Data Analytics for Accounting.

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 page i

Data Analytics for Accounting

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 page ii

DATA ANALYTICS FOR ACCOUNTING

Published by McGrawHill LLC, 1325 Avenue of the Americas, New York,

NY 10019. Copyright ©2023 by McGrawHill LLC. All rights reserved.
Printed in the United States of America. No part of this publication may be
reproduced or distributed in any form or by any means, or stored in a
database or retrieval system, without the prior written consent of
McGrawHill LLC, including, but not limited to, in any network or other
electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be

available to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 LWI 27 26 25 24 23 22

ISBN 978-1-265-09445-4
MHID 1-265-09445-4

Cover Image: sasirin pamai/Shutterstock

All credits appearing on page or at the end of the book are considered to be
an extension of the copyright page.

The Internet addresses listed in the text were accurate at the time of
publication. The inclusion of a website does not indicate an endorsement by
the authors or McGraw Hill LLC, and McGraw Hill LLC does not
guarantee the accuracy of the information presented at these sites.

mheducation.com/highered
 page iii

Dedications
My wonderful daughter, Rachel, for your constant love,
encouragement, and support. You always make me laugh and
smile!

—Vern Richardson

To my three wonderful little Teeter tots, who keep me on my

toes.

—Ryan Teeter

To the Mustache Running Club. Over many miles you all have
learned more about accounting data analytics than you ever
hoped for! Thanks for all of your support—on and off the trail.

—Katie Terrell
 page iv

Preface
Data Analytics is changing the business world—data simply surround us!
So many data are available to businesses about each of us—how we shop,
what we read, what we buy, what music we listen to, where we travel,
whom we trust, where we invest our time and money, and so on.
Accountants create value by addressing fundamental business and
accounting questions using Data Analytics.
All accountants must develop data analytic skills to address the needs of
the profession in the future—it is increasingly required of new hires and old
hands. Data Analytics for Accounting, 3e recognizes that accountants don’t
need to become data scientists—they may never need to build a data
repository or do the real hardcore Data Analytics or learn how to program a
computer to do machine learning. However, there are seven skills that
analytic-minded accountants must have to be prepared for a data-filled
world, including:

1. Developed analytics mindset—know when and how Data Analytics

can address business questions.
2. Data scrubbing and data preparation—comprehend the process needed
to clean and prepare the data before analysis.
3. Data quality—recognize what is meant by data quality, be it
completeness, reliability, or validity.
4. Descriptive data analysis—perform basic analysis to understand the
quality of the underlying data and their ability to address the business
question.
 5. Data analysis through data manipulation—demonstrate ability to sort,
rearrange, merge, and reconfigure data in a manner that allows
enhanced analysis. This may include diagnostic, predictive, or
prescriptive analytics to appropriately analyze the data.
6. Statistical data analysis competency—identify and implement an
approach that will use statistical data analysis to draw conclusions and
make recommendations on a timely basis.
7. Data visualization and data reporting—report results of analysis in an
accessible way to each varied decision maker and his or her specific
needs.

Consistent with these skills, it’s important to recognize that Data

Analytics is an iterative process. The process begins by identifying business
questions that can be addressed with data, extracting and testing the data,
refining our testing, and finally, communicating those findings to
management. Data Analytics for Accounting, 3e describes this process by
relying on an established Data Analytics model called the IMPACT cycle:1

1. Identify the questions.

2. Master the data.
3. Perform test plan.
4. Address and refine results.
5. Communicate insights.
6. Track outcomes.

page v
Adapted from Win with Advanced Business Analytics: Creating Business Value from Your
Data, by Jean Paul Isson and Jesse S. Harriott.

The IMPACT cycle is described in the first four chapters, and then the
process is illustrated in auditing, managerial accounting, financial
accounting, and taxes in Chapters 5 through 9. In response to instructor
feedback, Data Analytics for Accounting, 3e now also includes two new
project chapters, giving students a chance to practice the full IMPACT
model with multiple labs that build on one another.
Data Analytics for Accounting, 3e emphasizes hands-on practice with
real-world data. Students are provided with hands-on instruction (e.g.,
click-by-click instructions, screenshots, etc.) on datasets within the chapter;
within the end-of-chapter materials; and in the labs at the end of each
chapter. Throughout the text, students identify questions, extract and
download data, perform testing, and then communicate the results of that
testing.
The use of real-world data is highlighted by using data from Avalara,
LendingClub, College Scorecard, Dillard’s, the State of Oklahoma, as
well as other data from our labs. In particular, we emphasize the rich data
from Dillard’s sales transactions that we use in more than 15 of the labs
throughout the text (including Chapter 11).
Data Analytics for Accounting, 3e also emphasizes the various data
analysis tools students will use throughout the rest of their career around
two tracks—the Microsoft track (Excel, Power BI) and a Tableau track
(Tableau Prep and Tableau Desktop—available with free student license).
Using multiple tools allows students to learn which tool is best suited for
the necessary data analysis, data visualization, and communication of the
insights gained—for example, which tool is easiest for internal controls
testing, which is best for analysis or querying (using SQL) big datasets,
which is best for data visualizations, and so on.

1Jean Paul Isson and Jesse S. Harriott, Win with Advanced Business Analytics: Creating
Business Value from Your Data (Hoboken, NJ: Wiley, 2013).
 page vi

About the Authors

Vernon J. Richardson

Vernon J. Richardson is a Distinguished Professor of Accounting and the

G. William Glezen Chair in the Sam M. Walton College of Business at the
University of Arkansas and a Visiting Professor at Baruch College. He
received his BS, Master of Accountancy, and MBA from Brigham Young
University and a PhD in accounting from the University of Illinois at
Urbana–Champaign. He has taught students at the University of Arkansas,
Baruch College, University of Illinois, Brigham Young University, Aarhus
University, and University of Kansas, and internationally at the China
Europe International Business School (Shanghai), Xi’an Jiaotong Liverpool
University, Chinese University of Hong Kong–Shenzhen, and the
University of Technology Sydney.
Dr. Richardson is a member of the American Accounting Association.
He has served as president of the American Accounting Association
Information Systems section. He previously served as an editor of The
Accounting Review and is currently an editor at Accounting Horizons. He
has published articles in The Accounting Review, Journal of Information
Systems, Journal of Accounting and Economics, Contemporary Accounting
Research, MIS Quarterly, International Journal of Accounting Information
Systems, Journal of Management Information Systems, Journal of
Operations Management, and Journal of Marketing. Dr. Richardson is also
an author of McGraw Hill’s Accounting Information Systems and
Introduction to Data Analytics for Accounting textbooks.

