CHAPTER 2

THE EFFECTS OF BIG DATA

ON FORENSIC ACCOUNTING
PRACTICES AND EDUCATION
Burcu İşgüden Kılıç

ABSTRACT
Professionals who carry out the forensic accounting profession must have an
extensive knowledge of accounting, as well as an effective knowledge of law,
auditing, internal audit, business management, psychology, crime science, and,
in particular, computer technologies. In today’s digital business environment,
it has become difficult to identify fraudulent transactions with traditional
methods. Developments in information (data) and information technology
have helped increase anti-fraud control programs and fraud research oppor-
tunities. In particular, fraudulent financial reporting disrupts the reliabil-
ity, accuracy, and efficiency of financial markets in terms of existence and
continuity. The forensic accounting profession has been able to improve the
effectiveness of inspections by using big data techniques, data analytics, and
algorithms (Rezaee, Lo, Ha, & Suen, 2016; Seda & Kramer, 2014; Singleton &
Singleton, 2010).
The aim of the author, in this chapter, is to evaluate the contribution of using
big data techniques in forensic accounting applications and the skills that will
be provided to students while integrating these techniques in forensic account-
ing trainings. For this purpose, studies on forensic accounting education and
their applications were reviewed. In addition, opinions were evaluated by con-
sidering the relevant literature about the importance of big data, benefits of big
data, use of big data techniques, and interest shown of them.

Contemporary Issues in Audit Management and Forensic Accounting

Contemporary Studies in Economic and Financial Analysis, Volume 102, 11–26
Copyright © 2020 by Emerald Publishing Limited
All rights of reproduction in any form reserved
ISSN: 1569-3759/doi:10.1108/S1569-375920200000102005
11
12 BURCU İŞGÜDEN KILIÇ

Keywords: Big data analytics; forensic accounting; forensic accounting

education; accounting; auditing; fraud
JEL classifications: M40; M41; M42

INTRODUCTION
The main reasons for the occurance and development of the forensic accounting
profession can be listed as follows: The complexity of commercial transactions,
the increase in the corruption of the employees in the enterprises and the dif-
ficulty in detecting and preventing these corruption, the increase of the failures
of the enterprise, the use of the developing technological environment with bad
intentions, and the need for expert support. Along with the effect of these reasons,
members of accounting profession started to consider and question the world
behind numbers in accounting records. Forensic accountants performs activities
in fields of litigation support consultancy, expert witness, and fraud examiner.
Forensic accountants provide use of accounting knowledge and skills for soving
legal problems. (Crain, Hopwood, Pacini, & Young, 2015; Crumbley, Heitger, &
Smith, 2015; Manning, 2011).
Today, in the field of forensic accounting, it is observed that large data tech-
niques have been widely used to cope with the data sets exceeding the constraints
of traditional electronic financial statements. In today’s data environment and
technological infrastructure, relational database techniques with traditional rules
lead to misappropriation of findings, detect, or ignore some frauds. These tradi-
tional database techniques often perform tasks such as matching, sorting, filter-
ing, and query design. However, professional accountants in the field of forensic
accounting need more. This has created the data environment for that need.
Nowadays, forensic accountants can use numerous advanced anti-fraud tech-
niques such as data visualization, predictive analysis, behavior analysis, content
analysis, social network analysis, and geo-spatial analysis (Nigrini, 2011, 2012;
Rezaee & Wang, 2017).
When examining some research papers in the literature and when investigat-
ing corruption, fraud, and bribery cases in the field of forensic accounting, it is
possible to take into account the big data on legal regulations and rules related
to the sector and search for potential frauds with using keyword groups. In addi-
tion to the use of historical process data and comparisons, it is necessary to use
more developed analyses in order to detect abnormal operations, high-risk areas,
and potential fraudulent activities. Therefore, accountants or university gradu-
ates who want to work in the field of forensic accounting should be provided with
theoretical and practical trainings or courses on what big data is and what can be
done with big data analysis (Rezaee & Wang, 2017).
In the light of the literature reviewed, it is firstly observed that the use of
big data techniques and data analytics in the field of forensic accounting in
today’s technology environment and the interest shown in these techniques are
The Effects of Big Data on Forensic Accounting Practices and Education 13

increasing. For this reason, integration of theoretical knowledge and exercise

skills into the training programs for the field of forensic accounting is inevitable
to increase the comprehensibility, usability, and interest of big data analytics
and data analytics.
In this study, firstly, forensic accounting profession and activity fields will be
mentioned and then big data and big data techniques, use of big data analytics in
fraudulent operations, and adaptation of big data usage to forensic accounting
area will be discussed. In the scope of the study, the literature will be evaluated
and how the technological developments and big data analyzes affect the field of
forensic accounting and the effects of these technological developments in the
realization of the forensic accounting profession and the education process will
be discussed.

