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Preface
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Copyright © 2020 by Ronald Guymon

All rights reserved.

Published by the Gies College of Business at the University of Illinois at Urbana-Champaign, and
the Board of Trustees of the University of Illinois

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Module 1 Introduction to Accounting Data
Analytics and Visualization

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 Course Overview

Course Introduction
Media Player for Video

Course Introduction - Slide 1

Transcript

During this course, you'll not only hear from me, but you'll also hear from several guest speakers,
as they talk about how data is used in their domain. You'll hear from Louis Guilamo, a University
of Illinois Alum, who now works for the Buffalo Bills' NFL team, as the Director of Data
Applications and Analytics. He'll share with us the importance of using data analytics in the
context of drafting football players. He'll also talk about the relationship between data and
intuition. You'll also hear from Kalina Borkiewicz, a programmer at the Advanced Visualization
Laboratory, here at the University of Illinois. Data visualization is an important part of an analytic
mindset, because it provides insight, and helps communicate results. Kalina will talk about her
team's role in visualizing data sets in some pretty remarkable ways. Many of the same principles
that she talks about apply to visualizing data in a business domain.

Another guest speaker that you'll hear from is Ryne Cardone. Ryne has worked for over a
decade in the restaurant business. He uses point of sale data among other datasets to develop
intuition about sales forecasts as well as about identifying employees who need additional
coaching. We'll also hear from Scott Warner, who owns a social media influencing company. He'll
share his opinion about how important data is for running any company. He'll also talk about how
important it is to use data specifically for enhancing the results of social media campaigns. You'll
also get to see different locations of the University of Illinois campus. In short, I hope the variety

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of perspectives give you a better idea of one, what it means to have an analytic mindset, two, the
importance of data preparation and visualization, and three, some practical tools that you can use
to prepare, visualize, and analyze data.

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 Module 1 Overview

Module 1 Introduction
Media Player for Video

Module 1 Introduction - Slide 2

This slide shows the professor is standing in front of paintings inside the Krannert Art Museum.

Transcript

I'm standing in the Krannert Art Museum, in the Renaissance to Modern Remix Exhibit. This
museum is located by the two business buildings. There are two reasons why I'm standing here,
both of which I hope will be apparent in just a moment. I admire athletes that can excel in multiple
areas. For instance, I think triathletes are amazing because they somehow are able to run at a
fast pace, right after riding a bicycle and having swam a long distance. Similarly, there are people
known as polymaths, whose expertise spans a significant number of subject areas. Another
name for polymath might be renaissance man. People like Leonardo da Vinci might be
considered a Renaissance man, because he excelled in several fields like mathematics, art,
science and technology, and engineering. In our day, a good data scientist should be somewhat
of a polymath or renaissance man.

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Venn Diagram - Slide 3

This slide shows a Venn diagram with 3 overlapping circles. The circles represent: Math and
Statistics, Domains/Business Knowledge, and Computer Science/IT. The section where Math
and Statistics overlaps with Domains/Business Knowledge is labeled Traditional Research. The
section where Domains/Business Knowledge overlaps with Computer Science/IT is labeled
Software Development. The section where Computer Science/IT overlaps with Math and
Statistics is labeled Machine Learning. The center of the diagram where all three circles overlap
is labeled Data Science.

Transcript

If you Google data scientist, you will probably find the Venn diagram similar to this, in which it
shows someone who has skills in computer programming, statistics, and a specific business
domain. Other versions also include communication as an overlapping skill set.

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Module 1 Introduction - Slide 4

This slide shows the professor is standing in front of paintings inside the Krannert Art Museum.

Transcript

So, one of the reasons why I'm standing in the Krannert Art Museum is to emphasize the
importance of combining multiple skill sets when analyzing data. As you combine your knowledge
of the accounting domain with knowledge about computer programming, statistics, and
visualizations, you will be able to identify questions, and come up with creative solutions that will
not occur to someone with only one or two of those skill sets. Even if you don't become great at
programming, it's important that you stay abreast of current data analytic technologies, so that
you have an idea of what's possible. I hope that by the time you complete this module you will:
one, recognize where the accounting profession has been and where it's going, two, be able to
critique the accountant's role in helping organizations analyze data, and three, recognize how
data and analytics can be used to extend different accounting domains. So, what's the other
reason why I'm standing in the Krannert Art Museum? Well, I hope that you get a better feel for
what it's like here on campus. I hope that by the end of this module, you'll be familiar with several
iconic places on the University of Illinois campus.

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 Lesson 1-1 Introduction to Accountancy
Analytics

Lesson 1-1.1 History and Future of Accounting

Media Player for Video

Lincoln Hall - Slide 5

This slide shows the professor is standing in the main entrance foyer at the Lincoln Hall.

Transcript

With its bronze bust in the main entrance foyer, Lincoln Hall commemorates the Springfield
lawyer, Abraham Lincoln, who went on to become a president of the United States and to put an
end to slavery. This building is an example of Renaissance architecture. Luca Pacioli lived during
the Renaissance. He was a mathematician who became a legend in his own time. He worked
with Leonardo Da Vinci to create artwork with divine proportions. his most relevant work is the
"Summa" or "Summa de Arithmetica," One of the first books, which was printed on Gutenberg's
Printing Press and as illustrated by Da Vinci. In that book, there is a small section on a system of
double-entry accounting.

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Assets = Liabilities + Owner's Equity - Slide 6

Assets = Liabilities + Owner's Equity

Transcript

In that section, Pacioli explains how to record business transactions: assets equal liabilities, plus
owner's equity.

Pacioli's Three Principles - Slide 7

Pacioli's Three Principles

1. Cash and credit are most important

2. Merchants should be ready mathematicians.

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 3. Merchants should be good bookkeepers.

Transcript

He also identified three principles that makes every merchant successful. One, cash is most
important and when not present, merchants use credit doing business on the basis of good faith.
Two, merchants should be ready mathematicians. Three, merchants should be good
bookkeepers so that there's order. So, the father of our modern accounting system, Luca Pacioli,
was somewhat of a polymath and the three principles continue to be important advice to
management accountants in our day.

