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Managing and Retaining Data: Top Priority for CPAs

TechnologyTechnology allows organizations to make more effective use of data in advising clients and making business decisions. However, the explosive growth in the volume and complexity of information has increased the risks in managing and retaining data – which, according to the 2013 North America Top Technology Initiatives Survey, is the top priority for CPAs.

While everyone can agree that data management is integral to an organization’s ability to mitigate risk, an organization whose data management policies and procedures are insufficient or ineffective is exposed to the consequences of poor data management. Those consequences could result from poor business decisions or client advice that was based on incomplete or inaccurate data, having data stored in outdated or incompatible retrieval formats or improperly backing up data, which can result in its irrevocable loss.

Organizations must develop a strategic plan for managing data in order to realize the most value from their investment in data acquisition and usage. The strategic plan should include development of policies and procedures to meet the internal, legal and compliance-related requirements for data retention and usage. It’s essential that entities are able to back up and restore data in the event of data loss or a request to access historical data.

While defining the risks and identifying the best risk management approach is important, understanding how the risks were created can provide a greater perspective on the issue. According to industry experts, “big data” is likely the cause of CPAs rating Managing and Retaining Data the top priority for 2013.

Data is growing at an estimated 50% per year and companies generally have access to that information on a real-time basis through the web and social network traffic, emails, voice mails, videos and data generated by software and sensors used in industrial processes. Advances in computer processing and information technology have made it possible for companies to take a large amount of data, quantify it, analyze it and use it for a variety of purposes.

Companies need to create the necessary information systems and develop plans and policies for accessing, utilizing and managing big data. They must also recruit people with the necessary experience and skills to manage big data, and determine how to make cost-effective investments in big data management. If big data is inappropriately managed the intrinsic value of the data could significantly decrease. Jeannette Koger, CPA, AICPA Director of Member Specialization and Credentialing, also recognizes the importance of controls surrounding big data management. She states:

As the importance of data management has grown, firms are working closely with clients to ensure that effective controls are implemented pertaining to the appropriateness of data management policies, practices and procedures utilized by client organizations. Such controls are required to ensure that data management strategies effectively align with the fast moving IT environment in which many organizations operate.

Ensuring effective controls is not only critical to the process; it can also help companies realize numerous benefits. According to Frank Colantonio CPA, CA-IT, director of continuing education, CPA Canada, “With technology advances like in-memory processing reducing big data costs, the respondents have recognized the importance of managing and retaining data by controlling things like data governance and operational data strategy in order to realize big data’s many benefits.”

A whitepaper is available, which discusses the results of the 2013 North America Top Technology Initiatives Survey, conducted jointly by the AICPA and CPA Canada. Compare this year’s U.S. survey rankings and confidence levels with the 2012 U.S. results and examine the risks and opportunities for public accounting firms and businesses in managing each initiative. You can find these resources, the whitepaper and more at aicpa.org/toptech.

Jocelyn M. Woodard, Manager IMTA, American Institute of CPAs. Jocelyn is a technology risk and assurance manager assisting AICPA committee and task force members with the planning and implementation of initiatives that will better aid CPAs in understanding and utilizing information management and technology assurance tools and concepts.

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