FIELD OF FORENSIC ACCOUNTING AND FORENSIC

ACCOUNTING PROFESSION
The fact that accounting frauds causing great economic losses has led to an
increase in the efforts to prevent these losses as well as the development and
changes in the areas of both auditing and forensic accounting. Within this con-
text, the notion of forensic accounting has been discussed in the first place, fol-
lowed by the development of the forensic accounting profession and fields of
activity.

Forensic Accounting Definition

Integrating the audit and investigation techniques into the field of accounting
has emerged an expertise known as “forensic accounting,” which focuses on pre-
venting and determining the accounting frauds (Arboleda, Luna, & Torres, 2018,
p. 13).
Forensic accounting is the act of determining, recording, analyzing, classi-
fying, reporting, and confirming to historic financial data or other accounting
activities for the resolution of the present or future legal disputes. These historic
data are also being used for the evaluation of the financial data in the resolution
of future legal disputes (Crumbley et al., 2015).
The term of “forensic” in the accounting profession is related to the relation
and application of the financial facts with the legal problems. Forensic account-
ing contains the audit of the accounting records in order to seek proofs of fraud
(cheating and counterfeiting) (Singleton & Singleton, 2010, p. 12). Forensic
accounting is an intuitional area that using the investigation and audit techniques,
integrating them with the accounting and commercial skills, providing testimony
at the court through the expert witnesses, resolving the complex financial prob-
lems, executing fraud investigations (Oberholzer, 2002, p. 5). Forensic account-
ing procures a profound examination within the business and helps for a better
understanding of the accounting system that the business holds (McKittrick,
2009, p. 3).
14 BURCU İŞGÜDEN KILIÇ

Developments of Forensic Accounting

Dr. Larry Crumbley could be considered the first forensic accountant in his-
tory. Because, he examined bankruptcy records in the Sefton bankruptcy case
and served as expert witness in court. This incident can be seen as the starting
point of the forensic accounting profession (Singleton & Singleton, 2010, p. 5).
In 1824, a young Scottish accountant made the advertisements of his knowl-
edge and area of expertise without using the term of “forensic accountant”
in order to support the resolution of the disputes in the forensic transactions
(Idowu, 2011, p. 65). In the 1900s, the Internal Revenue Service (IRS) developed
many forensic techniques in order to capture tax evaders in the USA, resulting
in the disclosure of the tax-evasion activities of world-renowned gangster, Al
Capone, by forensic accountants (Crumbley et al., 2015). The term of “Forensic
Accounting” was first used in 1946 by Maurice E. Peloubet in his article named
“Forensic Accounting: Its place in today’s economy” (Idowu, 2011, p. 65). As a
result of major corporate scandals such as Enron, WorldCo, and Xerox, which
took place in the 1980s and beyond, the confidence in financial statements
has reduced and the responsibilities and roles of accountants and auditors in
determining financial conditions has become questionable. On July 30, 2002,
the Sarbanes–Oxley Act has been adopted by Senators Paul D. Sarbanes and
Michael G. Oxley in the United States, to prevent these scandals and regain
the trust of the investor. The Sarbanes–Oxley Act is considered to be one of
the most important milestones in the development of the forensic accounting
profession. Because this act has made an audit committee mandatory in the
companies other than the existing boards, and, within this context, forensic
accountants have been able to provide special advisory services to audit com-
mittees or companies’ managers by using their audit and research capabilities.
In addition, they can also serve on the audit committee with the permission of
the Securities and Exchange Commission (SEC) (Dönmez & Çavuşoǧlu, 2015,
p. 47).

Scope of the Forensic Acounting Profession

Forensic accounting has spread across many areas such as: Document coun-
terfeiting, computer cheating, credit card frauds, software hacks, tax frauds,
embezzlements, financial information manipulations, the company valuation,
determining the actual loss of earning in case of disputes between the stakehold-
ers, the lawsuits filled for bankruptcy, merge, and demerge transactions, the anal-
yses held for the frauds and corruption. (Bell, 2008, p. 6).
Forensic accounting appears to have three fields of practice: litigation support
consultancy, expert witness, and fraud examining (or investigative accountancy)
(Crain et al., 2015; Crumbley et al., 2015; Manning, 2011).
In the field of exercise of litigation support consultancy of forensic accounting
profession, it is in question that accountants provide various services to the con-
cerned lawyer before or during the case. Forensic accountants try to collect the
required financial data accurately and adequately methods. Analysis the collected
financial data is the most important services that forensic accountants will give
The Effects of Big Data on Forensic Accounting Practices and Education 15

