Professor Eric Negangard brings his extensive experience as a forensic accountant into the classroom as a part of the M.S. in Accounting Program curriculum. Before entering academia, Negangard was a Manager in KPMG’s Forensic Services practice. He is also a licensed CPA in Indiana and a Certified Fraud Examiner. Negangard has taught a variety of accounting and business courses at McIntire at the undergraduate and graduate levels.
Learn more about his experience teaching in the M.S. in Accounting Program and how he views his courses in relation to the bigger picture of accounting.
How important is data in the accounting curriculum?
What’s missing from traditional accounting education is really the “blocking and tackling,” or what I would say are the basics of how to work with data. To answer a complicated accounting-specific question, you have to first understand all the data that is available to you. We, as accountants, should not be scared to get our hands dirty if this elaborate, tremendously important, and informative accounting question can be answered with data.
We need to step back and learn where data lives and how to procure it—in other words, how to get it out of its native environment—so that we can get it into a testing environment and run analytics on it. I believe these are fundamental skills that are required to take data and answer complicated accounting questions, and yet they are often missing from accounting curricula.
It’s not always about learning any specific software, but rather, it’s about learning about data, different types of data, and different types of files. It’s about taking these concepts and turning them into utilities that can be used across a variety of software platforms and accounting tasks. For me, it’s all about digital acumen and data literacy.
Why do you think data is so late to the accounting game?
Historically, it just hasn’t been a part of learning accounting, but there has been tremendous change in the last 20 years or so, whereby everything has been digitalized. In many ways, the world around us has changed, but the world of accounting hasn’t changed.
The other element is technology and the teaching of technology, which can be really hard to bring into the classroom and often even harder for faculty who do not have the skills themselves to work with that technology. It really requires a complete upskilling of everyone involved, which includes the faculty who are teaching accounting courses.
Also, the CPA exam is in the process of evolving, and in future years it will require a significantly higher understanding of data and data analytics. While it’s hard and requires a tremendous amount of work to design accounting assignments and case studies that require the use of technology, it is absolutely critical that we provide students with experiential learning. I truly believe it needs to be “hands-on” accounting going forward.
Can you talk more about your research on how digital evidence can assist in the detection of fraud?
For any allegation of fraud or misconduct, there is always a burden of proof. In criminal court, it is beyond a reasonable doubt, and in civil court, it is the preponderance of evidence. Historically, we relied a lot on eyewitness testimony and hearsay; however, science has proven these types of evidence to be very inaccurate and not reliable.
Combine this with the idea of “the camera is always rolling” or the fact that everything we do in today’s society creates a sort of digital fingerprint. Whether it is getting in your car and driving, responding to a text message, looking at an Instagram post, sending a colleague a message via Teams, or many other seemingly mundane tasks, your action is captured and memorialized. If investigators have a high awareness of these digital fingerprints, they can recognize the plethora of sources of digital evidence, and these digital records become tremendously helpful as you attempt to prove or disprove an allegation. Whereas eyewitness testimony and hearsay can be unreliable sources of evidence, these relatively new sources of digital evidence are everywhere, and if collected and preserved appropriately, can become irrefutable evidence that can be introduced and used in the court of law.
In class, you talk about the “encryption dispute,” or when officials ask companies to unlock a person’s phone to use for an investigation. What are your thoughts on this?
This is a good question because it actually brings in some really interesting constitutional issues. There are clearly countries around the world where evidence is available to authorities instantly, no questions asked. However, here in the United States, companies like Apple and others have taken a stance in saying that they really aren’t interested in turning over private information from their users. The problem that authorities often have is that even when they have possession of a physical device, the information or data is often encrypted.
These are really complicated issues, and in my opinion, we should do everything we can to protect citizens and their privacy. Nevertheless, there are bad people out there, and in certain situations, it’s important that we have the tools and techniques to investigate alleged nefarious activities. In many situations though, it’s hard to figure out what is right and what is wrong, what represents a right to privacy, and what best protects innocent people. For example, I believe officials have zero right to know what’s on my cellphone until a certain point where I potentially did something really bad. Those are tough situations and issues that, no doubt, society is going to have to continue to navigate as we increasingly become more sophisticated from a technology perspective.
Another topic you talk about in class is how laws and investigations almost always come after an act of fraud has occurred. In other words, as opposed to being proactive in preventing fraud from happening, laws and regulations are more reactive in nature. In this situation, who or what is out on the front line preventing and detecting fraud in its earliest stages?
Laws and regulation, almost by design, have to be very reactionary in nature. It is extremely difficult to preemptively create rules and regulations that restrict or prohibit the latest and greatest forms of nefarious activity. What typically happens is someone discovers a new way to harm others, and it grows to a level of prevalence or gets so extreme that we as a society react and put in place some new laws or regulations that attempt to curb this new activity.
My personal view is that you can never, through rules and regulations, make people do the right thing all of the time. Instead, it is critically important to reduce and restrict nefarious activity through the development and teaching of ethics and morals. I think most of us learned our morals and ethics at a very young age, and, at least in my opinion, this is when it is so critical to teach people to respect others and know the difference between right and wrong. It really requires a high level of commitment on behalf of parents, family members, teachers, and any other stakeholders for kids to make sure that kids learn to treat others with respect and do the right thing at the right time, which is the most important thing to me. If people have good morals and ethics, things simply do not get as far out of control as they might otherwise.
In the case of fraud, it seems like history repeats itself regularly. What should be learned or done differently so that we can prevent fraud in the future?
We need to leverage the digital investigative tools that we have been exposed to and increase our skill sets and take advantage of all the data around us to help prevent, detect, and correct fraud. I am worried that a virtual environment has created a sense that it is not as necessary to be honest and forthcoming. For example, people may act differently online than they do in person. And as we transition to more digital communication and less social interaction, I am worried that dishonesty will increase. We either have to figure out mechanisms to counterbalance that or ramp up our prevention, detection, and correction procedures.