
Signifying the increasing relevance of FDA in the accounting world, 69% of EY’s respondents have listed internal audits as a top beneficiary of FDA tools.
"Traditionally, organizations turn to advanced FDA tools to help with their investigations. However, today, FDA is becoming indispensable to proactive risk management", Remnitz said. "Organizations need to recognize the role FDA can play not only in their reactive investigations, but also in their proactive surveillance, compliance, anti-fraud and cyber breach response efforts."
However while technology becomes increasingly important in accountancy firms’ service offering, professionals are weary to see the human factor undermined. This was highlighted in industry comments sent to the Federation of European Accountant (FEE) in response to the 2014 paper, Opening a discussion: the future of audit and assurance, as well as on the debate at the FEE Audit Conference Long Term Vision and Short Term Challenges in June 2015.
Based on these comments FEE published earlier this month a discussion paper entitled Pursuing a Strategic Debate: the Future of Audit and Assurance. The paper emphasized how big data techniques such as process mining will change the nature of auditing.
Yet responses from firm staff featured within the FEE’s paper stressed the profession should not head towards a totally virtual landscape.
"Technology should not override the human factor; physical presence is still important to fully understand a client’s business and its processes and to remain fully relevant," the paper adds.