to the lawyers before or during the case. All kinds of corruption cases, business
valuations, damage and loss estimates, insurance disputes, problems arising from
agreements, problems related to patents, rights and brands, separation and merger
cases related to enterprises, bankruptcy cases, and problems between enterprises
are among the cases that litigation support consultancy services provide.
Expert witness is a field where the judicial accounting profession benefits from
a case of economic origin is conducted in a healthy way. The increase in the num-
ber of cases of economic origin and the number of defendants and the increasing
complexity of these issues increased the need for expert witnessing. The specific
knowledge, experience, and training of forensic accountants play an important
role in these cases.
One of the most striking areas of exercise of the forensic accounting profession
in recent years is fraud examiner. Frauds made by employees of enterprise,
committing an offense by white collars, frauds in financial statements made
by enterprise’s top managers to mislead enterprise’s relevant persons, frauds
such as frauds related to investments, commercial briberies and commissions,
frauds related to bank transactions, frauds in electronic fund transfers, frauds
in credit cards, frauds in computer and information technologies, and frauds
made via internet and increase in their numbers resulted in the profession of
fraud examiner.
In these areas of application, fraud examining has an important place today.
Sometimes, fraud examining and fraud audit are used interchangeably. These two
concepts are similar to each other; yet, there are differences between them. Fraud
audit is a type of audit that has a specific approach and theory to prove whether
the fraud is present or not. Fraud examining is defined as the process of deter-
mining whether the fraud is committed or not, similarly. The most fundamental
difference between them is that fraud examining involves fraud audit techniques;
however, it collects and evaluates non-financial forensic evidence. Another differ-
ence is that fraud audit determines and analyses the red-flags upon the request
of the management, whereas fraud examining is the provision of the necessary
proofs through legal means in order to prove the fraud claim upon the request
of judges and prosecutors or the otherwise (Singleton & Singleton, 2010, p. 12;
Smith, 2012, p. 8).
Professing the forensic accounting profession requires having knowledge in
corporate crimes, corporate culture, research techniques, basic accounting and
finance issues, process of obtaining evidence, civil and criminal prosecution,
expert witnessing, electronic data preparation, collection/preparation of the data
necessary for digital forensics without damaging or destructing them, investiga-
tional audit, and, particularly, fraud examining. Since the information produced
in the business environment is produced, processed, and stored electronically,
the information to be acquired in the field of digital forensics is very valuable
for forensic accountants (Smith & Crumbley, 2009, p. 67). In addition, foren-
sic accountants should have knowledge and experience in auditing, tax, business
operations, management, internal controls, and interpersonal relations in addi-
tion to basic accounting and financial issues (Nunn, Mcguire, Whitcomb, & Jost,
2006, p. 2).
16 BURCU İŞGÜDEN KILIÇ

FORENSIC ACCOUNTANTS IN DETERMINATION OF

THE FRAUDULENT TRANSACTION
Along with the development of information technologies, the difficulty in the
control of the enterprises with high transaction volume, the increasing fraudu-
lent actions of the business executives, and the scandals in the international big
enterprises revealed the need for forensic accounting. It has been found that the
auditors can determine the fraudulent transactions on the average of 10–12%,
as a result of the fraud investigations on held by Association of Certified Fraud
Examiners (ACFE). Thanks to the developments in information and technology,
effective and anti-fraud audit programs are carried out and fraud-investigating
facilities are provided today. In today’s digital environment, traditional methods
for detecting fraudulent operations are not enough, and the use of computer-
aided and technology-supported techniques is required within the large mass of
data and the technological structure (Pearson & Singleton, 2008).
Forensic accountants scrupulously examine whether the entity’s financial
transactions comply with laws and generally accepted accounting principles with-
out making any assumptions (Nunn et al., 2006, p. 2). Forensic accountants are
not interested in giving a general view of the whole of the financial statements as
independent auditors do; instead, they try to find real information about what is
suspected or known, by whom, how, for what reason, and kind of corruption or
the fraud (Gerson, Brolly, & Skalak, 2006, p. 22).
Forensic accountants tend to use the method of discovery sampling, which is
based on determining the sample size and which can at least once reveal a deviation
from a presumed quality in a given degree of security. In addition to this, forensic
accountants can investigate all transactions related to a certain third party, such
as all transactions approved by a responsible personnel, all transactions related to
a certain third party in the relevant period, transactions related to extraordinary
amounts of money, as well as review all major transactions and communications
by means of data mining and reviewing e-mails. Forensic accountants can use all
contracts made by a particular person without any limit to obtain certain spe-
cific information, databases of public records, company e-mails, and interviews
with persons from outside or outside the company, information from lawyers, or
company accounting records as a source of information. In addition, informa-
tion obtained from mathematical models, such as Benford’s Law, Relative Size
Factor, Data Mining, can be used in forensic accounting as a source of infor-
mation against fraudulent transactions (Ranallo, 2006, pp. 114–116). Forensic
accountants will know that the figures fabricated with Benford’s Law will have
a different order than the random or valid figures. In this mathematical model,
which is based on the comparison of the frequencies of the numbers of occur-
rences (frequencies) and the first figures in a real accounting universe used in
enterprises with large databases, there is a risk of accounting fraud if the frequen-
cies are distributed in a form that does not conform to Benford’s Law. Thanks to
the Relative Size Factor, forensic accountants will be able to identify outliers or
unusual data that may occur due to error or fraud. Through data mining, they
will be able to investigate large amounts of data to reveal previously undiscovered
The Effects of Big Data on Forensic Accounting Practices and Education 17

