Data analysis has always been an integral part of the work of forensic accountants and Microsoft Excel™ has been a primary tool used by forensic accountants in their analytics work. In fact, most forensic accountants have a deep understanding of Excel and rely on it when conducting fraud investigations, providing litigation support and performing business valuations.
Data analytics, however, is a rapidly changing eld and a working knowledge of Excel may not be enough. Advances in data visualization and machine learning have taken data analytics to a new level. In today’s analytics world, data can come in all shapes, sizes and forms. It can be structured spreadsheets or unstructured data scraped from the web. There is so much data available for analysis, and so many ways in which to analyze it, that just the thought of it can be overwhelming.
Where does this leave forensic accountants? As professionals and experts in our eld, how can we embrace some of these changes and use them to our advantage? The answer is simple: we need to take steps towards becoming knowledgeable of new methods and tools currently available for data analysis.
The focus of this article is to address the changing landscape of data analytics from the viewpoint of a forensic accountant. Let’s begin by exploring resources that will help facilitate an understanding of these changes, to provide an overview of trends in data analytics that are relevant to the forensic accounting professional.
The following list of sources contains articles, books and websites that provide a fair amount of information on current trends in data analytics. With a little research on these sites, it is easy to nd data analysis specic to forensic accounting.
Data Science Central at http://www.datasciencecentral.com/ is an online collection of data analytics blogs, articles and webinars. This is a free resource. Check out the blog on Fighting nancial crimes and money laundering with graph data.
SuperDataScience at www.SuperDataScience.com is an online site offering data analytics training, videos, podcasts, blogs and
projects. You can test your data analysis skills with case studies like the ABC Corp. Acquisition Analysis using Tableau and/or learn the basics of using data visualization tools like Tableau and Power BI using instructional videos. This is a membership site that has both free and premium paid access.
O’Reilly Safari Books Online at www.safaribooksonline.com is a paid access resource, but if you are a member of the IMTA (CITP credential holder) section of AICPA, this resource is free. Safari Books Online offers thousands of books, tutorials and newsletters on data analytics. A search for books on data analysis and fraud returned 4,645 results. Members have the ability to save books and tutorials to their Safari library and read them online.
Data.World at https://data.world/ is a free online site where you can discover and download data sets that may be pertinent to your forensic accounting research or that can serve as practice sets when learning how to use a particular data analytics tool. Data.World is also a collaborative community where you can ask questions, share hypothesis and get help with data analytics problems.
Data analytics is obviously more than just formulas. It encompasses a wide range of statistical concepts that can seem frightening at rst, but in reality are statistical methods that forensic accountants use repeatedly. For example, how frequently do you use ratios in your work, regression analysis, correlations, probabilities or risk analysis? These tools are all part of data analytics. If you want to brush up on or begin learning these statistical concepts, there are several great online training sites that offer basic, intermediate and advanced courses. Following are some training sites to check out. These are some of the courses I’ve completed, but there are many more to choose from.
Udemy at www.udemy.com:
- Workshop in Probability and Statistics
- Data Science A-Z: Real-Life Data Science Exercises Included
- Financial Modeling and Valuation
Coursera at www.coursera.org:
- Data Science (10-course specialization offered by John Hopkins University)
- Accounting Analytics (University of Pennsylvania)
- Business Intelligence Concepts, Tools and Applications (four-course specialization offered by University of Colorado System)
SuperDataScience at www.superdatascience.com:
- Statistics for Business Analytics A-Z
- Data Science A-Z (same instructor as Udemy course)
Udacity at www.udacity.com (many free courses, paid nanodegrees):
- Creating an Analytical Dataset
- Introduction to Descriptive Statistics
- Introduction to Inferential Statistics
There’s a variety of data analytics tools available for forensic accountants to choose from that range in price and complexity. The enterprise-driven tools generally require a fair amount of training and experience to fully utilize their features. If you are a solo practitioner or practice in a smaller rm, the enterprise analytics solutions may be nancially out of reach.
Data visualization is perhaps one of the most useful analytics tools for forensic accountants. There are a number of data visualization applications to choose from. Most applications accept Excel and CVS formats, as well as more exotic formats like JSON, SAS and Spark SQL. Additionally, these applications utilize Excel formula structures. They are inexpensive, powerful and not difcult to learn. Three visualization tools I have used in my forensic practice are Tableau, PowerBI and QlikSense. You can download free versions of these tools for learning and practice.
A wide range of training also exists for these tools. Most of the resources named above have training courses and the websites for each tool offer their own training tutorials. If you are interested in learning Tableau, PowerBI or QlikSense, you may want to check out the following courses on Udemy:
- Microsoft Power BI – a Complete Introduction
- Certicate in QlikSense Analytic Development
- Tableau 10 A-Z, Hands-On Tableau Training for Data Analytics
In the April issue of the Journal oof Accountancy , the article “Using Excel and Benford’s Law to Detect Fraud” by J. Carlton Collins, CPA, provides a great explanation of how to perform a Benford’s Law analysis in Excel.
Interestingly, you can do the same exercise in Tableau and complete the process in fewer steps. Below is an illustration of a Benford’s Law analysis in Tableau. The data set I used to prepare the analysis was pulled from Data.World and consisted of 1000 rows of purchase order data. I adapted the Excel rst digit extraction formula used in the J o u r n a l article to Tableau. The CountIf function was not necessary, as this is already built into the analytic process. The resulting Benford’s Law analysis is illustrated.
Hopefully, the information included in this article will spur you to explore the changing landscape of data analytics and its applicability to forensic accounting. If you would like additional information on the steps I used to create the Benford’s Law analysis in Tableau, please feel free to email me at firstname.lastname@example.org.
About the Author: Donna M. Knapp, CPA, CFF/CITP, CFE, CVA, has over 20 years of experience. Her professional experience includes fraud investigation, prevention and assessment, data analytics, litigation support, and federal and state taxation. She has provided data analysis and litigation support services in both business and divorce litigation, investigated business fraud and administered fraud risk assessments for clients.