History of Accounting - Slide 8

Transcript

In the 1600s, as joint-stock companies became more common, a separate system of

bookkeeping for external use was created, giving rise to the distinction between management
accounting and financial accounting. The need for independent certification of the external
reports arose soon after that, giving rise to the need for auditing. In the mid-1800s, during the
Industrial Revolution, it became important for accountants to understand more complex topics
like logistics, asset capitalization, and depreciation, foreign exchange, and changing legislation.
In the 1880s, local governing bodies such as the AICPA were created to ensure that those who
practiced accounting had sufficient knowledge to do so. In the United States, the first CPA exam
was given in New York in 1896. Questions included the difference between double-entry and
single-entry bookkeeping, distinguishing between accounts, and the purpose of perpendicular
columns in books of original entry. The 1913 income-tax legislation increased the need for tax
accountants. In the 1970s, the rise of computers and accounting software led to computerized
accounting systems and the need for systems accountants.

In the early 1900s, it was critical that an accountant had good handwriting since typewriters had
not caught on yet. Accountants used the "Holler and Tick" method to identify errors in accounts,

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this literally consisted of one-person hollering out journal entries to another accountant, who
would tick it against the ledger posting. By the 1950s, CPA firms required a large support staff,
and assembly line set-up was used to create the documents. One person to write the original
document, a second person verified the calculation, a third person to type up the whole
document, and a fourth person to make copies, and a fifth person to proofread. Finally a sixth
person to check the entire document. If one person was out for the day, the work stopped. In the
late 1970s, Peachtree Accounting hit the market, it was one of the first small business accounting
software systems. By 1984, it was estimated to be one of the top 10 microcomputer software
companies.

In the 1980s, spreadsheet software like Lotus 1-2-3 and Microsoft Excel was created as a
computerized version of paper spreadsheets used in accounting. These became an important
tool for accountants because they facilitated the storage, organization, and calculation of data.
Spreadsheets continue to be popular because they're so flexible and have many useful functions
that can automate mundane tedious work. Good handwriting was no longer a critical accounting
skill. During the 1990s, the widespread adoption of Internet technologies increased the use of E-
commerce or online business transactions. Accountants needed to learn how to securely transmit
information on the Internet. Accountants also needed to learn how to store information. More and
more information has been made available online leading to people spending more time online.
All of the online activity is easy to capture, leading to an increase in the amount of data to
analyze. There is also an increase in the amount of non-financial data that was used to help
forecast the company's future. Accountants needed to know how to interpret financial measures
and contribute to strategic decisions.

In the late 2000s, advances in processing power contributed to smartphone technology, which
has exponentially increased the amount of time that people spend online as well as the amount
of data that can be analyzed. We are now in the data revolution period. During the late 2000s,
Cloud storage and advances in computing power have made it easier for companies to combine
many sources of data, and process it to find insights. There's also new cryptocurrency that is
being adopted, based on blockchain technology, which is based on remote storage and increased
processing power.

Pacioli's Three Critical Skills in Present - Slide 9

1. Cash, other currency, and credit are most important.

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 2. Merchants should be ready mathematicians and forecasters.
3. Merchants should be good data keepers.

Transcript

Pacioli's three critical skills continue to be important trademarks of accounting, but with a few
changes. One, in addition to cash and credit being most important, the role of cryptocurrency in
accounting is also important to understand. Two, mathematics is even more important, but for
forecasting future events and trends. Three, keeping financial transactions in order continues to
be important but with the electronic journals It's also important to keep non-financial data in order.

Lesson 1-1.2 The Importance of Data and Analytics in

Accounting
Media Player for Video

Roger Bannister - Slide 10

This slide has a photo of Roger Bannister.

Pose Vlog, 2006

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Transcript

In 1954, Roger Bannister was the first person known to have run a mile in under four minutes, at
three minutes 59.4 seconds. He certainly must have trained hard, but I've heard that he also used
a scientific approach to training by testing his ability to process oxygen, his lactic acid production,
and even undergoing blood tests. Since Roger Bannister's time, over 5,000 people have run a
mile in under four minutes. Part of that is due to advances in technology. Scientific, data-driven
approaches continue to be used in our day to help runners improve. There have been advances
in shoe technology, track surfaces, nutrition, watches, and even pills that runners swallow that
allow others to monitor their internal temperature. Importantly, the most important requirement is
people who are willing to train to achieve such a goal.

Luca Pacioli - The Father of Modern Accounting -

Slide 11

This slide contains an image of Luca Pacioli.

Transcript

How does this relate to accounting? The technology used to run a business has changed. The
environment in which businesses operate has changed considerably. However, the ability and
willingness of accountants to gather and analyze data continues to be a key characteristic of the
accounting profession. Accounting has always been about analytics. Luca Pacioli, the father of
modern accounting, recognized the importance of being able to summarize business transactions
into a quick snapshot.

The first CPA exam that was administered in 1896 required knowledge about how to organize
and summarize data. Financial metrics such as revenue, net income, days in accounts
receivable, return on investment, and other metrics have been and continue to be important.
Technological advancements and global competition has led to a need for accountants to do
more than just summarized data that describe what happened in the past. Accountants need to

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understand how financial data can be used to answer important strategic and operational
questions and then be prepared to analyze it accordingly. There's a need to use data to evaluate
why an organization is in the position it's in, what's likely to happen in the future, and then
recommend actions to get there. Recognizing that it's possible to make improved forecasts. Many
companies are committed to becoming more data-driven. Interestingly, a 2019 Harvard Business
Review article indicates that about 70 percent of firms surveyed have indicated that they're failing
in their attempts to forge a data culture and that they have not created a data-driven organization.

Accounting and New Technology - Slide 12

New customers + More clicks + More followers + More efficiency = More profit?

Transcript

The surveyed firms are increasing their investment in data and AI technology. The biggest
reasons for failure are not technological but people related. People and processes are failing to
keep up with the technology. This shouldn't be the case with accountants. Accountants are
guardians and stewards of some of the most important data assets, financial metrics to indicate
the impact of the bottom line on a company's health such as net income, revenue, cost of goods
sold, and cash flows. As stewards of such important data, it seems like we should know how to
use it. For example, many non-financial metrics such as new customers, website click funnel
metrics, social media followers or likes, and production efficiency are all important. Advocates of
these measures ultimately need to show that they positively impact net income or cash flow or
else the actions that improve those non-financial metrics ultimately aren't adding value. Thus,
accountants should play a key role and be early adopters and learning about data and how to
use analytic technology. In short, accountants have a key role in helping the companies we work
for make the most of data. As with the earlier running example, it is the people who are important
here. Accountants who are willing to incorporate new technology will be integral to meeting the
needs of today's businesses.