information, hidden trends, and complex relationships. With the help of these
mathematical models, unusual transaction entries, extremely high and low vari-
able values, accounting transactions held in various files, and unexplained values
for two or more records, which cannot be related to each other, can be determined
(Grubor, Ristic, & Simeunovic, 2013, pp. 2–3; Panigrahi, 2006, p. 1427).
The artificial neural network, which is one of the data-mining methods, is
being frequently used in the detection of fraudulent financial reporting. Artificial
neural networks are multivariate and artificial intelligence technology produces
successful results in situations where complex interactions between variables are
present or if there is no single set of solutions. Artificial neural networks are used
to determine the relationship between the processes in the data set and classify,
evaluate, predict, and control these operations (Coakley & Brown, 2000, p. 119).
It has been in some studies within the literature that the correct classification
success of the artificial neural network model starts from 75% and reaches up to
100%. The effectiveness of data-mining classification techniques in determining
the companies issuing fraudulent financial statements has been investigated and
identified factors related to fraudulent financial statements have been determined
in the study executed by Kirkos, Spathis, and Manolopoulos (2007). This study
shows the benefits of Decision Trees, Artificial Neural Networks, and Bayesian
Belief Networks in defining fraudulent financial statements. Model of Decision
Tree has accurately classified all non-fraud cases (100%) and 35 fraud cases of
38 (92%). Artificial intelligence model has correctly classified all of the cases (76)
on the rate of 100%. Bayesian belief network classified 72 cases correctly (per-
formance 95%). In particular, it correctly classified 37 cases of fraud (97%) and
35 non-fraud cases (92%). In the study held by Liou (2008), the differences and
similarities between fraudulent financial reporting and business failure predic-
tion models, descriptive variables, and methodologies have been investigated in
terms of their most effective aspects. In terms of overall accuracy, it has been seen
that both logistic regression and neural networks have been correctly classified all
counterfeit/failed companies. In particular, logistic regression performed better
than the neural network approach in determining both financial reporting and
business failure estimates.
Big Data, Benford’s Law, electronic imaging, and data mining techniques are
useful in both fraud detection and litigation consulting. Forensic accountants
should be particularly careful when dealing with electronic evidence. Evidences
those are proper for the essence of the event and untainted are necessary in order
to be on the winning side in the courtroom. The forensic accountant must have a
basic understanding of the rules for the collection and evaluation of evidence and
apply them (Crumbley et al., 2015).
In the field of forensic accounting, other than these mathematical models, the
focus is on processes or events that seem unusual in terms of time, frequency,
place, amount, parties, or persons when holding counterfeit research. In addition,
the corporate culture and reward system, which may lead to internal controls that
are neglected by senior management or performed without sufficient attention,
low employee motivations, job likes, and unethical behaviors may also be exam-
ined (Clayton, 2006, p. 305).
18 BURCU İŞGÜDEN KILIÇ

BIG DATA ANALYSES AND USE IN THE AREA OF

FORENSIC ACCOUNTING
Data production and share have become limitless today. The need to transform
the data produced at every stage of the commercial life into meaningful informa-
tion and store them safely has emerged. The big data concept and analysis tech-
niques that have formed over time in a way to represent many areas of our lives
will be evaluated within the scope of the studies in the literature along with their
effects on both accounting and auditing and forensic accounting areas.

