Some accounting professors instruct students about accounting – but Miklos Vasarhelyi, director of the Rutgers University Accounting Research Center, is helping to change the way the practice of accounting is done. He’s credited with developing the concept and application of “continuous auditing,” or a real-time review of business processes that can highlight exceptions to compliance, performance and effectiveness. Along with his team of faculty and Ph.D. students, Vasarhelyi is developing real-world applications for continuous auditing; like leveraging machine learning and artificial intelligence to identify bogus invoices, unusual or fraudulent insurance claims, and other questionable activity, with processes that could raise a red flag before a check is ever cut.
Vasarhelyi — a previous Power 50 honoree — and his cohorts are already working with CPA firms and other organizations in the U.S. and overseas on assignments like work in an Australian hospital with a visualization based continuous monitoring system, or with the State of Santa Catarina Brazil on an application of Smart contracts in the continuous monitoring of payables.
“But machines will not replace flesh-and-blood CPAs,” he said. “Instead, digital-driven continuous auditing will free them up to focus on higher-level services.” As an example, he pointed to a program developed at Rutgers, called MADS (Multidimensional Audit Data Selection), “that will let auditors do ‘full population testing’ to search for exceptions and other activity,” replacing the traditional tedious and time-consuming data sampling processes.
The new approach to accounting and auditing also ties in nicely with blockchain technology, he added, since the speed and security it offers will enable auditors and cybersecurity experts to more easily keep up with fraudsters and other bad actors.