Ryan A. Teeter

Ryan A. Teeter is a Clinical Associate Professor of Accounting in the Katz

Graduate School of Business at the University of Pittsburgh. He teaches
accounting information systems, auditing, and accounting data analytics.
Prior to receiving his PhD in accounting information systems from Rutgers
University, he worked at Google in Mountain View, California. He has
since worked with internal audit organizations at Siemens, Procter &
Gamble, Alcoa/Arconic, and FedEx, helping to develop robotic process
automation programs and Data Analytic solutions.
Dr. Teeter is a member of the American Accounting Association and has
published articles in the Journal of Strategic Technologies in Accounting
and Issues in Accounting Education. He has received grant funding for Data
Analytics research from PwC. Dr. Teeter is also an author of McGraw Hill’s
Introduction to Data Analytics for Accounting textbook.
Katie L. Terrell

Katie L. Terrell is an instructor in the Sam M. Walton College of Business

at the University of Arkansas. She received her BA degrees in English
literature and in the Spanish language from the University of Central
Arkansas and her MBA from the University of Arkansas. She expects a
doctoral degree by 2021. She has taught students at the University of
Arkansas; Soochow University (Suzhou, China); the University College
Dublin (Ireland); and Duoc UC, a branch of the Catholic University of
Chile (Vina del Mar, Chile).
She is a member of the American Accounting Association and has
published a Statement on Management Accounting for the Institute of
Management Accountants on managing organizational change in
operational change initiatives. Terrell was named the 2019 Business
Professional of the Year (Education) by the national Beta Alpha Psi
organization. She has recently been recognized for her innovative teaching
by being the recipient of the Mark Chain/FSA Teaching Award for
innovative graduate-level accounting teaching practices in 2016. She has
worked with Tyson Foods, where she held various information system
roles, focusing on business analysis, project management for ERP
implementations and upgrades, and organizational change management.
Terrell is also an author of McGraw Hill’s Introduction to Data Analytics
for Accounting textbook.
 page vii

Acknowledgments
Our sincere thanks to all who helped us on this project.
Our biggest thanks to the awesome team at McGraw Hill, including
Steve Schuetz, Tim Vertovec, Rebecca Olson, Claire McLemore, Michael
McCormick, Christine Vaughan, Kevin Moran, Angela Norris, and Lori
Hancock.
Our thanks also to each of the following:
The Walton College Enterprise Team (Paul Cronan, Ron Freeze,
Michael Gibbs, Michael Martz, Tanya Russell) for their work helping us get
access to the Dillard’s data.
Shane Lunceford from LendingClub for helping gain access to
LendingClub data.
Joy Caracciolo, Will Cocker, and Tommy Morgan from Avalara for their
help to grant permissions usage of the Avalara data.
Bonnie Klamm, North Dakota State University, and Ryan Baxter, Boise
State University, for their accuracy check review of the manuscript and
Connect content.
In addition, the following reviewers and classroom testers who provided
ideas and insights for this edition. We appreciate their contributions.
Amelia Annette Baldwin
University of South Alabama
Dereck Barr-Pulliam
University of Wisconsin–Madison
Ryan Baxter
Boise State University
Cory Campbell
Indiana State University
Heather Carrasco
Texas Tech University
Curtis Clements
Abilene Christian University
Elizabeth Felski
State University of New York at Geneseo
Amber Hatten
The University of Southern Mississippi
Jamie Hoeischer
Southern Illinois University, Edwardsville
Chris C. Hsu
York College, City University of New York
Venkataraman Iyer
University of North Carolina at Greensboro
Andrea S. Kelton
Middle Tennessee State University
Bonnie Klamm
North Dakota State University
Gregory Kogan
Long Island University, Brooklyn
Hagit Levy
Baruch College, CYNY
Brandon Lock
Baruch College, CUNY
Sharon M. Lightner
National University
Kalana Malimage
University of Wisconsin–Whitewater
Partha Mohapatra
California State University, Sacramento
Bonnie Morris
Duquesne University
Uday Murthy
University of South Florida
Kathy Nesper
University at Buffalo
Kamala Raghavan
Texas Southern University
Marie Rice
West Virginia University
Ali Saeedi
University of Minnesota Crookston
Karen Schuele
John Carroll University
Drew Sellers
Kent State University
Joe Shangguan
Robert Morris University
Vincent J. Shea
St. John’s University
Jacob Shortt
Virginia Tech
Marcia Watson
University of North Carolina at Charlotte
Liu Yang
Southeast Missouri State University
Zhongxia Ye
University of Texas, San Antonio
Qiongyao (Yao) Zhang
Robert Morris University
Vernon Richardson
Ryan Teeter
Katie Terrell
 page viii

Key Features
NEW! Color Coded Multi-Track Labs: Instructors have the flexibility
to guide students through labs using the Green Track: Microsoft tools
(including Excel, Power Query, and Power BI); Blue Track: Tableau
tools (including Tableau Prep Builder and Tableau Desktop); or both.
Each track is clearly identified and supported with additional resources.
NEW! Lab Example Outputs: Each lab begins with an example of
what students are expected to create. This provides a clear reference and
guide for student deliverables.
NEW! Auto-Graded Problems: The quantity and variety of auto-
graded problems that are assignable in McGraw Hill Connect have been
expanded.
NEW! Discussion and Analysis: Now available as manually graded
assignments in McGraw Hill Connect.
Emphasis on Skills: Working through the IMPACT cycle framework,
students will learn problem assessment, data preparation, data analysis,
data visualization, control contesting, and more.
Emphasis on Hands-On Practice: Students will be provided hands-on
learning (click-by-click instructions with screenshots) on datasets within
each chapter, within the end-of-chapter materials, and in the labs and
comprehensive cases.
Emphasis on Datasets: To illustrate data analysis techniques and skills,
multiple practice datasets (audit, financial, and managerial data) will be
used in every chapter. Students gain real-world experience working with
data from Avalara, LendingClub, Dillard’s, College Scorecard, the
State of Oklahoma, as well as financial statement data (via XBRL)
from S&P100 companies.
Emphasis on Tools: Students will learn how to conduct data analysis
using Microsoft and Tableau tools. Students will compare and contrast
the different tools to determine which are best suited for basic data
analysis and data visualization, which are easiest for internal controls
testing, which are best for SQL queries, and so on.
 page ix

Main Text Features

 page x

End-of-Chapter Materials
page xi
 page xii

Data Analytics for Accounting,

3e Content Updates
General Updates for the 3rd Edition
Color coded multi-track labs now emphasize two tracks: The green
Microsoft Track (including Excel, Power Query, and Power BI) and
blue Tableau Track (including Tableau Prep Builder and Tableau
Desktop).
Added additional End-of-Chapter Multiple Choice Questions
throughout the text that are auto-graded in Connect.
Significantly revised many End-of-Chapter Problems for availability
and auto-grading within Connect. Analysis Problems in Connect are
manually graded.
Linked chapter content to lab content using Lab Connections within
the chapter content.

