Ep. 13: Kirstie Tiernan - Investigative Accounting in Today's Industry
Kirstie Tiernan,CFE, OCA, Managing Director in BDO's Chicago Office, discusses the different aspects of digital forensics and e-discovery services in today's accounting industry. With over 15 years of experience providing data analysis, IT advisory, and investigative accounting services, Kirstie shares insights for managing fraud detection and prevention projects, as well as the use of technology for improving overall business functions. Kirstie regularly conducts fraud investigations and Foreign Corrupt Practices Act (FCPA) compliance reviews, in addition to providing fraud prevention services across various industries. She is experienced in managing fraud detection and prevention analysis projects requiring the collection of entire general ledger systems data from multiple sources such as Peoplesoft, SAP and Oracle. Kirstie also conducts anti-bribery compliance reviews, having managed engagements at several Fortune 500 companies, as well as an international review at a Fortune 10 client that resulted from allegations of FCPA violations. In this episode of Count Me In, Kirstie tells us how she approaches projects with a focus on process efficiency, regularly implementing technological advancements within systems and databases in order to improve and accelerate time-consuming client processes. With some practical examples and real-life stories, Kirstie talks about how emerging tech has changed the accounting services industry in the last 5 years, as well as where she expects it to go in the future!
- 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
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?
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.
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?
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.
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.
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.
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.
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 never enough people, right? There's always too much work. We had a client that came to us that said, Hey, you know, I've got 10 people on my team and I want them to be home at 5:00 PM I want them home on the weekends, but they're here every night til eight o'clock and they're here on the weekends. It's like I just want them to enjoy time with their family and I can't get that for them because there's too much work and I can't hire more people. So he said, my only, my only option is to consider automation. So we came in and when you walk into that room and you've got 10 people, he had his whole team of 10 people there and we were supposed to be brainstorming automation ideas that can be very intimidating for people that are going through that process. Right? Cause everyone thinks they're gonna lose their job because it's being automated. But I thought he did something really brilliant. He brought us in and he open up then the conversation to his team and said, I want to know today what about your job sucks? And when he presented it that way, people started thinking about that. And you know, there's not a lot of people out there who don't have one thing about their job that sucks, right? Everybody's got something that they do that takes time and that he would just love to hand off. And that's the kind of stuff we're trying to get to with automation. And especially in the tax world. There's so much of that reconciliation, you know, filing this, the sales and use tax returns online, things that are just very manual and very repetitive. And I think we have to get over the fear of being automated and if we're able to present it in a way like he did saying, I want to make your life better. I want to take these things off your plate that you don't want to do anyway, that really helps the team accepted and understand it and welcome it.
With all of this technology and AI, all these possible improvements. For you personally, what has been the interesting part of your career or the most rewarding maybe project that you've worked on? How do you truly appreciate this technology and what you do every day?
I think for me what I've realized is, you know, you come out of school thinking you're going to have these skill sets and you're going to use those forever. And, and that is so not true in this world, right? Like the things that we would have talked about two months ago are, are completely different than today. So it is just ever changing. And some of the skillsets that we look for now versus previously are just so different. And so I'd say just the amount of change that you'd have to adapt to it and get good at. Right. So now when we interview people, we don't interview them for specific database skills or programming skills. We have to understand that that person is able to adapt to change. They have to be quick learners, they have to be able to self-learn. Right. We have a lot of remote. Our entire environment for our team is remote. So everybody has to be very self-motivated, has to do their own training. And it's, I think that's a really important part of, at least what I seen in my career of, from what I expected initially. There's a lot of get out there, understand it, keep on it, and it's changing every day. So it's a never ending learning process, which I really enjoy. And so that, it really works for me. And I love, you know, finding new technologies, finding new AI tools to be able to take those and help pilot to our clients. We had a manufacturer, a long time manufacturing clients of ours that I work with on a regular basis and one of their issues is that they have a lot of people walking around their warehouse identifying empty spots in the warehouse. And that's a pretty common issue, right? So there's always somebody doing that. One of the things that we're exploring now with them is using drones to do that. So it's, you know, I'm not sure that it would've thought five years ago, that's what I would be talking with clients about. But that kind of thing, really exploring the leading edge emerging tech. That's, that's really exciting to me.
And what advice do you have for the future accountants? So maybe it's somebody who's already in the accounting field but needs to adapt to these changes. Maybe it's a student how do you recommend or what do you recommend as far as the learning that you referenced and in developing the skills that you are currently seeking so that as these people, you know, grow through the industry, you're more likely to bring them onto your team or something in a similar capacity.
It's hard to judge how someone's going to react to change on from a resume and an interview even. So I think the way to show how quick you are to adapt to new technologies and skill sets is to always be getting training in those areas. So for instance, right now, you know, robotic process automation is really popular. Data analytics. There's all of these different kind of areas of my world and technology within the accounting world that you can study and learn on your own. So when a resume comes to me and I see that someone's been learning UI path and they've got their certification, which costs $100, you know, that they can get that shows that I know that they're self motivated and that they can start to seek out these technologies and they can be on the edge of this because that's never going to end in their career. They're always going to have to be thinking about that. They're always going to have to be training on something new. So I really look for people that are self motivated, on self-taught, and are really trying out a lot of the different tools that we're seeing in the market today.
And I guess my last question for you, with these new tools in the market and this changing profession, really the role itself, what kind of a future projections or predictions do you think you may come across with clients and, and future projects? Uh, you know, you mentioned earlier you were a little surprised that drones were being used. So what else do you think you might be able to do within this accounting and finance field?
Sure. So I think, um, one of the things that I think people think is still pretty far off, but I think is definitely here and is augmented reality. And I've started, you know, we've been exploring all the different industries and clients that we may have. [inaudible] can use this and there are so many different opportunities for augmented reality. and I think that's going to be the next thing that kind of blows us away and how our clients are using that. I mean we see a lot of clients using it from a customer perspective. We have some clients are using like nonprofits that are using it to help donors understand let's say a surgical room they want to build for a hospital and they want a donor to donate to that. You know, rather than trying to get the donor to look at drawings, they instead use augmented reality to build out that environment and they walk that donor through the surgical center that they want to build. That's a much different way of raising money then, you know, the nonprofits have done in the past. So I think thinking through these kinds of things with our clients for in the past we've, we've been more focused on data analytics now it's a little bit more of what else digitally digital transformation wise can we help our clients understand and look at. And I think augmented reality is going to be a really big piece of that.
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