Understanding financial and accounting information is an essential prerequisite for making sound decisions. These data are useful for assessing the inputs, processes, outputs, and outcomes of business-type and governmental activities, and the custom of monetizing (or at least reducing to potential monetary service value) everything under the sun will persist over the near and medium terms. Fraud examination, which is the practice of discovering intentional material misrepresentations / omissions, and financial forensics, which is the practice of preparing theories of effects of actions (whether caused by fraud, accident, act of God, etc.) expressed in monetary values, are ultimately methods to determine narratives of fact (e.g., what happened, who gained and how much?) based on corroborating evidence (e.g., emails, spreadsheets, whistleblower tips) and skilled expert analysis and opinion (e.g., CPAs, CFEs).
Notwithstanding the economic and efficiency advantages of computer-based data and programs, the need to control manual and managerial biasing (e.g., through sufficient independent checks on performance) of the data, programs, and supporting functions should not be underestimated: this requirement transcends all systems developed / observed by human agents. What goes into the computer, how it is processed, how it is interpreted, etc. are not actions beyond the reach of undue influence and misleading manipulation by human agents. What is presented as accounting fact (e.g., Lehman Brothers’ level of debt at quarter-end) may be false and misleading. Accounting and corroborating data may be cherry-picked (cf. confirmation bias) to support individual objective (q.v. goal divergence), and the independent registered public accounting firm (or other legally defined independent check on performance) may not detect or prevent false reporting (cf. propaganda).
Concern should be focused on the sufficiency of the independent check on performance (e.g., were the budget, schedule, and access afforded to the independent agent / gatekeeper commensurate with the task at hand, how have these assessments been made?) and not merely the adequacy / existence of the independent check. Processes designed to reduce cost (e.g., outsourcing accounts payable to the cheapest provider) may also reduce effectiveness (e.g., insufficient attention to detection of bribery schemes). Please be wary of superficial checks masking and supporting false reporting (e.g., the use of independent but ineffective inspectors and overseers allegedly for the purpose of assessing compliance with labor standards in remote plants).
Though verifiable / falsifiable transparency within the public domain may not be entirely accomplished in the near and medium terms, it should remain the direction in which the sufficiently independent analyst proceeds.