Chapter by Chapter Updates

Specific chapter changes for Data Analytics for Accounting, 3e are as
follows:

Chapter 1
Added new opening vignette regarding a recent IMA survey of finance
and accounting professionals and their use of Big Data and Data
 Analytics.
Added discussion on how analytics are used in auditing, tax, and
management accounting.
Included introduction to the variety of analytics tools available and
explanation of dual tracks for labs including Microsoft Track and
Tableau Track.
Added “Data Analytics at Work” box feature: What Does an Analyst
Do at a Big Four Accounting Firm.
Added six new Connect-ready problems.
Implemented lab changes:
All-new tool connections in Lab 1-5.
Revised Labs 1-0 to 1-4.

Chapter 2
Edited opening vignette to include current examples regarding data
privacy and ethics.
Added a discussion on ethical considerations related to data collection
and use.
Added exhibit with potential external data sources to address
accounting questions.
Expanded the data extraction section to first include data
identification, including the use of unstructured data.
Added “Data Analytics at Work” box feature: Jump Start Your
Accounting Career with Data Analytics Knowledge.
Added six new Connect-ready problems.
Implemented lab changes:
Revised Labs 2-1 to 2-8.
 page xiii
Chapter 3
Refined the discussion on diagnostic analytics.
Improved the discussion on the differences between qualitative and
quantitative data and the discussion of the normal distribution.
Refined the discussion on the use of regression as an analytics tool.
Added examples of time series analysis in the predictive analytics
section.
Added “Data Analytics at Work” box feature: Big Four Invest Billions
in Tech, Reshaping Their Identities as Professional Services Firm with
a Technology Core.
Added six new Connect-ready problems.
Implemented lab changes:
All-new cluster analysis in Lab 3-2.
Revised Labs 3-1, 3-3 to 3-6.

Chapter 4
Added discussion of statistics versus visualizations using Anscombe’s
quartet.
Updated explanations of box plots and Z-scores.
Added “Data Analytics at Work” box feature: Data Visualization: Why
a Picture Can Be Worth a Thousand Clicks.
Added six new Connect-ready problems.
Implemented lab changes:
All-new dashboard in Lab 4-3.
Revised Labs 4-1, 4-2, 4-4, 4-5.
Chapter 5
Improved and clarified content to match the focus on descriptive,
diagnostic, predictive, and prescriptive analytics.
Added “Data Analytics at Work” box feature: Citi’s $900 Million
Internal Control Mistake: Would Continuous Monitoring Help?
Added six new Connect-ready problems.
Implemented lab changes:
Revised Labs 5-1 to 5-5.

Chapter 6
Clarified chapter content to match the focus on descriptive, diagnostic,
predictive, and prescriptive analytics.
Added “Data Analytics at Work” box features: Do Auditors Need to
Be Programmers?
Added six new Connect-ready problems.
Implemented lab changes:
Major revisions to Labs 6-1 to 6-5.

Chapter 7
Added new exhibit and discussion that maps managerial accounting
questions to data approaches.
Added “Data Analytics at Work” box feature: Maximizing Profits
Using Data Analytics
Added five new Connect-ready problems.
Implemented lab changes:
All-new job cost, balanced scorecard, and time series dashboards in
Lab 7-1, 7-2, 7-3.
 Revised Lab 7-4, 7-5.

page xiv
Chapter 8
Added new exhibit and discussion that maps financial statement
analysis questions to data approaches.
Added four new Connect-ready problems.
Implemented lab changes:
All-new sentiment analysis in Lab 8-4.
Revised Labs 8-1 to 8-3.

Chapter 9
Added new exhibit and discussion that maps tax questions to data
approaches.
Added four new Connect-ready problems.
Implemented lab changes:
Revised Labs 9-1 to 9-5.

Chapter 10
Updated project chapter that evaluates different business processes,
including the order-to-cash and procure-to-pay cycles, from different
user perspectives with a choice to use the Microsoft track, the Tableau
track, or both.
Added extensive, all-new set of objective and analysis questions to
assess analysis and learning.

Chapter 11
Updated project chapter, estimating sales returns at Dillard’s with
three question sets highlighting descriptive and exploratory analysis,
hypothesis testing, and predictive analytics with a choice to use the
Microsoft track, the Tableau track, or both.
Added extensive, all-new set of objective and analysis questions to
assess analysis and learning.
 page xv

Connect for Data Analytics for

Accounting

With McGraw Hill Connect for Data Analytics for Accounting, your
students receive proven study tools and hands-on assignment materials, as
well as an adaptive eBook. Here are some of the features and assets
available with Connect.

Proctorio: New remote proctoring and browser-locking capabilities, hosted

by Proctorio within Connect, provide control of the assessment
environment by enabling security options and verifying the identity of the
student. Seamlessly integrated within Connect, these services allow
instructors to control students’ assessment experience by restricting browser
activity, recordingstudents’ activity, and verifying students are doing their
own work. Instant and detailed reporting gives instructors an at-a-glance
view of potential academic integrity concerns, thereby avoiding personal
bias and supporting evidence-based claims.
SmartBook 2.0: A personalized and adaptive learning tool used to
maximize the learning experience by helping students study more
efficiently and effectively. Smartbook 2.0 highlights where in the chapter to
focus, asks review questions on the materials covered, and tracks the most
challenging content for later review recharge. Smartbook 2.0 is available
both online and offline.

Orientation Videos: Video-based tutorial assignments are designed to train

students via an overview video followed by a quiz for each of the
assignment types they will find in McGraw Hill Connect.
Multiple Choice Questions: The multiple choice questions from the end-
of-chapter materials are assignable and auto-gradable in McGraw Hill
Connect, with the option to provide students with instant feedback on their
answers and performance.
Discussion and Analysis Questions: We have added the Discussion and
Analysis questions into McGraw Hill Connect as manually graded
assignments for convenience of assignment organization. These can be
utilized for small group or in-class discussion.

page xvi
Problems: Select problems from the text are auto-graded in McGraw Hill
Connect. Manually graded analysis problems are also now available to
ensure students are building an analytical skill set.
Color Coded Multi-Track Labs: Labs are assignable in McGraw Hill
Connect as the green Microsoft Track (including Excel, Power Query, and
Power BI) and blue Tableau Track (including Tableau Prep Builder and
Tableau Desktop).
 page xvii
Students complete their lab work outside of Connect in the lab track
selected by their professor. Students answer assigned lab questions designed
to ensure they understood the key skills and outcomes from their lab work.
Both auto-graded lab objective questions and manually graded lab analysis
questions are assignable in Connect.
Comprehensive Cases: Comprehensive case labs are assignable in
McGraw Hill Connect. Students work outside of Connect to complete the
lab using the Dillard’s real-world Big Data set. Once students complete the
comprehensive lab, they will go back into Connect to answer questions
designed to ensure they completed the lab and understood the key skills and
outcomes from their lab work.