Lesson 1-1.3 Humans' Relationship with Data

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Media Player for Video

Humans' Relationship with Data - Slide 13

Transcript

How do we, as humans, interact with data? I think it's fair to say that we follow along the
spectrum, with not using data at one end and only using data at the other end. In this video, we
will consider together what causes people to use data in a sub-optimal way. To either not use
data or rely too much on data in their decisions. Recognizing the sources of sub- optimal uses of
data is important for knowing how we can help reduce the problem. Let's first consider some
reasons why people don't use data. In some situations, it may be nearly impossible to use data.
For instance, if you're in a car that's going downhill and the brakes stop working, you may be
forced to decide where to turn without taking in much data. Certainly, in that situation, it's better to
make decisions based on instinct and reflex rather than looking at the dashboard together data,
like how fast you're going, and then calculate how far it will take you to coast to a stop. There can
be analogies to business settings. Sometimes, the speed at which things are moving makes it
hard to wait for a careful consideration of the data. And the decision-makers hope that their
training and experience lead them to make the best instinctive decision. However, there are other
reasons why people may ignore data when the data could be useful to them and it's important to
be aware of them.

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Why Do People Not Use Data? - Slide 14

Why do people not use data?

Not aware that Data exists

Someone else's job
Apathy
Don't trust that it's useful
Don't trust that it's reliable
Fear
Right brained

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Transcript

One reason people don't use data is because they don't know that it exists. This can easily
happen in organizations when there are lots of silos or groups of people that work independently
of each other. This is a problem that doesn't need to exist and should be solved at an
organizational level. More companies are employing chief data officers to help manage and
monetize an organization's data. Another reason people don't use data is because they think it's
somebody else's responsibility. Historically, it was likely that one could expect a specialized
analytics department of data scientists or analysts to handle the data. However, data is oozing
into every nook and cranny of organizations and specialized departments don't have time to deal
with everyone's needs. Another reason why people don't use data is that they're apathetic.
Perhaps they don't realize the importance of the decision they're making or they're not
incentivized to focus a lot of effort to make the right decision. Two related reasons why people
don't use data is because they don't trust the data or think it's irrelevant. Most decisions can't be
improved with inaccurate or irrelevant data. If decision-makers have a reason to suspect that the
data is either inaccurate or irrelevant, then it makes sense that they won't use the data. Another
reason might be fear. Perhaps, they had a bad experience with data. Perhaps, they had to
generate a forecast for an important decision and it didn't go well so they avoid situations where
that might happen again. Or perhaps, they fear that the data may tell them to take a course of
action that will be difficult or painful. Another reason why people might not use data is because
they are just wired differently. They're more right-brained. They have a set of talents that leads
them to be more artistic or linguistic and to focus less on numbers. Ironically, if someone presents
them with data and indicates that it comes from a regression analysis or something else that they
don't understand, they may appear to rely on data, when, really they're hoping that they can trust
the person who is just showing them the numbers. Many of the reasons people don't use data to
make decisions can be solved by proper training.

Why Do People Rely Too Much on Data? - Slide 15

Why do people rely too much on Data?

Insufficient personal experience

Addicted to Data
They worked for it

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 Don't realize it's inaccurate

Transcript

Now, let's turn to the other end of the spectrum, and consider why people may rely too much on
data. One reason people rely too much on data, is again, because of the organizational
architecture. In large organizations, the upper level managers may be far removed from the front
lines because they don't have time to be everywhere. They may not have had time to gain
enough experience to develop an intuitive feel for what's happening as a result of informal
signals. So, they let the data decide. While data is certainly an important part of keeping things in
control, it's hard to measure and report everything. In such situations, it may be important for
upper-level managers to complement the data with middle level managers who have experienced
and can interpret and respond to informal cues. Another reason why people rely too much on
data is because there's always more data. Perhaps, they use data because they love to learn.
Their inability to handle uncertainty or because they're just more left-brained. They have a set of
talents or hard wiring that leads them to dissect, summarize, and mine every data that they get a
hold of. Even if it's not relevant to the question at hand or if it won't have some meaningful benefit
to the organization. A potentially common reason why people rely too much on data is because
they invest effort to obtain the data. It seems that we value what we work for. If someone works
hard to get data, then they may use it to a degree that is beyond what it's worth. Another reason
why people rely too much on data is because they don't realize the limitations of the data that
they're using. For instance, as accountants we can appreciate the problems that may occur if
potential investors rely on unaudited financial information. Regardless of how much they analyze
the financial data if it's intentionally or unintentionally misrepresented then they may arrive at the
wrong conclusion. For many of these people who use data too much, it may be helpful to receive
training on how to optimally use data. As an accounting student, my guess, it's not informed, is
that most of you would be more likely to fall into using data too much. Regardless, the sweet spot
in terms of data usage is when data is used to inform decisions, but is not used so much that it
doesn't leave room for other input, such as intuition.

Lesson 1-1.4 Accountants' Role in Shaping How Data

Is Used
Media Player for Video

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Five Subdomains in Accounting - Slide 16

Financial Accounting

Managerial Accounting

Auditing

Taxes

Systems

Transcript

In this lecture, I want to review how accountants shape the way data is used. I will review
responsibilities from each of the five subdomains in accounting: financial accounting, managerial
accounting, auditing, taxes, and systems.

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Managerial Accounting - Slide 17

Transcript

Managerial accountants influence how accounting data is used to make internal decisions. For
example, they can influence the way budgets are created and communicated, so that they are
useful planning tools. They can also influence how and whether budget variances are used to
evaluate performance. Managerial accountants can encourage a participative budgeting
approach in which many people throughout the organization provide input on what the budget
numbers should be. When people have to work to gather data, they'll likely value it more and be
more encouraged to use it in their decisions. Managerial accountants can encourage the use of
relevant data by reporting costs internally in a way that is more likely to be helpful than if it were
reported the same way for external purposes. Specifically, when reporting cost data, the best
practices include the separation of variable costs from fixed costs, control costs from non-
controllable costs, and direct costs from indirect costs. There are many other ways that
managerial accountants can shape how data is used. For instance, they can influence how and
what data is collected, and aggregated for evaluating performance, how historical cost
information can be used to forecast future costs, and how to use cost information to optimize
production schedules, given a set of constraints resources.

