By Allison M. Henry, CPA, CGMA, PICPA Vice President - Professional & Technical Standards
In a May 8, 2014, article on Complianceweek.com, author Tammy Whitehouse, Copy: Auditing in the Era of Big Data
, highlights how firms are challenging traditional sampling methods in light of new technologies that leverage big data to evaluate 100 percent of a given audit population. The new technologies present a number of issues, including whether or not expectations that the auditor is responsible for detecting fraud will increase resulting in increased litigation risk. However, bigger questions remain for firms that do not embrace the new technologies. If you can easily evaluate 100 percent of a population, why use sampling techniques? How will you be able to justify obsolete audit techniques? These changes will ultimately increase the divide between those firms that have IT resources and those that don’t.
Recent cybersecurity breaches also present challenges and opportunities for firms. A Verizon data breach investigations study shows that of 855 data breaches examined, 71 percent occurred in businesses with fewer than 100 employees (see Are You Prepared? Record Number of Cyber Attacks Target Small Business
). Are you prepared to advise your clients when a cybersecurity event occurs? This is not an unlikely event, and there are significant ramifications for a deficient response to a cybersecurity breach.
Firms with solid IT resources will be poised for long-term growth. Practitioners who do not wish to be left behind should seek out opportunities to improve their technical skills in this area. PICPA is interested in hearing from you. How can we help you to fill the gaps in your skills so that your firm is prepared for these challenges? Reach out to me at email@example.com
with your suggestions.