Lab Walkthrough Videos: These author-led lab videos in McGraw Hill

Connect explain how to access and use the tools needed to complete the
processes essential to the labs. Lab videos improve student success and
minimize student questions!
Author Lecture Videos: Lecture Videos assignable in McGraw Hill
Connect teach each chapter’s core learning objectives and concepts through
an author-developed, hands-on presentation, bringing the text content to
life. The videos have the touch and feel of a live lecture, rather than a
canned presentation, so you can learn at your own pace.
Writing Assignment: The Writing Assignment tool delivers a learning
experience to help students improve their written communication skills and
conceptual understanding. As an instructor you can assign, monitor, grade,
and provide feedback on writing more efficiently and effectively in
McGraw Hill Connect.
Test Bank: The test bank includes auto-graded multiple choice and
true/false assessment questions. The test bank can be assigned directly
within McGraw Hill Connect or exported from Test Builder.
 page xviii

Instructors: Student Success Starts with You

Tools to enhance your unique voice

Want to build your own course? No problem. Prefer to use our
turnkey, prebuilt course? Easy. Want to make changes throughout
the semester? Sure. And you’ll save time with Connect’s auto-
grading too.
Laptop: McGraw Hill; Woman/dog: George Doyle/Getty Images

Study made personal

Incorporate adaptive study resources like SmartBook® 2.0 into your
course and help your students be better prepared in less time. Learn
more about the powerful personalized learning experience available
in SmartBook 2.0 at
www.mheducation.com/highered/connect/smartbook

Affordable solutions, added value

Make technology work for you with LMS integration for single sign-
on access, mobile access to the digital textbook, and reports to
quickly show you how each of your students is doing. And with our
Inclusive Access program you can provide all these tools at a
discount to your students. Ask your McGraw Hill representative for
more information.

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 Solutions for your challenges

A product isn’t a solution. Real solutions are affordable, reliable,

and come with training and ongoing support when you need it and
how you want it. Visit www.supportateverystep.com for videos
and resources both you and your students can use throughout the
semester.

Checkmark: Jobalou/Getty Images

page xix

Students: Get Learning that Fits You

Effective tools for efficient studying

Connect is designed to make you more productive with simple,
flexible, intuitive tools that maximize your study time and meet your
individual learning needs. Get learning that works for you with
Connect.
Study anytime, anywhere.
Download the free ReadAnywhere app and access your online
eBook or SmartBook 2.0 assignments when it’s convenient, even if
you’re offline. And since the app automatically syncs with your
eBook and SmartBook 2.0 assignments in Connect, all of your work
is available every time you open it. Find out more at
www.mheducation.com/readanywhere

“I really liked this app—it made it easy to study

when you don’t have your textbook in front of you.”
– Jordan Cunningham, Eastern Washington University

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Everything you need in one place

Your Connect course has everything you need—whether reading on
your digital eBook or completing assignments for class, Connect
makes it easy to get your work done.

Learning for everyone

McGraw Hill works directly with Accessibility Services Departments
and faculty to meet the learning needs of all students. Please contact
your Accessibility Services Office and ask them to email
[email protected], or visit
www.mheducation.com/about/accessibility for more information.

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 page xx

Brief Table of Contents

Preface iv
About the Authors vi
Acknowledgments vii
Key Features viii
Main Text Features ix
End-of-Chapter Materials x
Data Analytics for Accounting, 3e Content Updates xii
Connect for Data Analytics for Accounting xv

Chapter 1 Data Analytics for Accounting and Identifying the

Questions 2
Chapter 2 Mastering the Data 52
Chapter 3 Performing the Test Plan and Analyzing the Results 114
Chapter 4 Communicating Results and Visualizations 180
Chapter 5 The Modern Accounting Environment 244
Chapter 6 Audit Data Analytics 282
Chapter 7 Managerial Analytics 334
Chapter 8 Financial Statement Analytics 404
Chapter 9 Tax Analytics 454
Chapter 10 Project Chapter (Basic) 498
Chapter 11 Project Chapter (Advanced): Analyzing Dillard’s Data to
Predict Sales Returns 512
Appendix A Basic Statistics Tutorial 528
Appendix B Excel (Formatting, Sorting, Filtering, and PivotTables) 534
Appendix C Accessing the Excel Data Analysis Toolpak 544
Appendix D SQL Part 1 546
Appendix E SQL Part 2 560
Appendix F Power Query in Excel and Power BI 564
Appendix G Power BI Desktop 572
Appendix H Tableau Prep Builder 578
Appendix I Tableau Desktop 582
Appendix J Data Dictionaries 586

GLOSSARY 588

INDEX 593
 page xxi

Detailed TOC
Chapter 1
Data Analytics for Accounting and Identifying the Questions
2
Data Analytics 4
How Data Analytics Affects Business 4
How Data Analytics Affects Accounting 5
Auditing 6
Management Accounting 7
Financial Reporting and Financial Statement Analysis 7
Tax 8
The Data Analytics Process Using the IMPACT Cycle 9
Step 1: Identify the Questions (Chapter 1) 9
Step 2: Master the Data (Chapter 2) 10
Step 3: Perform Test Plan (Chapter 3) 10
Step 4: Address and Refine Results (Chapter 3) 13
Steps 5 and 6: Communicate Insights and Track Outcomes (Chapter
4 and each chapter thereafter) 13
Back to Step 1 13
Data Analytic Skills and Tools Needed by Analytic-Minded
Accountants 13
Choose the Right Data Analytics Tools 14
Hands-On Example of the IMPACT Model 17
 Identify the Questions 17
Master the Data 17
Perform Test Plan 20
Address and Refine Results 23
Communicate Insights 24
Track Outcomes 24
Summary 25
Key Words 26
Answers to Progress Checks 26
Multiple Choice Questions 28
Discussion and Analysis 30
Problems 30
Lab 1-0 How to Complete Labs 36
Lab 1-1 Data Analytics Questions in Financial Accounting 39
Lab 1-2 Data Analytics Questions in Managerial Accounting 41
Lab 1-3 Data Analytics Questions in Auditing 42
Lab 1-4 Comprehensive Case: Questions about Dillard’s Store Data
44
Lab 1-5 Comprehensive Case: Connect to Dillard’s Store Data 47