The Notion of Big Data and Big Data Analyses

In general terms, we can refer to big data as big data sets that cannot be analyzed
by traditional data-processing tools and cannot be categorized by traditional
methods (Ohlhorst, 2015). However, most of the studies in the literature feared a
precise definition of big data, and each researcher attempted to explain big data
that would highlight the data characteristics that were important for them.
Among the main characteristics that initially helped to identify big data and
differentiated it from other data types were the three main components of the data:
volume, velocity, and variety. The size of the data produced is being explained by
“volume of data,” the production speed of the data is being explained by “data
velocity,” and the types of the data are being explained by “data variety.” Five
components in total have been established by adding two other components
named “veracity” and “value” into the previous three components, in the light of
the studies in progress of time and the information obtained about the big data.
“Veracity” is expressed that order for the data not to be altered during the flow
and not to be seen by unauthorized persons. “Value” is expressed that the value-
creation activities to be realized through the processing, merging, analyzing, pro-
ducing of the new data. In the last case, big data components are expressed as
5V (volume, velocity, value, veracity, and variety). It is expected that new compo-
nents will be added to these present components in the process of continuation of
big data studies. With the concept of big data, the understanding of data collec-
tion, acquisition, and storage has changed completely and there are no limits to
daily digital data production, anymore.
Although Data Analytics (DA) and Big Data Analytics (BDA) are frequently
used interchangeably, they actually have two different definitions. Data analysis
is a process of reviewing data sets through expert systems and software (IBR,
2018). Big Data analysis is the process of examining, transforming, and mod-
eling Big Data sets in order to identify useful information and patterns, forward
results predict results, and support decision-making (Cao, Chychyla, & Stewart,
2015). The technologies included in the big data analysis process are increasing
day by day, while the biggest and most important technologies are as follows
(Davenport, 2014, p. 114): data management, data mining, Hadoop, MapReduce,
in-memory analytics, predictive analysis, text mining, scripting languages (e.g.,
Python, Pig, Hive), machine learning, visual analytics, natural language process-
ing, cloud computing (web services and virtualization), Internet of Things, and
NoSQL (non-relational databases).
The Effects of Big Data on Forensic Accounting Practices and Education 19

Different analysis types can be used in order to analyze Big Data for differ-
ent purposes. These are Descriptive Analytics, Diagnostic Analytics, Discovery
Analysis (Insight), and Predictive Analytics. Descriptive analysis, from an
accounting point of view, is the traditional knowledge that represents traditional
historical financial information. The diagnostic analysis explains the reasons for
historical results. The exploratory analysis determines whether there is a relation-
ship between historical information and another database. The predictive analysis
determines historical data and trends to predict what will happen in the future
(Lindell, 2017, 1/9).

The Effects of Big Data Analyses on the Areas of Accounting and Auditing
Accountants tend to consider the data on traditional data perspectives, such as
information retrieval, collection, classification, analysis, and reporting. Yet, the
emergence of Big Data has allowed for increased complexity and the ability to
perform deep data analysis that was not previously possible (Lindell, 2017, 2/2).
Nowadays, it is known that audit activity is possible to create value in enter-
prises by means of big data analysis, thus increasing the reliability of audit activi-
ties and auditors. Big data analysis is used in the audit in order to examine the
underlying transactions, balances, and disclosures in the financial statements and
related management claims. It enables auditors to analyze larger amounts of
data, identify frauds more easily, create auditory views based on stronger facts,
and perform higher-quality audits (Earley, 2015).
Big data require the use of complex analytical tools and platforms to effec-
tively and accurately identify potential risks that can trigger financial reporting
frauds. Big data are expected to grow even further and therefore companies and
their auditors in general and forensic accountants are expected to proactively
search the irregularities in big data and evaluate and manage the risk profiles in
discovering financial reporting frauds (Rezaee & Wang, 2017, p. 104).
In the study conducted by Dai and Vasarhelyi (2016, p. 2), four control genera-
tions were mentioned and different tools used in each generation were classified.
In the audit, the first generation was named Audit 1.0, and in this generation, the
Manual control tools (calculators, etc.) were included. The second generation in
the audit was named Audit 2.0, where the IT audit tools (Excel, software, BDDT-
ACL, IDEA) were included. The third generation in the audit was called Audit 3.0.
Audit 3.0 audit tools are classified as a generation in which big data have been
included in audit analysis tools (analytical applications). The last generation
was called Audit 4.0 and included semi and advanced automatic control tools
(Sensors, Cyber-physical systems, Internet of Things/IoT/IoS, Radio Frequency
Identification (RFID), locators-GPS).
In the study conducted by Appelbaum, Kogan, and Vaserhely (2017), the need
for the progress of the independent audit profession toward big data and audit
analyzes has been evaluated by examining the studies in the literature within the
scope of six main research questions. These questions have been focused on the
questions: “Should new analyses must be used in the audit progress?”; “Which of
these analyses is more promising?”; “Where can they be used within the audit?”;
20 BURCU İŞGÜDEN KILIÇ

