Data can be classified as either qualitative or quantitative. Qualitive data
cannot be measured like a sight, sound, documents, or interviews. Quantitative
data can be measured like profit, age, time, or weight. As a forensic accountant
not all data is of interest, “…we seek to identify data that are sufficient to support
an expert opinion and relevant to the specific objectives of the engagement”
(Rufus et al., 2015, p. 227). Rule 201 of the AICPA’s Code of Professional
Conduct and Rule 702 of the Federal Rules of Evidence both discuss that an
expert witness’s opinion must be based on sufficient relevant data. Rule 201
states accountants must comply with the standards and interpretations of said
standards designated by the council. These standards include professional
competence, due professional care, planning and supervision, and sufficient
relevant data (AICPA, 2013, p. 2935). Rule 702 describes what qualifies a
witness as an expert. To be an expert witness, the accountant must have
specialized knowledge that will help understand evidence, a testimony that has
sufficient facts or data, a testimony that is a result of reliable principles and
methods, and that said principles and methods are applied reliably to the facts
(Federal Evidence Review, 2016).
In identifying data, it is important to ensure the data meets sufficiency and
relevance. Meeting these standards is relative as it depends on the specific
engagement. Data for one engagement may not be relevant in another
engagement. “When evaluating sufficiency, a key consideration is the availability
of data” (Rufus et al., 2015, p. 229). Limited data may lead to a lower threshold.
Relevance is tied to how pertinent the data is to the engagement.
Another element of sufficiency is the reliability of data. Most of the time,
reliability is tied to its source. Data can be obtained via first-party, second-party,
third-party, and fourth-party. First-party data can pose some implications as it
comes directly from the subject. Second-party data may be more reliable as first-
party data as it comes from a related party. Third-party data is generally
considered reliable as they are usually items like bank statements. Fourth-party is
variable as the quality depends on the source. a (Rufus et al., 2015, p. 232).
Reference
AICPA. (2013, June 1). Code of Professional Conduct and Bylaws. AICPA.
Retrieved March 9, 2023, from
https://us.aicpa.org/content/dam/aicpa/research/standards/codeofconduct/ a
downloadabledocuments/2013june1codeofprofessionalconduct.pdf
Federal Evidence Review. (2016). Federal Rules of Evidence (2015). Retrieved
from a a a
https://web.archive.org/web/20180831001530/http:/federalevidence.com/rules-
of- evidence
Rufus, R., Miller, L., & Hahn, W. (2015). Forensic accounting. Upper Saddle
River, NJ: Pearson a a Education.