Chapter 2
Mastering the Data 52
How Data Are Used and Stored in the Accounting Cycle 54
Internal and External Data Sources 54
Accounting Data and Accounting Information Systems 56
Data and Relationships in a Relational Database 56
Columns in a Table: Primary Keys, Foreign Keys, and Descriptive
Attributes 57
Data Dictionaries 59
Extract, Transform, and Load (ETL) the Data 60
Extract 61
 Transform 64
Load 67
Ethical Considerations of Data Collection and Use 68
Summary 69
Key Words 70
Answers to Progress Checks 70
Multiple Choice Questions 71
Discussion and Analysis 73
Problems 74
Lab 2-1 Request Data from IT—Sláinte 77
Lab 2-2 Prepare Data for Analysis—Sláinte 79
Lab 2-3 Resolve Common Data Problems—LendingClub 84
Lab 2-4 Generate Summary Statistics—LendingClub 91
Lab 2-5 Validate and Transform Data—College Scorecard 95
Lab 2-6 Comprehensive Case: Build Relationships among Database
Tables—Dillard’s 98
Lab 2-7 Comprehensive Case: Preview Data from Tables—
Dillard’s 103
Lab 2-8 Comprehensive Case: Preview a Subset of Data in Excel,
Tableau Using a SQL Query—Dillard’s 108

Chapter 3
Performing the Test Plan and Analyzing the Results 114
Performing the Test Plan 116
Descriptive Analytics 119
Summary Statistics 119
Data Reduction 120
Diagnostic Analytics 122
Standardizing Data for Comparison (Z-score) 123
Profiling 123
Cluster Analysis 128
 Hypothesis Testing for Differences in Groups 131
Predictive Analytics 133
Regression 134
Classification 137
p-Values versus Effect Size 141

page xxii
Prescriptive Analytics 141
Decision Support Systems 141
Machine Learning and Artificial Intelligence 142
Summary 143
Key Words 144
Answers to Progress Checks 145
Multiple Choice Questions 146
Discussion and Analysis 148
Problems 148
Chapter 3 Appendix: Setting Up a Classification Analysis 151
Lab 3-1 Descriptive Analytics: Filter and Reduce Data—Sláinte 153
Lab 3-2 Diagnostic Analytics: Identify Data Clusters—
LendingClub 157
Lab 3-3 Perform a Linear Regression Analysis—College Scorecard
160
Lab 3-4 Comprehensive Case: Descriptive Analytics: Generate
Summary Statistics—Dillard’s 166
Lab 3-5 Comprehensive Case: Diagnostic Analytics: Compare
Distributions—Dillard’s 169
Lab 3-6 Comprehensive Case: Create a Data Abstract and Perform
Regression Analysis—Dillard’s 174

Chapter 4
Communicating Results and Visualizations 180
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 CHAPTER II
CINCINNATI AND WASHINGTON