“what kind of changes must be held on the audit standards in order to provide
the permission/expedition of these analyses?”; and “How can the audit reports
be more informative?” In the study, many different analytical techniques have
been used at each stage of the audit and these have been classified as follows
(Appelbaum et al., 2017, pp. 21–22):

(1) Audit tests: transaction tests, ratio analysis, sampling, verification, recon-

struction (re-performance), BDDT (CAATs) automation.
(2) Analysis from uncontrolled datasets: Clustering, Text Mining, Visualization
and Process Mining (discovery models).
(3) Analyzes from audited datasets: Process Mining (Process Optimization),
Machine Learning – Support Vector Machine, Artificial Neural Networks,
Genetic Algorithms, Expert Systems, Decision Aids, Bagging, Upgrade, C4.5
Classifiers, Bayesian Theory, Bayesian Belief Networks, Dempster-Shafer
Theory Models, Probability theory models.
(4)  
Regression: Logistics, Linear, Time Series, ARIMA, Single Variable,
Multivariate.
(5) Other statistics: Multi-criteria Decision Assistance, Benford’s Law,
Descriptive Statistics, Structural Models, AHP, Spearman Rank Correlation
Measurements, Hypothesis Evaluation and Monte Carlo Study / Simulation.

In the study held by Brown-Liburd and Vaserhely (2015), discussion within the
scope of the literature includes what kind of evidence is revealed in the big data
environment, how these can be integrated into the traditional audit process, and
how the assurance process will change conceptually. As a result of the investiga-
tions, it has been emphasized that both the definitions and the qualifications of
audit evidence vary in accordance with the effect of Big Data, digital evidence,
and electronic tracks provided by technologies such as RFID, GPS, and IoT. It
has been stated that the evidences will expand in volume and the new analyses will
serve to identify and explain these evidences.

The Effects of Big Data Analyses on the Area of Forensic Accounting

Nowadays, because of the facts that the various operations are being carried
out in virtual environment and companies perform various activities via inter-
net and computer; forensic accountant becomes to be in a situation that hav-
ing wide computer knowledge (Pearson & Singleton, 2008, p. 548). The speed of
transfer, operation, deletion, or modification of data can be realized very quickly
thanks to the continuous renewal of computer technologies and the internet. The
change and development of these technologies have also increased the disclosure
of financial crimes. Therefore, forensic accountants should be cautious against
financial transactions carried out through computer-aided programs and infor-
mation technologies.
Today, a new one is being added into technology-aided financial crime, day by
day. Even if the measures taken by using information technology-supported pro-
grams and techniques are taken against these crimes, the people who counterfeit
The Effects of Big Data on Forensic Accounting Practices and Education 21

can learn these techniques and develop various methods in the progress of time.
Therefore, it is clear that the techniques used in order to detect and prevent fraud
and corruption can never have their first effects. Therefore, due to the speed of
change and development in information technologies, it is necessary to constantly
update the techniques of detecting and preventing fraud (Bolton & Hand, 2002,
p. 235).
In the study conducted by Ernst & Young (2014, p. 2), 72% of the respondents
(466 enterprises participating in the survey) stated that big data technologies have
a key role in the prevention and detection of fraud. According to the results of
the survey conducted within the scope of EY Global Forensic data analytics sur-
vey, it has been seen that the database tools such as Microsoft Excel (65%) and
Microsoft Access or Microsoft SQL Server (43%) were used primarily in enter-
prises. Apart from these, continuous monitoring tools (SAP, SAI Global, Oracle)
which may contain GRC – governance risk and compliance tools, text analysis
tools, or keyword searching (26%), forensic analytics software (ACL, IDEA)
(26%), social media/web monitoring tools (21%), visualization and reporting
tools (Tableau, Spotfire, QlikView) (12%), statistical analysis and data mining
packages (SPSS, SAS, R, Stata) (11%), Big Data Technologies (Hadoop, Map
Reduce) (2%), voice searching and analysis (NEXIDIA, NICE) (2%) place in
the forensic data analysis tools used in the enterprises which participated in the
research (Ernst & Young, 2014, p. 9). The survey of global forensic data analy-
sis tools conducted by Ernst & Young has been repeated in 2016 and 2018. In
the research conducted in 2016, it was determined that the enterprises that suc-
cessfully applied forensic data analytics tools used social media, web monitoring,
and visualization tools. In addition, the findings obtained from the research show
that the enterprises expand their forensic data analytics capabilities beyond the
traditional methods of counterfeiting into the areas such as legal, information
management, and cybersecurity. Following can be referred as the forensic data
analytics tools used against the internal enterprise threats, cyber-risks, and fraud
risks: rules-based descriptive tests and reporting, keyword search, topic modeling
and linguistic analysis, statistical analysis and machine learning, data visualiza-
tion: dashboards data visualization: pattern and link analysis (Ernst & Young,
2016, pp. 25–27). In the 2018 survey, it has been indicated that the enterprises (745
companies surveyed) began to use tools such as data blending, data blending, user
behavioral analytics, and social media analytics along with the above-mentioned
forensic data analytics tools. User behavioral analytics and social media analyt-
ics tools are often used to detect abnormal activities and suspicious relationships
(Ernest & Young, 2018, p. 12).
Big data and digitalization have brought both challenges and opportunities
for forensic accountants. Today, forensic accountants most frequently encoun-
tered fraud risks of cyber-violations, manipulation/destruction of data within the
enterprise, IP theft, unauthorized transactions, illegal money transfers, informa-
tion technology sabotage, theft of intellectual property, theft of personal data
and theft of digital assets, and more. These types of fraud occur as a result of the
malicious use of information technologies and constitute the cases that the foren-
sic accountants focus on today. However, now they use the same weapon against
22 BURCU İŞGÜDEN KILIÇ

