October 30, 2019

Leveraging AI to Streamline

Accounting/Finance Departments and

Add Greater Value to Your Organization

Kirstie TiernanBDO Digital Transformation Services

BDO Survey Videohttps://www.bdo.com/thought-leadership/digital-transformation-survey

2

71% of companies have seen increases in revenue from digital initiatives.

79% of executives anticipate increases in profitability over the next 3 years due to digital transformation initiatives.

79% of companies plan to increase spending on digital transformation over the next year.

67% of companies say reducing operational inefficiency is one of their top 3 business goals in the next 12-18 months.

Developing a digital transformation strategy is the #1 priority for c-suite

executives.

3

Imagine – Real-time diagnostic alerts on plant issues with remote expert resolution.

Digital platform enables better communication, prediction, and resolution.

Digital transformation in energy

4

T A P T O E D U C A T E M E

Imagine - Holding a device up to an object to discover, experience and purchase things you want, using a mobile device(s).

Better customer experiences, higher revenue conversion and more measured outcomes

Digital transformation in retail

5

Imagine – Creating better transfer of information, higher retention, quick recall, and measured outcomes

Better knowledge, better medical professionals

Digital transformation in healthcare

6

Digital 3+1 approach

DIGITAL BUSINESS. Creating new value, market differentiation, and revenue in the digital economy.

DIGITAL PROCESS. Reinventing operational processes by optimizing end-to-end performance and improving efficiency.

DIGITAL BACKBONE. Addressing or removing the IT complexities, risks, and barriers to innovation, to meet evolving market demands.

DIGITAL ADOPTION. Change management that informs and enables the business’ strategic direction, while streamlining user adoption for employees, suppliers, and customers.

Digital Transformation is all about reimagining your business and operations in today’s digital economy, securing your future starting today. We set you on your pathway with our Digital 3+1 approach:

7

DIGITAL PROCESS: Automation & Analytics

8

InvestigationCFO Start Date

CFO Termination Date

6,000 Vendors Limited by:• Location of interest• Vendor spend over $50,000 • 160 Vendors to Review

InvestigationCFO Start Date

CFO Termination Date

Limited by:• Specific user time of employment• Round dollar amounts• 11 Vendors to Review

10

$350,000 Fraud 2010-2015

Investigation

11

Fraud review

Vendor geographic regionQuality Health - $38K St. Pete’s Hospital - $29K

AutoMak Body Repair - $40K Gen Chiropractor - $12K

13

Most common iPhone passcodes

People wounded by terrorism (1970-2013)

People killed by terrorism (1970-2013)

Distance of starts from Earth in light years

Loan amounts on kiva.org

Total number of print materials in US libraries

Population of Spanish cities

File sizes in the Linux 2.6.39.2 source tree

Population of Mexico’s Counties (Municipios)

Stack Overflow User Reputation

Line count of the Rails 3.0.9 core source code

UK government spending May-Sept 2010

2011 Russian Parliamentary Elections Results

Population of Turkish boroughs

Google books unique 1-grams

2007 population per district in Peru

First 652066 Fibonacci Numbers

14

Beford’s Law

The principle that in any large, randomly produced set of natural numbers, around 30 percent will begin with the digit 1, 18 percent with 2, and so on, with the smallest percentage beginning with 9.

15

Benford’s Law

16

Good

Bad

Payments begin with $40*($400, $4,000, $40,000)

$500K of payments areto Heavy Equipment

Training Company

17

University clientRevenue testing (tuition/financial aid, meals, housing)

18

Expenses analysis

AIRFARE

HOTEL

RENTAL CAR

FUEL

TRIP

MISC

UNKNOWN

AIRPORT

What is Misc for $1,500?

Why are there airfare expenses with no airport

expenses? Meals?

Why so many gas reimbursements?

Base analyticsEmployees

Vendor/employee similar name, address, phone or tax ID

Payroll trend analysis by function Duplicate employees Employees without payroll deductions Employees with a PO box address

Invoices Invoices created on weekends, holidays, or in off

hours Round dollar invoices Keyword analysis on description Zero amount invoices System created invoices Invoices from vendors not in vendor master Invoices with no description

Vendors One time vendors Blocked/deleted/do not use vendors Vendors without an address Vendors with similar names or addresses Vendors with non-standard payment terms Inactive vendors with activity in last year Keywords analysis of vendor name Duplicate vendor IDs

Disbursements Payments created on weekends, holidays, or in off

hours Round dollar payments Duplicate payments (same amount, payee, date) Keyword analysis on payment description Benford’s Law on payment amounts Payments just below approval limit Summary of payments by users Payments to vendors not in vendor master

20

Predictive analyticsHistorical dataExternal dataStatistical algorithmsMachine learningBeyond forecasting…predicting the future

21

Internet of thingsThe inter-networking of physical devices, vehicles, buildings, and other items embedded with electronics, software, sensors, actuators, and network connectivity which enable these objects to collect and exchange data.