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Financial Accounting - Slide 18

Transcript

Financial accountants influence external parties to use data to make investment, lending, or
regulatory decisions. They do so by creating reliable financial reports that follow a set of
standardized guidelines or Generally Accepted Accounting Principles also known as GAAP. They
summarize the many individual transactions to a brief historical snapshot for the organization as
a whole. They also present notes to the financial statements that show the key assumptions that
are made in the creation of the numbers on the financial statements. This allows external parties
such as regulators, customers, investors and creditors to evaluate a company's health relative to
competitors. Financial accountants also help prevent the overuse of data by working with others
like the CEO, auditors, legal counsel, marketing and manufacturing managers to provide softer
information in an annual report, which is known as the management discussion about the
organization as well as in an independent auditors report.

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Auditing - Slide 19

Transcript

Auditors influence the extent to which internal and external parties use data by ensuring that the
control procedures are being followed. They also ensure that the financial statements are
accurate. By using data, statistical sampling techniques, and risk models, they develop an
efficient plan regarding what evidence should be gathered, to most efficiently determine a
judgment about the firm's financial statements. Auditors gather evidence to support transactions
by examining the journal entries and supporting documentation. They ensure that the customers,
vendors, assets, and liabilities that are represented in the transactions exist, and that they are
valued correctly. Auditors then work with managers to correct weaknesses and errors, before
they give a final judgement. The financial statements are free from material misstatements.

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Taxes - Slide 20

Transcript

Tax accountants shape how data is used by organizations, as a result of their goal to reduce the
company's tax payments. Tax accountants may need to explain tax laws and regulations to
supervisors, to persuade them why one course of action would result in lower taxes than another
course of action. This is likely to result in a need for data about potential deductions. For
instance, if a manufacturing division is in a lower tax jurisdiction than a selling division then they
may want to set a transfer price that is as high as reasonably possible. This means that they
would need data about product costs, sales, and tax information.

Systems - Slide 21

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Transcript

Systems accountants provide guidance not only to the hardware and software that's used for
tracking accounting information, but also on the database organization and security. Their
decisions influence many of the details associated with how people interact with data, as well as
the availability of data. Some of their decisions may seem unimportant, but can have far reaching
influence on the use of data. For instance, by designing a quick simple way to enter data,
systems accountants can increase the likelihood that information will get recorded. They can also
make sure that the data is recorded accurately by establishing data entry validation techniques
like making sure phone numbers get recorded in the same format every time. They can also
influence the way people interact with data, by deciding what accounting software to use. As
companies grow, they transition from using spreadsheets, to desktop accounting systems, to
enterprise resource planning systems. These different software systems vary in their ability to
share data, in their timeliness of preparing the data, and in the type and quantity of data that they
provide.

Using Data in the Optimal Way - Slide 22

Using Data in the Optimal Way

Understanding Context
Competent
Good Team Members
Sharing Information
Hardware, Software, Measurement, and Access to Data

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Transcript

In short, each domain of accounting has a significant impact on how people use data.
Accountants have the potential to help people use data in an optimal way, not too much and not
too little. By one, understanding the context, and what information is relevant. Two, by being
competent in their knowledge of laws and regulations by truthfully following them, so that others
can trust that the data is accurate. Three, by working with others to come up with a narrative
about the data, like an auditors opinion, or management's discussion. Four, by acquiring and
communicating information, to explain decisions that are influenced by taxes. And five, by
influencing the type of hardware, software, and access to an organization's data.

Lesson 1-1.5 Data Analytics Tools: Spreadsheets vs.

Data Science Languages
Media Player for Video

Data Processing Tools - Slide 23

Forecasts

Text Mining

Cluster Analyses

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Transcript

Data processing tools have a significant impact on how accountants used data. Due to an
increase in the amount of available data as well as the ability to process that data, the demand
for additional data analyses from accountants and everyone in the organization is increasing.
Specifically, the demand for forecasts, text mining, and cluster analyses is increasing. There's
also a demand for visualizations that can be created from large amounts of data. In this video, we
will briefly compare and contrast two important classes of data analytic software: spreadsheets
and data science software like Python and R.

Why Do We Focus on Excel in this Course? - Slide 24

Why Do We Focus on Excel in this Course?

Familiarity
Excel has untapped potential
Visual understanding of what data science languages do

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Transcript

Data processing tools have a significant impact on how accountants used data. Due to an
increase in the amount of available data as well as the ability to process that data, the demand
for additional data analyses from accountants and everyone in the organization is increasing.
Specifically, the demand for forecasts, text mining, and cluster analyses is increasing. There's
also a demand for visualizations that can be created from large amounts of data. In this video, we
will briefly compare and contrast two important classes of data analytic software: spreadsheets
and data science software like Python and R. Spreadsheet software such as Excel has been an
essential part of accounting for at least 25 years. As you know, Excel allows users to categorize,
store, edit, analyze, and visualize data. A relative strength of Excel is that it allows users to
visually explore and create datasets. All a user needs to do is click on a cell and then enter the
desired content, which can be text values, numeric values, or even a calculation. Because Excel
is so widely used, it seems likely that it will continue to be an important part of the accountant's
toolkit. At the same time, it's also becoming quite clear that knowledge of how to use data
science software like Python, SQL, R, and Java are also required in today's accounting
environment. Data science software allows users to programmatically access, process, and
visualize large amounts of data. The keywords in that last statement are programmatically and
large. Programmatically means that you can set up a process to perform data functions with
simply the click of a button, or at regularly timed intervals, or based on certain conditions like
when the accounts receivable balance hits a certain threshold. While Excel power users know
how to programmatically interact with data using macros and Visual Basic Editor, Excel isn't built
to handle large datasets because of its emphasis on visually interacting with the data.

While it's important that you learn how to use data science software, we are going to save that for
another course. We're going to focus on Excel in this course for three reasons. First, Excel is
something you're probably familiar with already. So, rather than try to introduce data analytic
ideas and new software at the same time, we'll focus just on the data analytic ideas and to
introduce you to the data science languages in future courses. Second, Excel has a lot of
untapped potential. I hope that by the end of this course, you'll be able to do a lot more with excel
than what you started with when you started this course. In this course, you'll get some
experience using some of Excel's advanced features including pivot tables, data analysis add-in,
macros, and the visual basic environment. I want to mention a little bit more about the visual
basic environment. Don't worry. It won't be the main focus of this course, but I do think it's really
important. You'll have the opportunity to learn some basics with respect to creating code to
analyze data systematically. One aspect of creating code is how to debug it. This is important
because, in my experience, it can be unnecessarily frustrating when you can't figure out why
code doesn't work. Oftentimes, it's unnecessary to be frustrated because if you know how to use
some basic tools and approaches, then it's much easier to pinpoint the cause of the problem.
Third, I think that because of Excel's focus on the ability to interact with the data in a visual way,
it's a great way to really see how data is processed in machine learning algorithms. So, when we
get into some of the statistical analyses, you'll be able to visualize how it's working without having
to read a lot of Greek letters or learn additional mathematical notation.

