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Technology's double-edged sword: For forensic accountants, technology can help crack cases — or lead to new ones — but can also be a hindrance if misused by clients

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Just like how WebMD has made anyone with access to the internet a do-it-yourself doctor, everyone's a click away from being a pseudo-expert on forensic accounting.

Susan Miano, a partner at Friedman LLP, said she’s seen the copy-paste phenomenon firsthand.

“There was a time when clients would depend on us totally to be the sole provider of information,” she said. “These days we receive a lot of feedback along the lines of, ‘I found this on a Google search.’

“There’s a lot of second-guessing, or at least spirited discussion, as I’d call it, because there’s a lot of information out there. But information is not analogous to knowledge. … You have to temper what you see online with reality and what you can prove.”

That’s just the tip of the iceberg when it comes to ways technology is changing the forensic accounting profession. Whether it’s navigating online financial transactions, cyberthreats or keeping web search experts in check — forensic accountants have new roles in the digital age.

Perhaps most surprising is how large a part forensic accountants have started to play in the aftermath of attacks by cybercriminals.

For instance, forensic accountants are often called in to help identify the source of an email following a phishing attack on a business, said Anthony Campanelli, a partner at Deloitte Financial Advisory Services LLP.

Cryptocurrency consequences

Traditionally, combing through financial records and tracking suspicious one-time vendor payments has worked wonders for uncovering fraud.

Anthony Campanelli of Deloitte Financial Advisory Services LLP wonders how long that will last.

“Cryptocurrency could be a big change for us,” he said. “This is an area that hasn’t been explored too deeply from a forensic accounting perspective, but I think as an industry we need to start thinking about it.”

In an initial step toward exploring the potential impact of cryptocurrency on his profession, Campanelli wrote an article describing a hypothetical situation in which one of a company’s leaders bribes a government official in an anonymous and untraceable manner.

A cryptocurrency such as Bitcoin is “paradoxically both anonymous and transparent,” Campanelli said, because transactions through Bitcoin are permanently recorded, but some online exchanges do not require verifiable personal information.

On top of that, Bitcoin mixing — which Campanelli described as putting one’s currency in a larger pool with currency from other sources — further scrubs the potential to track specific payments.

Whether or not forensic accountants will be able to reckon with such powerful methods of masking fraud remains to be seen.

“We’d be looking at where it originated and if there’s any connection to someone within the company itself,” Campanelli said. “Was it a smart hacker in Asia or Africa, or is it an inside job, someone that’s trying to get money out of company? We’d be going through emails to find out if there’s an insider. We would also make an assessment of the individuals (targeted) to see if there was negligence, if they operated in accordance with the company’s policies.”

Forensic accountants also assess what was stolen, tallying direct financial loss as well as compromised information — which can be just as costly.

One challenge in the digital business environment is keeping tabs on bad financial transactions as they happen.

As Sax LLP partner Joe Shannon pointed out, monitoring fraud was somewhat easier when everything went into a filing cabinet somewhere.

“With digital accounting options and online banking and everything computerized, it’s easy to lose track,” he said. “There’s still a strong importance in regularly checking those bank statements and documents, even if you’re paying everything online easily.”

He brought up the example of a case involving a local property management company, where an employee doing the payroll was putting relatives in for pay and netting them benefits, too. This occurred for about three years.

“And it was because one (person) was manually signing the checks that it went unnoticed,” Shannon said.

Technology may change forensic accounting even more when it gets around to developing affordable artificial intelligence programs capable of picking up on trends in how fraud reveals itself and identifying suspicious transactions — like checks cut for a relative — before a human ever could.

Miano said the profession’s ability to sort gobs of data with tools available today has already proved to be a major change, in some ways making the job more easily manageable.

There’s also social media and other web platforms with even more information that forensic accountants can use to get a leg up on fraud culprits today. And tapping those next-generation sources of information is the next generation of forensic accountants.

“We look to our younger, millennial associates who may not have experience to embark on managing a forensic investigation, but they can help us navigate all of the new plateaus we’re dealing with,” Miano said. “We want to gain insight on any source of information that’s already out there.”

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