22

Sensors – subway doorsDATA POINTS CAPTURED

# of times open/closeForce used to closeTemperatureHumidityIndoors/OutdoorsWeatherTime of day

DATA USAGEReplace partsSchedule techniciansPurchase inventorySell data back to manufacturing engineering team for improvements

23

DIGITAL PROCESS: Automation

24

Basic, low-level tasks drain employees

Insight 01.Approximately 10% to 20% of human work hours are spent on dull, repetitive computer tasks.Researchers estimate that IT departments also spend 30% of their time on low-level basic tasks.50% of companies spend $5 to $25 per manually-processed invoice.

25

RPA opportunities are everywhere

Insight 02.Businesses are missing about 50% of all automation opportunities, while 13% of workers find these repetitive tasks to be a waste of time.

26

Lowers costs, increases accuracy

Insight 03.About 70% to 80% of rules-based processes can be automated, allowing companies to operate onshore at a lower cost than offshore.

27

Your competitors are doing it

Insight 04.Companies will experience with RPA by 2025 is between $5 trillion to $7 trillion

RPA software will be able to perform tasks equal to the output of 140 million FTEs by 2025.

28

Robotic process automation

More time can be spent consuming &

analyzing data

Increased employee satisfaction &

retention

Maintain data &document security

Improve quality ofwork product

Increaseprofits throughdata efficiencies

29

Typical process

Transformation Process

Transformation Process SYSTEM

30

Multi-location data extraction bot

John SmithFinancial Reporting Developer

Each morning I begin by collecting the franchisees’

sales data…

Now I can analyze the data and email to the other

departments

Original process: 5-10 min/store

New process: Runs overnight = NO MANUAL

EFFORT31

Address cleansing bot

Sales data is obtained from multiple

systems/clients/formats

City/State/Zip Code combinations are often incorrect or misspelled

The cleaned file with corrected address

combination is exported for review and processing

Software robot reviews the address combination and updates the misspelling

automatically

Chicago Hieghts, IL 60411should be

Chicago Heights, IL 60411

Original process: 3-5 hours

New process: 5 minutes

32

Contract review and analysis

33

Contract data extraction and analysis

34

REINVENTED BUSINESS

35

Computer Vision

36

Artificial intelligence

37

Facial recognition

38

Sponsorship exposure analysis

39

Mixed reality –inspection/maintenance

Plant maintenance video: https://youtu.be/QTuKcm8s4QQ

Remote assistance: https://youtu.be/UpmolMrf5HQ

40

AI for social goodVideo: https://www.youtube.com/watch?v=2wQQh5tbSPw

41

QUESTIONS

42

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

EXPERIENCE

Kirstie Tiernan is a Principal in BDO’s Technology and Business Transformation Services practice in the Chicago office with more than 16 years of experience providing data analytics, technology advisory, and risk management services. Kirstie assists clients with generating key insights and knowledge from data across the organization in multiple sources, locations, systems, languages, and functions.

Kirstie’s team of technology professionals provides clients with the necessary dashboards, statistical models, and predictive analytics to turn data into information upon which key business decisions are made. Applying her skills in artificial intelligence and machine learning, Kirstie regularly works with clients to increase operational efficiencies and to prevent and detect organizational fraud.

Kirstie approaches projects with a focus on process optimization and a passion for implementing technological advancements to improve and accelerate time-consuming client operations. She has a desire for helping clients make sense of the new world of Digital Transformation and in determining how it tangibly applies to each and every client’s business.

Kirstie also serves as the co-leader of the firm’s own Digital Transformation & Innovation strategy execution. She has been part of several key developments for the firm during her leadership in this role, including the BDO bot factory, the firm’s first Hackathon, and in leading brainstorming and ideation sessions throughout the organization.

PROFESSIONAL AFFILIATIONS

Association of Certified Fraud ExaminersIndiana Brown County Community Foundation Board of Directors

EDUCATION

M.B.A, Fraud Management and Economic Crime, Utica College B.S., Computer Information Systems, Indiana University

KIRSTIE TIERNAN, CFE, OCA

Data Analytics & AutomationManaging Director

ktiernan@bdo.comDirect: +1 312-616-4638Mobile: +1 773-208-1609

330 North Wabash Ave. 32nd FloorChicago, IL 60611

Tel: +1 312-856-9100Fax: +1 312-856-1379www.bdo.com