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Tableau - Slide 25

Transcript

We will also introduce you to Tableau in this course. Visualizations are very helpful for exploring
relationships in the data. A single well-designed chart can quickly communicate trends,
correlations, and anomalies, in a way that requires relatively little processing power. Several well-
designed charts that are linked together and are interactive allow a user to explore relationships
in the data, from both a global level as well as after drilling down to a smaller subset of the data.
These charts can be combined to visually communicate a story.

Tableau is a powerful visualization tool that allows users to explore data and communicate a
story. Tableau can also handle large data sets and can be used for combining and refreshing
datasets. As you probably already know, once you start exploring data, it inevitably leads to more
questions. At some point, you'll say to yourself, "If only I also knew how sales revenue related to
weather patterns." To explore the relationship between sales and weather, you'll probably need to
combine data from two different sources and match it up by date and location. There's a good
chance that you'll want to explore that relationship for many locations. Perhaps, many products
and over many time periods. There's also a good chance that you'll want to keep that data up to
date so that you can see the most recent history. As you will learn, Tableau is a powerful tool that
can help you accomplish these activities. It will also introduce you to some visualizations that
may be new to you and that aren't available in Excel. In short, the principles that you learn in this
class while focusing on Excel and Tableau should help lay a foundation that will help you develop
more advanced data analytic skills.

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 Lesson 1-2 Introduction to Accountancy
Analytics

Lesson 1-2.1 Advanced Data Analytics in Managerial

Accounting Overview
Media Player for Video

The Morrow Plot - Slide 26

This slide contains an image of the Morrow Plot.

Transcript

I'm standing at a National Historic Landmark, The Morrow Plots, which are located in-between
the underground Undergraduate Library and the Institute of Genomic Biology. These plots are the
oldest experimental agricultural fields in continuous use. The oldest domain of accounting, which
happens to be in continuous use, is managerial accounting.

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Data Analytics in Managerial Accounting - Slide 27

Transcript

Managerial accounting is a domain in which accountants prepare and to use data for internal
decision-making purposes. In many ways, managerial accounting could be considered analytic
accounting. I'd like to introduce you to a couple of ways in which advanced data analytics skills
will help you make better internal decisions. One way in which data and advanced data skills can
help managerial accountants, is keeping costs and control.

Bam Bams BBQ - Slide 28

This slide contains an image of Bam Bams BBQ.

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Transcript

Bam Bams Barbecue is a tasty restaurant located in Orem, Utah. Although the restaurant isn't
located in the South, there food is good enough that, on occasion, there are hired to feed the
New Orleans Saints. Their most important entrees include a variety of meats: brisket, pork,
turkey, ribs, sausage, and chopped beef. Meat is one of their most expensive ingredients in their
entrees. Not only does it cost a lot, but it takes a lot of time to prepare so that it tastes just right.
So, it also requires a lot of labor costs. So, Bam Bams implements standards to keep the costs of
meat in control.

They also measure how much meat they start a day with, how much is prepared, and how much
they end with so that they can see how much meat was used. When a customer buys an entree,
say a sandwich, the employees at Bam Bams are supposed to use a standard amount of meat. If
the employee doesn't put enough meat on the sandwich, then customers may be dissatisfied. On
the other hand, if employees put too much meat on the sandwich, then the profit margin
decreases and Bam Bams' shareholders are dissatisfied. Combining point of sale data with
inventory data and data about standard quantities of meat can calculate variances to help identify
if the employees are using the right amount of meat. Variance information can be criticized for
being too old to make a difference. However, if you know how to systematically fetch data at
regular intervals and combine data, perhaps from, say, a point of sale system, spreadsheets, and
QuickBooks, then you could help set up a process to calculate and communicate variances on a
daily basis. This is just the start. If you can gather the names of the employees who are
responsible for serving the food, then you can also quantify the extent to which each employee is
serving the right amount of meat, helping managers to identify employees who may need
additional training. While there may be a way to do that in Excel, I'm pretty sure that you'll be
more efficient doing it in Python or R, because those languages have functions that allow you to
connect to online resources, process large amounts of data, and share the results online.

Creating Cost Pools and Identifying Cost Drivers -

Slide 29

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Transcript

Another way in which advanced data analytics skills could serve a managerial accountant is in
the area of allocating indirect costs. Indirect costs are the costs that are not easily traced. So they
are usually allocated in a fair systematic way. For instance, indirect costs could be allocated using
direct labor hours or direct labor costs, number of parts, machine hours, and the list can go on
and on. There are many limitations on what activities you can use to allocate indirect costs.
Ideally though, indirect costs should be allocated using an activity that is correlated to the amount
of the costs. In large organizations that have lots of indirect costs, accountants may split the
costs into a number of different cost pools, and then allocate those costs using a variety of
activities.

The detailed systematic approach for doing this is known as activity-based costing or ABC. Let us
consider a car manufacturer Tesla, for example. The indirect costs associated with manufacturing
a car may include the cost of electricity that is used to run the machines and the assembly plant,
the cost of shipping raw materials to the assembly plant, the cost of plant supervisors, the cost of
designing a new model, the cost of advertising a new car. There are probably hundreds of other
costs. They're also likely to be hundreds, if not thousands, of activities that can cause those cost
to be incurred. Ideally, each of those costs should be matched with an activity that is highly
correlated with the costs. If the data exists, say, in the ERP system and you know how to fetch
the data and match it all up to the right time period, then you can set up a process to look for
costs and activities that are highly correlated to form cost pools and select the best activities for
assigning costs to the cost pools. If the data doesn't exist and you have the curiosity, motivation,
and capability, then who knows? You may be the accountant that uses image recognition to come
up with an efficient way to gather activity data that isn't currently being measured. These are just
two examples from the managerial accounting realm.