One day after we had been married less than a year my husband
came home looking so studiously unconcerned that I knew at once he
had something to tell me.
“Nellie, what would you think,” he began casually, “if I should be
appointed a Judge of the Superior Court?”
“Oh, don’t try to be funny,” I exclaimed. “That’s perfectly
impossible.”
But it was not impossible, as he soon convinced me. My father had
just refused the same appointment and it was difficult to believe that
it could now be offered to my husband who was only twenty-nine
years old. It was a position made vacant by the retirement from the
Bench of Judge Judson Harmon who was my husband’s senior by
more than a decade.
One of the most prominent and prosperous law firms in Cincinnati
was that of Hoadley, Johnston and Colston, and both Mr. Hoadley
and Mr. Johnston had been invited to go to New York and become
partners of Mr. Edward Lauterbach who was then doing an
enormous business.
They went, and the old firm in Cincinnati being broken up, Mr.
Colston asked Judge Harmon, who was then on the Superior Court,
to take Mr. Hoadley’s place. Mr. Harmon decided to do so, but he
was anxious to resign his judgeship in such a way as to leave a long
enough vacancy to attract a good man. It was an elective office and
the law provided that a vacancy occurring within thirty days before
election could not be filled by an election until the following year.
Judge Harmon resigned so as to make the appointment for a period
of fourteen months. After my father declined it, the choice lay
between Mr. Taft and Mr. Bellamy Storer. Mr. Taft always thought
that but for his opportunity in the Campbell case Judge Hannon
would not have recommended him and Governor Foraker would not
have appointed him. That is why he says he traces all his success
back to that occasion. Mr. Foraker was opposing counsel in the
Campbell case, but he had a lawyer’s appreciation for a lawyer’s
effort.
After the first pleased surprise at the honour which came to us so
unexpectedly I began to think; and my thinking led me to decide that
my husband’s appointment on the Bench was not a matter for such
warm congratulation after all. I saw him in close association with
men not one of whom was less than fifteen years older than he, and
most of whom were much more than that. He seemed to me
suddenly to take on a maturity and sedateness quite out of keeping
with his actual years and I dreaded to see him settled for good in the
judiciary and missing all the youthful enthusiasms and exhilarating
difficulties which a more general contact with the world would have
given him. In other words, I began even then to fear the narrowing
effects of the Bench and to prefer for him a diverse experience which
would give him an all-round professional development.
He did not share this feeling in any way. His appointment on the
Superior Court was to him the welcome beginning of just the career
he wanted. After serving the interim of fourteen months he became a
candidate for the office and was elected for a term of five years. This
was the only elective office Mr. Taft ever held until he became
President.
My own time and interest during that winter was largely spent on
my house. We had been very particular about the plans for it and had
fully intended that it should combine outward impressiveness with
inward roominess and comfort. It was a frame structure, shingled all
over, and with certain bay window effects which pleased me
exceedingly. In fact, with our assistance, the architect had made a
special effort to produce something original and, while I don’t claim
that the result was a conspicuous architectural success, to my mind it
was anything but a failure. And our view of the Ohio River and the
surrounding country was really superb.
But I was not destined to enjoy my satisfaction with my
surroundings very long. The section had been at one time a stone
quarry, and the man who had levelled off the land and filled in the
gulches made by the quarry operations, took as a part of his
compensation two building lots which happened to be just across the
street from ours. He forthwith proceeded to put up a sort of double
house which looked more like a gigantic dry-goods box than anything
else, and I felt that it quite robbed the neighbourhood of the “tone”
which I had confidently hoped our house would give it. The double
house had just one quality and that was size.
I think the owner, whose name was Jerry something, lived in one
side of it, and he had a tenant in the other who hung clothes out of
the front windows. But tastes in architecture differ, as we soon found
out.
We were paying taxes on our house at an assessed value of $4000
and the undervaluation had been troubling my husband’s conscience
for a long time, in spite of my assuring him that tax collectors ought
to know their own business. Some men from the board of
equalization were to call one day to make a new appraisement and I
had very much hoped that my husband would not be at home. But he
was; he was there to welcome them and give them every possible
assistance. Without waiting for an examination of the premises, he
addressed one of them, an Irishman named Ryan.
“See here, Mr. Ryan,” he said, “I understand that Jerry, my
neighbour across the street, has his property assessed at $5000. Now
I don’t think that’s fair. I’m assessed at only $4000 and I’m sure my
house cost a good deal more than his. As a matter of fact it cost over
$6000. Now I’m a Judge of the Superior Court; I get my income out
of taxes and I certainly have no disposition to pay any less than my
share.”
“Well, Judge, your Honour,” said Mr. Ryan, “that is a sentiment
very befitting your Honour. Now I’ll just be after goin’ over and
lookin’ at those houses of Jerry’s, and then I’ll come back and look at
yours.”
I watched them as they went over to the other houses; then I saw
them go up the street a way and down the street a way, looking us
carefully over from every possible view-point. When they came in
they wore a very judicial aspect and I expected to see taxes go up
with one wild leap.
 “Well, Judge, your Honour,” began Mr. Ryan, “I think you’re givin’
yourself unnecessary concern. We assess houses for what they’re
worth and not for what they cost. While your house no doubt suits
your taste, it has a peculiar architectural style that wouldn’t please
very many people, and certainly it ain’t to compare with those houses
of Jerry’s. There’s a modern polish about those houses that will rent,
Judge, your Honour.”
My son Robert was born in this house on McMillan Street in
September, 1889. In the following February an interruption occurred
in our peaceful existence which was welcome at least to me.
President Harrison offered the appointment of Solicitor General of
the United States to Mr. Taft and he, with a few regretful glances at
his beloved Bench, accepted it. I think that once again it was Major
Butterworth who suggested my husband’s name to the appointing
power. I was very glad because it gave Mr. Taft an opportunity for
exactly the kind of work I wished him to do; work in which his own
initiative and originality would be exercised and developed. I looked
forward with interest, moreover, to a few years in Washington.
Mr. Taft made his first official arrival in Washington alone. My
baby, Robert, was only six months old and I concluded to remain in
Cincinnati until my husband could make arrangements for our
comfortable reception. His description of his first day in Washington
is, in the light of later events, rather amusing.
He arrived at six o’clock on a cold, gloomy February morning at
the old dirty Pennsylvania station. He wandered out on the street
with a heavy bag in his hand looking for a porter, but there were no
porters. Then he stood for a few moments looking up at the Capitol
and feeling dismally unimportant in the midst of what seemed to him
to be very formidable surroundings. He wondered to himself why on
earth he had come. He was sure he had made a fatal mistake in
exchanging a good position and a pleasant circle at home, where
everybody knew him, for a place in a strange and forbidding city
where he knew practically nobody and where, he felt sure, nobody
wanted to know him. He lugged his bag up to the old Ebbitt House
and, after eating a lonesome breakfast, he went to the Department of
Justice to be sworn in. After that ceremony was over and he had
shaken hands with the Attorney General, he went up to inspect the
Solicitor General’s Office, and there he met the most dismal sight of
the whole dismal day. His “quarters” consisted of a single room,
three flights up, and bearing not the slightest resemblance to his
mental picture of what the Solicitor General’s offices would be like.
The Solicitor General’s stenographer, it seemed, was a telegrapher in
the chief clerk’s office and had to be sent for when his services were
required. Altogether it must have been a very disheartening outlook.
As Mr. Taft sat looking over briefs and other papers, and trying to
get some definite idea about his new work, a messenger brought in a
card.
“Mr. Evarts, New York,” it read.
Evarts was a well-known name, of course, but it was hard for Mr.
Taft to believe that the William M. Evarts, leader of the American Bar
and then Senator from New York, could be calling on the Solicitor
General of less than a day. He knew that Wm. M. Evarts had known
his father.
Mr. Evarts entered.
“Mr. Taft,” he said, as he gave my husband’s hand a cordial grasp,
“I knew your father. I was in the class of ’37 at Yale and he had
graduated before I entered; but he was there as a tutor in my time
and I valued his friendship very highly.”
Then the visitor came straight to the point.
“Mrs. Evarts and I are giving a dinner to-night for my former
partner and his wife, Mr. and Mrs. Joseph Choate. Mr. Choate is in
Washington for a short time to argue a case before the Supreme
Court. Now, unfortunately, one of our guests has sent word that he
can’t come and I thought, perhaps, considering my long-standing
friendship with your father, you might consent to waive ceremony
and fill the place at our table at this short notice.”
My husband accepted the invitation with almost undue alacrity,
and when his guest left started in on his new duties feeling that, after
all, Washington might afford just as friendly an atmosphere as
Cincinnati, once he became accustomed to it.
There is just one incident in connection with the dinner party
which Mr. Taft adds to his account of that day. As he sat down to
dinner the ladies on either side of him leaned hastily forward to see
what was written on his place card. “The Solicitor General”—that was
all. Of course neither of them knew who the new Solicitor General
was and it didn’t occur to him to enlighten them until it was too late
to do it gracefully. So he allowed them to go on addressing him as
“Mr. Solicitor General” while he, having them at an advantage,
addressed them by the names which he had surreptitiously read on
their place-cards. They were Mrs. Henry Cabot Lodge and Mrs. John
Hay.

