Ep. 13: Kirstie Tiernan - Investigative Accounting in Today's Industry

Kirstie's Resources:

• Tax Transformation Guide - https://www.bdo.com/thought-leadership/tax-transformation-guide
• Digital Transformation Survey - https://www.bdo.com/thought-leadership/digital-transformation-survey
• Insight First Innovation - https://www.bdo.com/insights/business-financial-advisory/strategy,-technology-transformation/insight-first-innovation

FULL EPISODE TRANSCRIPT

Adam: (00:05)
Hello and welcome back to another episode of Count Me In, IMA’s podcast about all things affecting the accounting and finance world. I'm your host, Adam Larson and today we're going to hear my cohost Mitch Roshong's conversation with the managing director in BDOs Chicago office, Kirstie Tiernan. First. As a reminder, if you're enjoying what you hear on, count me in, please make sure to subscribe, download rate and review all podcasts. Feel free to share your comments with us in the review section of the episodes or just send us an email now, Mitch, learning that Kristie has over 15 years of experience in data analytics and it advisory, what was she able to share during your conversation?

Mitch: (00:43)
Kirstie is a certified fraud examiner and an Oracle certified associate. She is experienced in managing fraud detection and prevention analysis projects and was able to share a lot of real life examples about some of her work with her clients. As you said, she has a strong background in IT, so she is a big proponent of researching and implementing technology to enhance various accounting services. We talked about how these advancements have improved the services she's able to provide as well as how it's changed the investigative work she needs to do with her clients. At the end of the conversation, Kirstie adds an intriguing prediction about what is next for the future of accounting. She's an engaging speaker and established and extremely successful professional. And someone I really enjoyed speaking with. Have a listen for yourself as we'll now go to the conversation.

Mitch: (01:30)
From your experience with digital forensics and eDiscovery services in the recent years, what kind of impact has this technology, the AIRPA had on fraud in the accounting industry?

Kirstie: (01:50)
Well, for forensic accountants in the increasing role of data that we have in business and in everyday of our lives and how much data is being created, that really just creates such a scope of potentially relevant evidence for investigations around and digital forensics need discovery. So I think the fact that the data is growing so exponentially so quickly, that's probably for forensic accountants, one of the biggest issues and one of the biggest impacts of technology is really had. With that though goes all of these new tools and all of these new ways and methodologies and using AI and machine learning, all these different things that we can utilize to call that data town. So where in the past for an eDiscovery project where we were looking at a lot more data, now we're using analytics, predictive coding, a lot of different tools to really narrow down on exactly what those relevant documents are and how we can review those most efficiently. So from my experience and going in digital forensics and you just go around that side, I'd say the impact that technology has really had been that and allowing us to review those very large sets of data very quickly and it's made it a little bit more difficult now that we have those tools for fraudsters to do the same old tricks. Right? So it, it does create a bit of a deterrent for the same fraud. You know, that's been created time and time again. However, with that also comes the risk that AI and some of these algorithms are allowing fraudsters to also develop their schemes. So it's technology, the impacted in both directions and we just hope that we can keep up, you know, with, with the way that the fraudsters are using it by detecting and quicker and using all these different new tools, statistic tools and analysis to really be able to identify these anomalies that are being created by fraudsters and new schemes.

Mitch: (03:54)
And how about with these tools, through your investigations, what kind of positive results have you recognized because of these different advancements and capabilities? In other words, what type of key business decisions or conclusions have you kind of been able to lead your clients to? Um, because of these accelerated processes.

Kirstie: (04:13)
So we have a lot of clients that maybe they know about a fraud that's going on and the typical issue is, okay, we're going to go investigate that. But our concern is what else is going on that we didn't know about? Right. And now we've got a ton of email data. We've got accounting system data, we've got POS data, we've got all this, this data that exists that we could search for where things could be happening that we're not even thinking about looking for yet. And so I think what AI has really allowed us to do is when a client comes to us and says, yeah, go investigate this, but what else is going on? We're now able to use those tools and that technology to go through those large sets of data. And so we have a, we had a client on too long ago where they came to us and that was this exact issue and they said what else could be going on? They said, just take a peek at the data and take a high level view of it somehow and tell us what else we should be looking at. So we ran a, through some of our, in an anomaly, we have a fraud detection algorithm we use and we look at it at the GL data. So the journal entry data by account. And we assess the risk by account using this algorithm. And what it's able to do is bubble up the top these transactions that look different than others, right? So you have all these transactions hitting revenue for instance, and then all of a sudden see something differently when you're talking about a client that has 10 million journal entries a month, it's impossible to run a round dollar analysis or show me all the payments on the weekends, that kind of stuff. To find this fraud, you need something bigger and something that can handle a lot more of the data sets that we're dealing with. So when we had that client come to us and give us three years of data and 2 million journal entries month, we were able to push it through that algorithm. The algorithm came back and it highlighted certain accounts of high risks year over year. And so we, what we did is we went back to the client and I said, okay, here are the top 10 high risk accounts that our tool is seeing. And one of the top one was a liquor tax and they had never had liquor tax in their review items. So that account kind of popped to the top and it was something that allowed us to further investigate, but something that they hadn't initially really reviewed in their typical internal audit process.

Mitch: (06:36)
And how about something that may not be fraud related? What are some of the positive results that you've been able to, you know, advise clients? Again, maybe something like process efficiency or you know, something where a tech has been able to just improve overall business functions.

Kirstie: (06:54)
Yeah, I'd say the biggest area for our clients right now is focused on tax transformation and tax automation. So within a lot of our clients tax teams, there's nev...