Professor Stefano Grazioli specializes in the design and management of information systems. His courses offered through the M.S. in Accounting Program expose students to IT by providing them with hands-on data management and analytics experience. His courses encourage students to question how business information is organized, accessed and manipulated for data analysis.
Learn more about the importance of IT in accounting and how Grazioli’s courses help prepare students for the changing profession.
Why should accountants care about data management and analytics?
Grazioli identifies five aspects of data that concern accountants. The first is location. Data is no longer stored in a hard copy form to be faxed to users when needed. Data is either contained in local databases or remote databases, like in the cloud. So, knowing how to access that data and how it’s stored and managed is just as important for accountants as knowing what that data means.
The second concern Grazioli identifies is data quality. Users of data need quality information to make decisions. However, what defines quality information is changing, especially in audits. The impact of transcription errors, for example, is often considered by auditors when determining whether financial information is materially misrepresented. Formerly, that involved estimating the number of invoices recorded improperly or not recorded at all because employees couldn’t read the handwritten amounts. Now, auditors have to consider new errors, like extra spaces in the recorded name of a supplier, that could lead to an understatement of accounts payable.
The third concern is security. The accounting profession is highly focused on designing controls and assessing the effectiveness of controls currently in place. IT adds the complexity of security to this. Accountants now have to consider aspects such as encryption, access privileges, and passwords.
The fourth concern is sampling. Formerly, it was impossible for auditors to read through all documents to search for errors, leading to frequent sampling, but databases have changed the way checks and controls are performed. Databases allow auditors to reach more information, reducing the need to sample and the impact of sampling errors. In some instances, sampling can even be increased to 100% of the data. As a result, auditors are able to assess fraud with more clarity and precision.
The fifth concern Grazioli identifies is productivity. It takes a lot of work and study to create a good accountant, which is why hiring an accountant is expensive. Because of these costs, there is pressure to increase the productivity of accountants. Productivity is typically increased through automation, and in the case of accounting, automation is IT.
How is the accounting profession changing alongside data?
Grazioli recognizes that many industries are currently undergoing a digital transformation. Facebook and Google have left people demanding fast, mobile service. Companies are adopting to meet those demands by increasing their use of information technology. IT allows accountants to present the same reliable information to their clients at increased efficiency, so requests can be met without compromising the integrity and reputation of the profession. Thus, accountants today need to know how data is stored, managed, and accessed so they can perform analysis, which is the goal of the database management and analytics course offered to all M.S. in Accounting students at UVA.
What are the concerns of using data analytics to solve accounting problems?
According to Grazioli, ethics will always be an important concern in accounting. In the past, ethics primarily centered around fraud, and that’s a problem that technology can’t solve. Technology might make it easier to catch fraud or identify the party responsible for the data manipulation; however, it can’t completely change or discourage the desire to commit fraudulent activity in the first place.
Now Grazioli recognizes that there’s additional ethical concerns relating to privacy. Many companies don’t fully reveal how the data collected from users, consumers, and employees is used. As a result, it’s difficult to assess whether data is used fairly. This is especially true in circumstances where companies make large amounts of money from the data they collect. The power that any one company has over collected data is something that requires consideration. Some people aren’t concerned with the fact that companies know information about their consumer preferences, for example, but are concerned with who has access to that information. Thus, before data analytics becomes fully streamlined in the accounting profession, guidelines are necessary. The guidelines may be a company-wide policy or they may be an addition to the current standards accountants are required to follow.
Grazioli’s courses give students the opportunity to improve their technical skills and explore issues relating to data quality, security, privacy, and innovation within the field of information technology. Students get the opportunity to consider the implications of the technology they’re learning about on public safety and the accounting profession.