The data that is provided by the
client for the purposes of a forensic
accounting assignment should be
scrutinized by the forensic accountant.
The forensic accountant, as required
by the Standard Practices, has a
responsibility to “consider the relevance
of all information that arises during
the course of a forensic accountant
engagement.”
Clients have a
larger role
At one time, a typical forensic
accounting engagement might not
require much from the client save for
appropriate and relevant background
information and some assistance with
locating, accessing and interpreting
documentation. This has changed
significantly in the age of data.
If data analysis is to form part of the
engagement (which is now usually
a given), understanding the client’s
complex server setups and data storage
policies is an important first step. This
step replaces what used to be a matter
of simply unlocking a file room door.
respect to the data. For example, data
for some periods may be incomplete.
The reliability of data is central and risk
of data integrity and potential tampering
is relevant. These concerns need to be
addressed at the earliest stages.
Once the relevant data is identified, it
must be checked for completeness. For
example, a forensic accountant cannot
state that a full review of all expenses
was performed if there is no assurance
that all expense data was received.
Forensic accountants should review all
information received and consider its
relevance, reliability and reasonableness.
If data is not relevant, reliable and/or
reasonable, the usefulness of analysis
using that data will be limited.
Data with integrity can be used
confidently and analyzed and deciphered
as required. Data analytics (see next
page) can be used to unlock the
information contained within data. Now,
it is a critical capability of a forensic
accountant to be able to process
huge amounts of data quickly and
confidentially using sophisticated tools
and models. But as always, the need
for reliability of data is central because,
as the old saying goes: “garbage in,
garbage out.”
When the information that could
arise was limited to boxes of hard
copy documents, it may have been
easier to determine the relevance of
information. Now that electronic data
is a key component for almost all
engagements, assessing the relevance
of information can be more difficult.
There may be numerous systems that
have relationships and share data, and
the client with the forensic accountant
and/or legal counsel must identify that
data which might be relevant. This can
take some deep understanding of the
relevant systems and/or reliance on an
individual with the technical expertise
needed to assist with understanding the
data and its relevance.
This level of IT granularity may not
necessarily be a requirement for legal
counsel, but there is a very clear need to
understand relevant issues and counsel
must have input on at least this aspect.
Data integrity
At a minimum, the results of any data
analysis are only as reliable as the data
used in that analysis. Counsel should
be aware of and understand where
data is sourced and any limitations with
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affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
At Risk
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Volume 7, No. 1
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