these fraud risks in forensic accountants, rather than traditional methods, and use
information technologies in the detection and prevention of fraud and corrup-
tion. Today, forensic accountants can obtain both structured and unstructured
data through the untraditional data sources such as third-party watch lists, news
media, free text payment descriptions, e-mail communications, social media, and
web monitoring (Rezaee & Wang, 2017, pp. 103–104).

The Effects of Big Data Analyses on Forensic Accounting Education

Accounting and audit scandals that occurred in the past have shown that auditors
were not sufficient on the subjects such as information technologies, statistics,
research methods, and accounting software. Therefore, computer and statistical
applications are the most important characteristics of forensic accountants in
order to reveal fraud and corruption in financial statements.
In a study conducted by Rezaee and Wang (2017), opinions were gathered
from academicians and practitioners in China in order to examine the rela-
tionship between big data and forensic accounting practices and education. In
the study, a questionnaire has been applied to academicians and practitioners
about the importance and content of Big Data training skills and subjects in
forensic accounting education in order to reveal the difficulties caused by the
big data and the opportunities it provides. According to the findings, the inter-
est in big data, data analytics, and forensic accounting subjects are increasing
day by day. Therefore, these issues need to be included in the forensic account-
ing education curriculum. The integration of magic data attributes and big data
analyses into training programs will make forensic accounting education and
forensic accounting applications more comprehensive and support the need
for accurate and reliable information against the adversities in today’s business
environment. In the study, the skill of data mining and modeling and knowl-
edge of advanced data analyses and data-management techniques are consid-
ered among the benefits of subjects related to big data being included within
the undergraduate and graduate programs. According to academicians and
practitioners, it is emphasized that forensic data analysis tools, data mining/
predictive modeling analysis, digital research, data visualization, and infor-
mation assurance and validation issues should definitely be included in the
courses related to big data and analysis within the scope of forensic accounting
education.
In the study held by Kramer, Seda, and Bobashev (2017), it has been aimed
to determine the opinions of educators and practitioners due to the increase of
interest in forensic accounting education. Within this purpose, a questionnaire
has been applied to 740 accounting lecturers who were randomly selected from
the Hasselback Faculty of Accounting Index and has been giving lectures in the
field of forensic accounting and 40 practitioners who had participated in foren-
sic accounting training seminars. According to the findings, cyber crimes and
security, interviews and interrogations, and digital forensic science are among
the most important issues in forensic accounting education. In addition, it has
been determined from the answers given that data analytics software, role-playing
The Effects of Big Data on Forensic Accounting Practices and Education 23

scenarios, digital forensics, internship, simultaneous learning, field trips, comput-

