2016年-德勤全球_Harness_the_power_12页_1mb

Summary of Deloitte Document: "Harness the Power of Advanced Analytics in Valuation"

Core Content

This document explores the growing role of data analytics in valuation and financial reporting, emphasizing its importance in mitigating risks, improving transparency, and aligning with regulatory expectations. It outlines the opportunities and challenges associated with the integration of analytics into valuation processes, particularly for public companies and their compliance and governance structures.

Main Views

• Data analytics is rapidly expanding in the financial reporting arena, influencing areas such as compliance, risk sensing, and fair value estimation.
• Regulatory scrutiny is intensifying, especially from the SEC, which is leveraging analytics to detect financial fraud and improve data reliability.
• Fair value measurement is a critical area where analytics can enhance accuracy, reduce subjectivity, and support better decision-making.
• Strategic risk is increasingly recognized as a key challenge, with the pace of innovation now among the top risks for businesses.
• Compliance and transparency are vital for maintaining investor confidence and corporate reputation.
• Valuation processes are complex and require robust policies, procedures, and oversight to prevent errors or manipulation.
• Technology and analytics are becoming essential tools for financial professionals, with a growing need for education and internal skill development.

Key Information

1. Data Analytics in Fair Value Estimates

• Fair value estimates are often subject to significant judgment and can be misused or manipulated.
• Analytics can improve the reliability and consistency of fair value measurements by providing supportable data and insights.
• Traditional valuation methods like discounted cash flow (DCF) analysis are becoming more vulnerable to misuse without appropriate oversight and analysis.

2. Risk Sensing: The Evolving State of the Art

• Risk sensing involves using human insights and advanced analytics to identify, analyze, and monitor emerging risks.
• 81% of respondents in a Deloitte survey believe analytics will become more important over the next three years.
• Strategic risk is the least managed, with only a minority of executives feeling they have strong programs in place.
• The pace of innovation has moved up the list of risks, now expected to be the top risk by 2018.

3. Regulatory Scrutiny Amid Lack of Transparency

• The SEC has been using proprietary analytics tools to detect fraudulent activities, especially in financial reporting.
• From 2009 to 2014, the SEC conducted 8 enforcement actions against funds and private equity firms using these tools.
• The number of SEC enforcement actions has increased while the number of US-listed companies has declined, indicating heightened regulatory focus.
• The FRAud Group (Financial Reporting and Audit Group) is tasked with improving fraud detection using data analytics.

4. The Need for Policies, Procedures, and Supportable Valuation Conclusions

• Valuation is not purely an art or science but a process involving quantitative and qualitative analysis.
• Professional judgment is crucial, but it can be misused to manipulate results.
• Companies must ensure that assumptions and inputs are reasonable, supportable, and transparent to avoid ICFR (Internal Control over Financial Reporting) failures.

5. Addressing Valuation Risk and Opportunity: Three Key Considerations

• Compliance risk: Regulators are increasingly focused on valuation processes, requiring transparency and oversight.
• Internal process efficiency: Analytics can help identify "soft spots" in valuation and improve the speed and accuracy of financial reporting.
• Enhanced quality: Companies can use analytics to improve fair value estimates and disclosures, aligning with regulatory expectations.

6. Opportunities Ahead

• The complexity of financial markets and evolving accounting standards are pushing companies to adopt more advanced analytics.
• Data collection and normalization will continue to be refined, and more oversight will be applied to valuation assumptions.
• Emerging technologies such as cognitive computing platforms (e.g., IBM Watson) are enabling faster and more efficient analysis of large data sets.

7. Operationalizing the New Lease Accounting Standard (ASC 842)

• The new lease accounting standard introduces challenges in data collection, analysis, and internal control.
• Analytics can help in the valuation of leases by improving the accuracy of future cash flow estimates and supporting financial reporting.
• Companies must adapt their systems and processes to comply with the standard while ensuring transparency and reliability.

8. What's Next?

• Valuation misrepresentation is expected to remain a top concern for the next 2–5 years.
• Electronic data analysis (big data) is now the top issue for forensic and valuation professionals.
• There is a growing need for qualified staff and regulatory changes to keep pace with technological advancements.
• Companies must be prepared to adapt and innovate to meet evolving market and regulatory demands.

Conclusion

The integration of data analytics into valuation and financial reporting is no longer optional—it is a strategic imperative. Companies that invest in analytics, transparency, and robust internal controls are better positioned to manage risks, meet regulatory expectations, and enhance their market reputation. As the financial landscape becomes more complex, the role of analytics in supporting accurate, supportable, and ethical valuation practices will only grow in importance.