MRS. TAFT, WITH ROBERT AND HELEN, WHEN MR. TAFT

WAS SOLICITOR GENERAL

When my husband had been in Washington two weeks I joined

him and we took a small house on Dupont Circle where for two years
we lived a life, sometimes amusing, sometimes quite exciting, but, on
the whole, of quiet routine.
Washington society was much simpler then than it is now. Since
that time a great many people of very large means have gone to
Washington to live because of its unusual attractions and its
innumerable advantages as a residential city. They have changed
Washington, by their generous hospitality, into one of the most
brilliant social centres in the world, where large dinner parties, balls,
receptions, musicals and other entertainments are of daily and
nightly occurrence throughout the season. The very character of the
streets has changed. The small, red brick houses, closely grouped
together and neighbouring, even in fashionable quarters, on negro
shacks and cheap tenements, are being everywhere replaced by
marble and granite residences of great beauty and luxury.
In 1890 Society in Washington still consisted, chiefly, of the “best
families” of the old city, the Diplomatic Corps and the highest among
the government officials. A dinner party of twelve was still
considered large, and only a few people had weekly evenings At
Home. There were occasional big receptions, but for nobody was
society the mad rush that it is to-day. We ourselves lived very simply
even for those simple days.
My daughter Helen was born in 1891, so for the last year in
Washington I had two small babies to care for. In order that he might
get a little much needed exercise Mr. Taft bought a horse and,
fortunately, for us, he secured a most adaptable creature. He was
supposed to be a riding horse, but he didn’t mind making himself
generally useful. The Attorney General lent us a carriage which he
was not then using—a surrey, I think it was called—and we hitched
him to that; and the whole Taft family drove out of a Sunday
afternoon to the Old Soldiers’ Home, which was the fashionable drive
in those days, or up the aqueduct road to Cabin John’s bridge. My
sister Maria who visited us used always to speak of our steed as
“G’up,” a name suggested by Bobby’s interpretation of his father’s
invocations to the good-natured and leisurely beast. Poor old “G’up”!
I suppose with his “horse sense” he finally realised that he was
leading such a double life as no respectable horse should lead; he
gave up and died before we left Washington.
The Justices of the Supreme Court and the Attorney General, the
men with whom Mr. Taft came most in contract, were, with their
wives, very kind and attentive to us, including us in many of their
delightful parties. Chief Justice Fuller was then the head of the court
and I have the pleasantest memories of his and Mrs. Fuller’s
hospitality. Justice Grey had married a Miss Matthews, a daughter of
Mr. Justice Matthews. I had known Mrs. Grey in Cincinnati before
her marriage.
During the course of my first weeks in Washington Mr. Taft had
taken special pains to impress on me many times the necessity for
my calling on Mrs. Grey without any delay. Much importance
attached to the formality of first calls and I was the newest of
newcomers who had to call on the wives of all my husband’s official
superiors before they noticed me. Still, it was a full month before I
had time to go to Mrs. Grey’s and I was considerably worried about
it. But when, finally, I did go and had been most kindly received, I
explained at once that the settling of myself and my small baby in a
new house had, until then, kept me too busy for any calls. Mrs. Grey
hastened to assure me that she understood my position perfectly and
had not thought of blaming me.
“Indeed, my dear,” she said, “I knew that you had a small baby in
the house and that you must be kept constantly occupied. As a
matter of fact I should have waived ceremony and come myself to
welcome you to Washington except for one thing which I could not
very well overlook, and that is—that Mr. Taft has not yet called on
Mr. Justice Grey.”
I think I have rarely seen anything more satisfactorily amusing
than the expression on my husband’s face when I told him this.
But, in spite of the friendliness of the Justices and others, we really
went out very little. On one occasion when my sister Maria had been
visiting us for several weeks we went for a Sunday night supper to
the house of a lady whom Maria had known very well in Cincinnati.
She was living that winter in Washington and seemed to be rather
well pleased with her social success. She talked loftily throughout
supper, and during a good part of the evening, about the dinner
parties she had attended and the grand people she had met. Then
just as we were about to start home she turned to my sister and said:
“And have you been much entertained, my dear Maria?”
“Oh, I’ve been enjoying myself tremendously,” was the answer.
“Well, with whom have you dined, dear?” persisted our hostess.
“Why, we’ve dined with the Andersons, with the German
Ambassador, with the Chief Justice, and with the Maurys, and with
the French Ambassador,—and with, oh, a number of other people.”
Our hostess was visibly impressed.
“Why! you really have been very gay, haven’t you, dear!” she
exclaimed.
When we got into our cab to go home Maria turned to my husband
and said:
 “I had my eye on you all the time I was talking, Will Taft. I was
perfectly certain that your terrible sense of fact would overcome you
and that you would blurt out that I dined with all those people on the
same evening at the same dinner party!”
President Harrison, in March, 1892, appointed my husband on the
Federal Circuit Bench, so once more I saw him a colleague of men
almost twice his age and, I feared, fixed in a groove for the rest of his
life. However, he was greatly pleased and very proud to hold such a
dignified and responsible position at the age of thirty-four. I think he
enjoyed the work of the following eight years more than any he has
ever undertaken.
We moved back to Cincinnati. Mr. Taft’s circuit included parts of
Ohio, Kentucky, Tennessee, and Michigan—reached in fact, from
Lookout Mountain to Marquette, and he was much away from home.
My own life during those years in Cincinnati was very busy, for, in
addition to my occupation with family and friends, I became
interested in a number of civic movements.
My principal work was the organisation and management of the
Cincinnati Orchestra Association. I found, at last, a practical method
for expressing and making use of my love and knowledge of music.
We had not had a good symphony orchestra in the city since
Theodore Thomas left, but with our music-loving population it was
only necessary that somebody should take the initiative and arouse
definite enthusiasm and keep it going, in order to establish and
maintain such an institution. There were many public-spirited
citizens, some of them true music-loving Germans, and I saw no
reason why I should not get strong popular support for my project. I
was not disappointed. From the first the response was general and
generous and we did not have much difficulty in raising the
necessary funds for financing the orchestra, although in addition to
our box-office receipts, we had to secure $30,000 a year for six
consecutive years. It could not have been done had it not been for
such liberal friends as my brother and sister, Mr. and Mrs. Charles P.
Taft, Mr. Charles Krippendorf, Mr. M. E. Ingalls, Mr. and Mrs. L. A.
Ault, Mrs. Charles Fleishmann, Mr. J. G. Schmidlapp and others.
For the first year we had three different directors, Mr. Seidl, Mr.
Schradick and Mr. Van der Stücken, who came to Cincinnati and led
two concerts each. Then we secured Mr. Van der Stücken as a
permanent leader and he remained with the orchestra ten years.
I think I regretted the Cincinnati Orchestra Association more than
anything else when we left for the Philippines, but I left it in good
and well-trained hands. Mrs. C. R. Holmes, who succeeded me as
President of the Association, had taken a great part in the original
work of organisation and management, as had my sister-in-law, Mrs.
Charles P. Taft, and others. Through their efforts the orchestra has
been enlarged and improved and it is still a source of great pride and
satisfaction to the city of Cincinnati. Mrs. Charles Taft is now the
President and through her interest, activity and generosity it has
been enabled to grow in excellence.
Except for the orchestra, our life was tranquil; quite too settled, I
thought, and filled with the usual homely incidents connected with
housekeeping and the entertaining development of small children.
My youngest child, Charles, was born in 1897, and my family was
thus complete.
I come now to the years which we gave to the Philippine Islands
and I must say that I wonder yet how our lot happened to be so cast.
There had never been any unusual interest in our family as to the
results of the Spanish-American War. Like most patriotic Americans
we had been greatly excited while the war was in progress and had
discussed its every phase and event with a warmth of approval, or
disapproval, as the case might be, but it did not touch us directly,
except as citizens, any more than it touched the vast majority of the
people of the United States. And yet, it came to mean more to us
personally, than any other event in our times. The whole course of
my husband’s career was destined to be changed and influenced by
its results.
Mr. Taft was strongly opposed to taking the Philippines. He was
not an anti-imperialist in the sense that he believed the Constitution