Advanced Data Analytics Skills - Slide 30

Cost behavior estimation

Validating strategy map in balanced scorecard

Max value of implementing training

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Monte Carlo budget simulations

Transcript

There are many other ways in which advanced data analytics skills can extend the analytics that
managerial accountants already perform. Briefly, here are a few other ideas: combining historical
cost data with external data-sets to estimate cost behavior; evaluating the relationship among
performance measures in an organization's balanced scorecard and strategy map; using sales
and cost data to estimate how much it would be worth to implement a new training program;
finally, using simulations to create budgets.

Lesson 1-2.2 Advanced Data Analytics in Auditing

Overview
Media Player for Video

Business Instructional Facility - Slide 31

This slide shows the professor is standing inside the Business Instructional Facility at the
University of Illinois.

Transcript

I'm standing in the Business Instructional Facility. It's home to numerous classrooms, a career
development center, and a recruiting center for the Business School. Auditing is a discipline that
is taught in the School of Accountancy.

Auditing is a domain within accounting that focuses on whether the control procedures are being
followed and whether the reported financial statements are accurate. An auditor provides

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assurance to internal and external stakeholders. For instance, an internal auditor can provide
assurance to managers that the procedures for making payments are being followed. An external
or independent auditor can provide assurance to regulators, investors, and creditors that the way
a form is represented on the financial statements, in the 10-K report, is free of material
misstatements. I'd like to give you a couple of examples of how advanced analytics can provide
more efficient and effective audits. University, colleges, and departments like the accountancy
department here in the Gies College of Business often make funds available to employees
through purchase cards. Purchase cards are basically debit or credit cards that are tied to an
account where funds are stored. As you can imagine, to prevent spending on unauthorized
purchases, there are lots of rules that employees are supposed to follow whenever they buy
something with the department's purchase card. For instance, and a not for profit university, the
person who uses the card is supposed to make sure that sales taxes are not assessed. There's
probably a monthly spending limit for card holders as well.

There's a list of items that should not be purchased, such as alcohol or gifts, and purchases
should not be made from institutions owned by university employee. The list goes on and on. You
might be able to imagine that for a large university like the University of Illinois that employs over
10,000 people, that over a span of several years, there can be millions of transactions.
Historically, an internal audit team would sample some of the transactions and then make
inferences about how often and to what extent the procedures are being followed. Now, auditors
are expected to evaluate all the transactions rather than just a sample and look for anything that
is inconsistent with one of the control procedures.

Drawbacks of Excel - Slide 32

Max rows in Excel = 1,048,576 = 2^20

Repetitive

Importing data and sharing results

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Transcript

This would be very time consuming to do in a spreadsheet software like Excel for a few reasons.
First, Excel isn't built to handle more than about a million rows of data. So it'd be extremely time-
consuming because you'd have to split up the data into different files and then analyze each file
separately. Second, unless you know how to use Visual Basic, you'd have to repeat many of the
processes. This would also make it time-consuming as well as tedious. Third, it's relatively
difficult to get the data into Excel, and then communicate the results. While pivot tables in Excel
are pretty great, it appears to be more difficult to read data into Excel and communicate the
results than using data analytics software.

Using Visualizations to Identify Relationships - Slide

33

Transcript

Someone who has advanced analytic experience can read a script that can extract the data from
the purchase card provider system and load it into the data science software platform, process
the data to check for violations of the control procedures and then summarize those violations
and communicate the results using a dashboard or a file. All of these processes can easily be
communicated and shared with others who may want to change the script a little or check it to
ensure that the processes are being done correctly.

Visualizations are very helpful for exploring relationships in the data. A single well-designed chart
can quickly communicate trends, correlations, and anomalies in a way that requires relatively little
processing power. Several well-designed charts that are linked together and are interactive
allows an auditor to explore the relationships in the data at a global level as well as filter down to
the data and explore at a more local level. Let's use the purchase card example again to illustrate
how interrelated charts and filters can help an auditor explore the data. We'll assume that another
control is that all purchases need to be delivered to university addresses. Obtaining coordinates
for addresses would allow an auditor to create a map that shows where orders are being

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delivered, making it really easy to observe if orders are being delivered to non-campus locations.
One link table or chart could summarize the transactions by employee, while another could
summarize the transactions by department. Using filters, built into the map, would allow auditors
to quickly identify which cardholders and departments are allowing deliveries to non-campus
locations. Moreover, this can be easily used by the auditors to communicate to those individuals
and departments the pattern that is being observed. These are just two examples from the
auditing realm. There are many other applications for advanced analytics and visualizations,
many of which have yet to be considered. Your domain knowledge combined with the ability to
fetch, clean, combine, and process data, and your ability to communicate the results in a simple
way can lead to more effective audits.

Lesson 1-2.3 Advanced Data Analytics in Financial

Accounting Overview
Media Player for Video

Memorial Stadium - Slide 34

This slide contains a photo of Memorial Stadium.

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Transcript

I'm standing in front of the memorial stadium, next to the statue of Red Grange, who was a
famous football player here. This stadium, in my opinion, is one of the most distinctive stadiums
in the country. The thing that I like the most is the Colonnade of paired limestone Roman Doric
columns which represent the University of Illinois students who perished during World War I.
Twenty thousand students, alumni, and friends of the university contributed about $1.7 million to
fund the construction of the stadium. Now, that was a long time ago. In today's terms, that would
be worth about $25 million which is still a bargain for this type of Stadium. However, anytime an
institution spends that much money, I'm pretty sure that governing and regulatory bodies, such as
the Illinois Board of Higher Education would be interested in knowing, at least a summary, of the
expenses required to fund this project.

Creating More Value from Financial Data - Slide 35

Creating more value from financial data

Finding and resolving inaccuracies

Data entry validation
Improved estimates

Transcript

Financial accounting is a domain of accounting that focuses on summarizing accounting

transactions during a period of time for users external to an organization like investors, creditors,
and regulators. The culmination of summarizing the historical transactions is a set of financial
statements, the income statement, the balance sheet, the statement of cash flows, and the
statement of shareholders equity. They follow a set of guidelines called Generally Accepted
Accounting Principles also known as GAAP. So, the information is comparable between
companies. Financial accountants are also expected to provide strategic guidance.

