A revolution in accounting: from big data to technology

On Wednesday evening, 2 October 2019, Professor Vernon Richardson, holder of the W. Glezen Chair of Accounting, University of Arkansas, gave the 80^th Annual University of Melbourne-CPA Australia Research Lecture, the oldest continuous lecture series in the University’s Calendar and the world’s longest-running annual lecture in the accounting discipline.

Delivered to a large audience in the University’s Carrillo Gantner Theatre, the lecture’s exceptional provenance was reinforced by the presence of 94-year-old Mrs Win Leslie, daughter of Sir Alec Fitzgerald who gave the inaugural lecture in 1940.

The starting point of the lecture was that while textbooks had changed little since 1987, when Professor Richardson took his first undergraduate accounting subject, there had been exponential increases in the volume of data and the power of computers. The theme of the lecture, captured in its main title – Act or be Acted Upon – was how big data, data analytics, and computerisation are revolutionising accounting. These changes are already impacting on lower-level data collection and processing tasks which are increasingly being undertaken by machines, with the scope for machine-learning far from exhausted.  In recent years, in the US accounting labour-market, this change has been manifested in CPA firms recruiting declining proportions of graduates with Bachelor’s- and Master’s-level accounting degrees and increasing proportions of non-accounting graduates.

If accountants are to strengthen their competitive advantage in this changing environment, they must apply data analytics to higher-level and non-routine tasks, encompassing measurement, verification, interpretation and communication.  Among the copious examples provided by Professor Richardson were: improved doubtful debts estimates obtained from richer profiles of slow payers; enhanced detection of variances and outliers for audit purpose; more-relevant phenomena included in balanced scorecards and increased capacity to identify cost-drivers for activity-based-costing purposes.

However, these developments are not inevitable and pose a challenge to accounting educators and researchers, captured in the lecture’s sub-title: revolutionising accounting training using data analytics.  Professor Richardson’s strong message to accounting educators was that there had to be a revolution in teaching materials and methods, desirably with students confronted with data at all stages and in all subjects.  However, he also indicated that this transition could increase student workloads.   Accounting research would also have to keep up with this evolution and he provided anecdotal evidence that this was already occurring.

After the chair for the evening, Professor Naomi Soderstrom, presented the University medal to Professor Richardson, Ms Clare Lezaja, President of the Victorian Division of CPA Australia, closed proceedings by complimenting the speaker and thanking the audience for their attendance.