erized forensic laboratories, and moot courts must definitely be included in the
forensic accounting education.
In the study executed by Rezaee, Crumbley, and Elmore (2004), the views
of both academicians and practitioners on the importance, relationship level,
and presentation of forensic accounting education have been put forward.
The results of this study have focused on the appropriateness, benefits, cur-
riculum development, presentation techniques, and content of the curriculum.
According to the results, it has been seen that the number of institutions-
universities-colleges that provide forensic accounting education has increased
in accordance with the increasing interest in the field of forensic accounting.
According to the research conducted on academicians and practitioners, it has
been determined that financial chart frauds, red flags, report writing techniques,
internal control, forensic accounting activities, corporate governance, analyti-
cal review procedures, cybercrimes, information security, information technol-
ogies, and software should definitely take place in the accounting education
curriculum.
The role of forensic accounting in Australia has been searched by Van
Akkeren, Buckby, and MacKenzie (2013a) on the services, skills, and expertise
needed to successfully perform these services, and the qualifications, skills, and
personal qualities that university students who wish to study in the field of foren-
sic accounting should acquire. Within the scope of the study, 32 forensic experts in
Australia were interviewed and the latest trends in judicial services, the demands
of the customers, and the knowledge and skills to be provided in the forensic
areas at universities have been reported. Some noteworthy findings can be sum-
marized as follows: in the first five of the services offered by the legal services
firms, there are fraud investigations, expert witness, litigation support, valuation,
and technology services. Compared to other services, researches within the scope
of the frauds hold the largest workload (34%). Forensic accounting, investigative
accountancy (fraud examiner), and computer fraud are the most demanded ser-
vices from the companies performing forensic services. In order to guide students
who wish to pursue a career in forensic accounting, the participants were also
asked about what kind of features are crucial in terms of both work-based and
personal characteristics. Communication, critical thinking, technical account-
ing skills, attention to detail, audit knowledge and experience, technology skills,
legal knowledge, financial skills, and fraud risk assessment are considered among
the work-based forensic skills. Communication skills, analysis skills, curiosity,
being intuitive, and being systematic are being regarded among the characteristic
features that support forensic skills. It is emphasized that students who wish to
have a career in the field of forensic accounting should accomplish the account-
ing qualifications as the work-based graduate skills, hold technological skills, be
received education regarding the communication, reporting and analyses tech-
niques. Excel, Word, Powerpoint, Access/Databases, SAS/SAT/ACL software,
SQL, MYOB (Mind Your Own Business-Accounting software), EnCase Forensic
Software, and Apple Products are being referred as the software skills that are
assets at the graduate level.
24 BURCU İŞGÜDEN KILIÇ

CONCLUSION AND RECOMMENDATIONS

The rapid and continuous development of technology and communication tools
has facilitated the monitoring of unlawful acts and criminals, but it has also
made it difficult to identify and conclude illegal acts. Therefore, it is necessary
for competent and responsible parties having more technical and specific knowl-
edge than before in order to fight against unlawful acts and criminals in the
business world.
We can consider the changes that the big data create in the field of audit
within the aspects of the time of evidence collection, the audit time, the cost
of the audit, the auditor’s characteristics, and the audit standards. When we
evaluate the effects of big data in terms of evidence collection during the audits,
use of new technological analyses tools (ACL, IDEA, SAS, data mining, etc.),
examination of the groundmass instead of choosing samples, and use of big
data in every single stage of the audit due to the change in the subjects of data
collection, and appropriateness of the in-house/out-of-data, privacy and data
security issues attract the attention. When the effects of big data are evalu-
ated in terms of audit process, continuous auditing approach is seen. With this
approach, it has been possible to perform audit activities throughout the year
and this increased the quality of the audits. When we look at the big data in
terms of audit costs, it has been seen that there are both reducing and increasing
costs. Using software and hiring big data analysts cause extra costs. In addi-
tion, it is known that large data analyses make auditing tasks more convenient
and customers receive consultancy services using the benefit they receive from
the audit fees. When we look at the auditors, they should have the knowledge
of computer technologies necessary for data collection and big data analysis.
Therefore, auditor trainings should also be reviewed. The impacts of big data
analyses on audits make it necessary to review audit standards. While auditing
standards do not seem to restrict big data and big data analyses, it is actually
necessary to make adjustments to basic standards and establish new special
standard sets.
One of the most important determinants of the fields of investigative
accountancy/fraud examining the research of the forensic accounting profession
is the level of knowledge of the forensic accountant in using information
technologies related to the occupational activity. The forensic accountant, who
is a fraud examiner or investigative accountant, should be able to use analytical
examination procedures, computer-aided audit techniques, artificial intelligence,
fuzzy logic models, artificial neural networks, expert systems, data mining, and
digital analysis methods as the technology-based approaches in revealing the
fraud. In addition to this, as well as semi and advanced automated audit tools,
the forensic accounting profession, which uses audit techniques, audit evidence,
and audit tests, has to keep up with this change. All technological structure and
system changes in information technologies and auditing environments require
the renewal of both the educational and professional aspects of the forensic
accounting field technologically.
The Effects of Big Data on Forensic Accounting Practices and Education 25

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