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I'd like to share with you a couple of ways in which knowledge of advanced analytic technologies
can help accountants who prepare and communicate those reports. Broadly speaking,
accountants can identify ways to create more value from financial data. This may be in the form
of discovering inaccuracies in journal entries, or discovering them more efficiently. They can then
suggest novel approaches to resolving the source of those inaccuracies, like an improved way for
validating the data before it can be entered. It may also be in the form of improved estimates
such as bad debt expense, impairment of assets, or the useful life of depreciable assets. For
instance, improvements in estimates of bad debt expense can be achieved by using a greater
variety of data about the circumstances surrounding customers purchase of products. Perhaps,
analyses will identify times of the year weather patterns, market basket size, or variety, or
demographic data that is highly related to customers not paying for goods that are purchased.

Process Data More Efficiently - Slide 36

Process data more efficiently

Pulling data from ERP and spreadsheets

Communicating data more effectively

Transcript

Another way to create more value from financial data is to use it more efficiently. Gaining and
understanding in data analytic technologies can help financial accountants automate mundane
tasks such as pulling information from their company's ERP system and spreadsheet files and
then combining that information. For instance, rather than manually opening multiple Excel files
and copying and pasting the information, a script can be created to do that with the click of a
button. Similarly, rather than manually downloading data from the ERP, a script can be created,
and scheduled to run at regular intervals so that the data is automatically downloaded.
Knowledge of advanced analytic technologies will also help accountants know how to effectively
communicate it to others.

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Comparing Across Companies - Slide 37

Transcript

Investors and creditors often combine the data from financial statements with data from other
sources to decide how to invest in a company. Financial accountants such as CFOs, often work
with analysts and investors to help convey the financial help of a company. CFOs may also be
investors in the sense that they oversee how their company's funds are invested. One way that
investors and creditors evaluate companies is based on their performance relative to other
companies in the same industries. Thus, if you're the CFO for Tesla or accountant that helps the
CFO with their duties, you probably want to be able to explain how your performance compares
to other companies in the auto industry like General Motors, Ford, Toyota, Honda, etc.

You would also probably want to be able to understand how accounting information affects how
shares of Tesla stock are traded. Let's consider how a financial accountant with advanced data
skills can facilitate the comparison of Tesla to its competitors. In the United States, all public
companies must file annual reports to the Securities and Exchange Commission. These reports
include audited financial statements. While there is a good amount of standardization, there are
still some things that make it hard to compare. For instance, the names of the companies use for
the costs associated with the inventory that they sell, could be called cost of goods sold, cost of
revenue, cost of sales, cost of auto cells, etc. Similarly, companies can call net income net loss if
they haven't been profitable over several consecutive years. Thus, when trying to systematically
gather information from historical reports for a lot of companies across many years, it would be a
time-consuming task to manually match up the line items.

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eXtensible Business Reporting Language (XBRL ) -
Slide 38

Transcript

For this reason, the SEC has required public companies to file their reports using a standardized
set of tags. These tags and the hierarchy that accompanies them are known as Extensible
Business Reporting Language, or XBRL. Under XBRL, cost of goods sold is tagged as US
hyphen GAAP colon cost of goods sold, and that income is tagged as US hyphen GAAP colon
net income loss. Regardless of the title that's used for the line on the income statement, these
XBRL tags will be used, and will be the same. It's actually a little bit more complicated than that,
but that's the main idea. So a financial accountant who understands XBRL can provide useful
direction for gathering data across companies and be better prepared to communicate relative
performance with investors, creditors, and regulators. These are just two ideas about how
advanced analytics and visualizations can be helpful for financial accountants.

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Benefits of Advanced Analytics and Visualizations -
Slide 39

Interactive dashboards

More efficient collection of data for adjusting / closing entries

Transcript

A couple of other ideas include, one, creating interactive KPI dashboards for communicating to
the board of directors and, two, creating information collecting processes for speeding up the
collection of data for adjusting and closing entries. You may be the one to find creative new
applications for using data gathering and analysis techniques to help improve the transparency of
your company's financial help.

Lesson 1-2.4 Advanced Data Analytics in Taxes

Overview
Media Player for Video

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McFarland Bell Tower - Slide 40

This slide contains a photo of the McFarland Bell Tower.

Transcript

I'm standing here on the south end of the University of Illinois campus in Urbana-Champaign, in
front of this beautiful McFarland Bell Tower. This campus is huge and covers over 6,370 acres
and houses over 651 buildings. As a state institution, the university is exempt from paying taxes.
However, it is not exempt from teaching about taxes. Tax accountants not only focused on
preparing tax returns, they also focus on providing recommendations for how firms can lower
their overall tax liability. I'd like to share with you one way in which data analytic techniques and
additional data can help tax accountants provide more value.

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Benefit of Tax Reporting - Slide 41

Reduce the likelihood of an audit.

Transcript

Tax reporting is not always black and white. If the IRS suspects that your company's taxable
income is lower than expected, they may select your company to be audited. Audits from the IRS
can be costly so tax accountants should also be familiar with courses of action that will reduce
the likelihood of being audited. If you've ever used software to file your own income taxes, you
may notice that they tell you the likelihood that you'll be audited. This information is likely the
result of information that the software company tracks on its own. This is a great example of how
advanced data techniques are already being used by tax accountants. What if you don't have
information on individual tax returns?

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Screenshot of IRS Webpage - Slide 42

This slide contains a screenshot of the IRS SOI Tax Stats Webpage.

Transcript

The IRS maintains a public database on the statistics of income in which they report statistical
tables for millions of tax returns. Tax return information is broken down in lots of ways such as by
entity, for example, individual, business, or estate and gift. It's also broken down by income,
deductions, taxes, and credits. The IRS also reports the number and type of audits, the
percentage of audits that resulted in no change, and additional recommended tax per return. A
tax accountant can use this information to assess the likelihood of an audit and then plan
accordingly.

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Other Types of Useful Data (1 of 2) - Slide 43

Other types of data that could be useful:

Executive compensation

Census data

Area deprivation index

Transcript

Tax accountants may also benefit from other datasets that aren't created for tax purposes that
may prove insightful. For example, data about executive compensation from other companies in
the same industry can be harvested from 10K reports. This data could be helpful when designing
executive compensation plans and potential corporate tax issues. Another example, census data
reports information by zip code about household income, number of single-family homes, number
of homes built in each decade, number of rooms in homes, number of vehicles available, and a
plethora of other information. A third example, Area Deprivation Index that reports information by
neighborhood, including income disparity, amount of education, unemployment, and single-parent
homes.

