The American Institute of Certified Public Accountants (“AIPCA”) recently released the findings of its most recent Survey on International Trends in Forensic and Valuation Services (“Survey”). The Survey polled 443 professionals, including 55% who worked in public accounting and/or consulting firms. The remainder were professionals working in business and industry, education, law enforcement, and government. Approximately half of the accounting professionals work in firms with under 20 accountants. Roughly 80% of respondents asserted that they spent 25% or less of their time working on valuation or forensic related matters; only 15% devoted their full working hours to forensic and valuation services (“FVS”).
The prior version of the survey was conducted four years ago, with the chief concerns revolving around staffing and the economy. Current results show economic concerns completely falling off the list of top 5 issues, while “attracting and retaining qualified staff”, formerly ranked as top concern, fell to #5. A newcomer to the list, Big Data, was ranked by 25% of the FVS professionals as the largest issue facing the profession in the next two to five years:
”Electronic data analysis — another term for the buzzword “big data” — did not appear on the list in 2011 but jumped to number one this year…only 13% of respondents said they practiced in this area, but electronic data analysis may be called for in a variety of other engagements. “
In addition to concerns over growing demand for Big Data applications, 40% of respondents ranked cybersecurity – defined as a hacking attack by an outsider – as the largest information security threat facing the profession. This was followed by 14% who ranked “malicious insiders” as the #1 concern.
These results were not surprising given the headlines regarding cybersecurity breaches and Big Data scandals in the past few years, including: consumer level breaches at retailers such as Target and TJ Maxx, breaches at fortified institutions such as Anthem Health and JPMorgan Chase, and the now infamous storage and subsequent breach of massive caches of data at the NSA.
Participants were optimistic regarding the growing demand for FVS professionals:
”The respondents were very enthusiastic about the opportunities for forensic and valuation services. A total of 76% of forensic and 54% of valuation respondents are expecting growth with most anticipating between 10% and 50% growth in their practice over the next two to five years. Of the 76%, roughly 33% overall expected up to a 10% increase in demand for their services in the coming two to five years. Another 30% anticipated up to a 25% rise in demand, and about 13% were looking to a 50% or higher spike. Twenty percent foresaw no change, and [only] about 4% expected a decline in demand. “ [Emphasis added]….
“ No doubt one contributing factor was the belief — held by two-thirds of respondents — that there would be an increase in litigation and regulatory enforcement during the next two to five years. “
Respondents also reported on the high prevalence of fraud. Of business and industry (“B&I”) professionals polled, 53% had experienced fraud in the last year. In parallel, 58% of respondents expressed concern that financial statement misrepresentation by insiders would increase in the next two to five years. The most common tools used by B&I professionals to combat and prevent these threats were: internal controls (83%), division of responsibilities (77%) and good supervisory oversight (76%).
A full copy of the 2014 Survey can be found here.