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Other Types of Useful Data (2 of 2) - Slide 44

Transcript

To the extent that tax accountants gather additional data, they could also add value by
recognizing other applications in the company for which the data could be used and then share
that information with those groups. For instance, the marketing department may also be
interested in knowing demographic information so that they know how to focus their marketing
efforts on social media. Gathering data and analyzing it to help identify the likelihood of an audit
is just one of the many ways in which tax accountants can benefit from advanced data
technologies. They may also provide leadership across the organization as a whole in sharing
data. In short, having an understanding of what data is useful and how it can be used can have a
significant impact on improving tax accountants' contributions to their company.

Lesson 1-2.5 Advanced Data Analytics in Systems

Accounting Overview
Media Player for Video

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National Center for Supercomputing Applications -
Slide 45

This slide contains a photo of the National Center for Supercomputing Applications.

Transcript

I'm standing in front of the National Center for Supercomputing Applications or NCSA which is
home to the fastest supercomputer on a university campus. The NCSA provides leading-edge,
computation, data storage, and data visualization capabilities. While supercomputers aren't used
very often in the accounting domain, computing is an integral part of the accounting profession.

Functions of Systems accountants - Slide 46

49
 The extent to which data is recorded
Data accuracy
Data protection
Data availability

Transcript

And systems accountants focus a lot on this aspect of accounting. Systems accountants
influence the hardware and software infrastructure that supports an organization's accounting
system. Their decisions also influence the extent to which data is recorded, how accurately data
is recorded, the extent to which data is protected from unintentional changes or loss, and the
availability of data to those who need to use it. Thus, if a system's accountant does their job well,
people who use the data will trust that the data has been entered correctly and protected from
changes. People will also know where to find the data, and the right people will have access to
the data. If data is quick and easy to record, then more useful data can be made available. I'd like
to mention two ways in which a systems accountant's knowledge of data technologies can
influence the availability of data.

Image Recognition - Slide 47

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Transcript

Image recognition software has many applications. Here's one example, I did some work for a
solar company that suspected it was occasionally being overcharged by a supplier of electrical
components. These electrical components were purchased by a lot of different people. So, these
people weren't familiar with what price to expect. After the solar company made a purchase, the
electrical components supplier would e-mail a scanned copy of an invoice to the solar company.
Because the invoices were scanned, the solar company couldn't tabulate them easily. However,
an accountant suspected what was happening. Using optical character recognition, we set up a
process to fetch invoices from e-mails, convert the invoice contents to data, and then parse the
data into line items and prices that were aggregated into a CSV file. From that point, they used
Excel to filter the data and identify invoices for which they had been overcharged for the electrical
components. The solar company was able to take those invoices and go back to the supplier to
get thousands of dollars in refunds. This is just one example of how using image recognition
made it easy to create a useful dataset from accounting data that wasn't previously easily
accessible.

There are so many potential uses for image recognition technology to be used as a way to gather
data in a simpler way. For instance, it could be used by a car rental company to evaluate whether
a car was returned in the same condition as it was in before it was rented by a customer. A
somewhat related area of technology that can lead to advancements in data entry is known as
the Internet of things. This refers to the ability for technology to be embedded and connected via
the Internet. Sensors in cars that keep track of driver information could be used by insurance
companies, car rental companies, or a fleet manager. These sensors can gather information
about how quickly a driver turns a corner, or if a blinker was used before turning a corner, or if a
driver ran over a pothole. This information could then be used to establish insurance premiums,
rental car premiums, driving privileges, or additional fees for the drivers. It could also be
combined with tire rotation data, oil change data, and fuel refills to predict future costs. These are
just two ways in which data and data technologies can be used by systems accountants.
Systems accountants who are familiar with data technologies can help identify ways to gather
valuable data and to make it available to the right people, and thus, have a far-reaching impact
on how data is used to increase organizational performance.

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 Module 1 Wrap-up

Module 1 Conclusion
Media Player for Video

Takeaways - Slide 48

Recognize where the accounting profession has been and where it's going

Critique the accountant's role in helping organizations use data

Recognize how data and analytics can be used to extend different accounting domains

Transcript

I hope that, by now, you're better able to recognize where the accounting profession has been
and where it's going, critique the accountant's role in helping organizations analyze data, and
recognize how data and analytics can be used to extend different accounting domains. Advances
in machine learning, data gathering, data storage, and communications, are all important and
exciting. It's true that many jobs are being taken over by robots or software. However, I think the
bright side to that is humans don't have to do the mundane tasks. Instead, our time can be freed
up so that we get to spend it doing things that are more interesting, require more judgment, and
are more fulfilling. Also, in spite of all the technological advances, humans are still more
important than data and robots.

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TEDx Talk - Slide 49

Curiosity, empathy, imagination, leadership, communication, creativity

From TEDx talk in 2017 by Jose Miguel Cansado

Transcript

While robots may be able to process large amounts of data, humans bring things that robots don't
such as curiosity, empathy, imagination, leadership, communication, and creativity. It's been said
that a fool with a tool is still a fool. As you learn more about data, remember that data alone isn't
useful. Just because you have big data doesn't mean you can solve problems. It takes curiosity
and empathy to care enough about problems. It takes creativity to know how to use data and
technology to solve problems. It takes imagination to consider new frontiers that haven't been
thought of before. And it takes leadership and communication to motivate people to act.

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Table of Contents
1. Preface
2. Module 1 Introduction to Accounting Data Analytics and Visualization
1. Course Overview
1. Course Introduction
2. Module 1 Overview
1. Module 1 Introduction
3. Lesson 1-1 Introduction to Accountancy Analytics
1. Lesson 1-1.1 History and Future of Accounting
2. Lesson 1-1.2 The Importance of Data and Analytics in Accounting
3. Lesson 1-1.3 Humans' Relationship with Data
4. Lesson 1-1.4 Accountants' Role in Shaping How Data Is Used
5. Lesson 1-1.5 Data Analytics Tools: Spreadsheets vs. Data Science
Languages
4. Lesson 1-2 Introduction to Accountancy Analytics
1. Lesson 1-2.1 Advanced Data Analytics in Managerial Accounting Overview
2. Lesson 1-2.2 Advanced Data Analytics in Auditing Overview
3. Lesson 1-2.3 Advanced Data Analytics in Financial Accounting Overview
4. Lesson 1-2.4 Advanced Data Analytics in Taxes Overview
5. Lesson 1-2.5 Advanced Data Analytics in Systems Accounting Overview
5. Module 1 Wrap-up
1. Module 1 Conclusion

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