required us to keep the boundaries of the United States within their
continental limits, but he thought the Antipodes rather a far stretch
for the controlling hand, and he thought the taking of the Philippines
would only add to our problems and responsibilities without
increasing, in any way, the effectiveness and usefulness of our
government.
 Oddly enough, he had expressed himself to that effect when he
happened, during the Spanish War, to be dining with a number of
judges including Justice Harlan who, although later an anti-
imperialist, was at that time strongly upholding the policy of taking
over Spanish territory in both oceans.
Mr. Taft knew just about as much about the Filipino people as the
average American knew in those days. What he definitely knew was
that they had been for more than three centuries under Spanish
dominion and that they now wanted political independence. He was
heartily in favour of giving it to them.
It was one day in January, 1900, that he came home greatly
excited and placed before me a telegram.
“What do you suppose that means?” said he.
“I would like to see you in Washington on important business
within the next few days. On Thursday if possible,” it read. And it
was signed—William McKinley.
We didn’t know and we couldn’t think what possible business the
President could have with him. I began to conjure up visions of
Supreme Court appointments; though I knew well enough that
Supreme Court appointments were not tendered in that fashion and
besides there was no vacancy.
Mr. Taft lost no time in responding to the President’s summons
and I awaited his return with as much patience as I could muster. In
three days he came home with an expression so grave that I thought
he must be facing impeachment. But when he broke his news to me it
gave me nothing but pleasure.
“The President wants me to go to the Philippine Islands,” he said,
in a tone he might have used in saying: “The President wants me to
go out and jump off the court house dome.” “Want to go?” he added.
“Yes, of course,” I answered without a moment’s hesitation. I
wasn’t sure what it meant, but I knew instantly that I didn’t want to
miss a big and novel experience. I have never shrunk before any
obstacles when I had an opportunity to see a new country and I must
say I have never regretted any adventure.
“The President and Mr. Root want to establish a civil government
in the Philippines,” said Mr. Taft, “and they want me to go out at the
head of a commission to do it.” It was only after I had accepted the
invitation to go ten thousand miles away that I asked for an
explanation.
In answer to the President’s proposal, Mr. Taft said that he didn’t
approve of the acquisition of the Philippines in the first place, and
that in the second place he knew nothing about colonial government
and had had really no experience in executive work of any kind. But
Mr. McKinley did not accept these objections as final. He called in
Mr. Root, who was then Secretary of War, and who would be Mr.
Taft’s chief in the proposed mission to the Philippines, and together
they presented the case so strongly that my husband could not help
but waver in his decision. Neither Mr. McKinley nor Mr. Root had
rejoiced in the taking over of the Philippines for that matter, but that
was beside the question; the Philippines were taken, and it behooved
the United States to govern them until such time as their people had
learned the difficult art of governing themselves.
Mr. Root said:
“The work to be done in the Philippines is as great as the work
Livingston had to do in Louisiana. It is an opportunity for you to do
your country a great service and achieve for yourself a reputation for
the finest kind of constructive work. You have had a very fortunate
career. While you are only slightly over forty you have had eight
years on the Federal Bench, three years on the State Bench and two
years as Solicitor General. These places you have filled well, but they
have been places which involved no sacrifice on your part. Here is a
field which calls for risk and sacrifice. Your country is confronted
with one of the greatest problems in its history, and you, Judge Taft,
are asked to take immediate charge of the solution of that problem
7,000 miles away from home. You are at the parting of the ways. Will
you take the easier course, the way of least resistance, with the
thought that you had an opportunity to serve your country and
declined it because of its possible sacrifice, or will you take the more
courageous course and, risking much, achieve much? This work in
the Philippines will give you an invaluable experience in building up
a government and in the study of laws needed to govern a people,
and such experience cannot but make you a broader, better judge
should you be called upon again to serve your country in that
capacity.”
 My husband promised to consult with me and with his brother
Charles and give his answer in a few days. He didn’t know whether or
not I would be willing to go, but that was a question soon settled.
His resignation of his judgeship was the greatest difficulty. The
President told him he did not think it would be at all necessary for
him to resign since the work in the Philippines would take only about
six months—nine months at the longest—and that he could absent
himself from his duties for that length of time, and for such a
purpose, without fear of any kind of unfortunate consequences. Mr.
Taft’s investigation and study of the situation immediately convinced
him that Mr. McKinley was wrong in his expectation that the work
could be done so quickly. Nor did Mr. Root have any such idea. Even
with the meagre information which was then available, my husband
at once saw that it would be years before the Philippine problem
would begin to solve itself. So he resigned from the Bench; the
hardest thing he ever did.
After sending in his acceptance he went immediately to
Washington to discuss with Mr. McKinley and Mr. Root the whole
situation and, especially, the names of four other men who were to be
chosen to serve with him on the Commission. He had met Mr.
Worcester, a member of the first Commission, and had got from him
a great deal of valuable data. If Professor Shurman, the chairman of
the first Commission, had become a member of the second, he
probably would have been at its head, but he did not, and this
position fell to Mr. Taft. He was thereafter known as President of the
Commission, until civil government was organised in the Philippines
and he became governor.
After he had gone to Washington I began at once to make hasty,
and I may say, happy preparations for my adventure into a new
sphere. That it was alluring to me I did not deny to anybody. I had no
premonition as to what it would lead to; I did not see beyond the
present attraction of a new and wholly unexplored field of work
which would involve travel in far away and very interesting
countries. I read with engrossing interest everything I could find on
the subject of the Philippines, but a delightful vagueness with regard
to them, a vagueness which was general in the United States at that
time, and has not, even yet, been entirely dispelled, continued in my
mind. There were few books to be found, and those I did find were
not specially illuminating.
I gave up my house in Cincinnati and stored my belongings,
packing for shipment to the Orient only such things as I thought
would be absolutely necessary. We were to leave almost immediately
and I had very little time in which to do a great many things. Mr. Taft
came back to Cincinnati for a short period and we entered upon a
busy season of good-bye hospitality. Everybody we knew, and we
knew nearly everybody, wanted to give us a farewell dinner or
entertainment of some sort. Mr. Taft, especially, was fêted in a way
which proved to him how much more widely he was valued in his
native town than he had ever realised. In the opinions of people then
we were going, sure enough, to the ends of the earth, and many of
our friends were as mournful about it as if they had private
foreknowledge that it was to be a fatal adventure.
When the banquets and dinners and luncheons and receptions and
teas had all been given; when the speeches had all been made, and
the good-byes had all been said, Mr. Taft hastened off to Washington
once more to meet his colleagues and make final arrangements, and I
was not to see him again until we met in San Francisco a week before
the date set for sailing.
I asked my sister Maria to go with me for the first year, and she
accepted with delight. So, one morning in early April, with our world
waving at us from the platform of the station, we started south to join
the Southern Pacific railroad at New Orleans and to make our way
from there to Los Angeles and so to San Francisco.
 CHARLIE TAFT WHEN HE WENT TO
THE PHILIPPINES

I had with me my three children, Robert, Helen and Charlie.

Robert was ten years old, Helen eight, while Charlie, my baby, was
just a little over two. It did not occur to me that it was a task to take
them on such a long journey, or that they would be exposed to any
danger through the experience. They were normal, healthy and very
self-reliant little people and I made preparations for their going
without giving the matter a moment’s unhappy consideration. But I
was to receive a few shocks in this connection later on. One of these
came when I learned that some members of the party had left their
children at home for fear of the Philippine climate. Then one day, at
the old Palace Hotel in San Francisco, I was sitting on guard over
Charlie as he played up and down a wide corridor, and reading a
book at intervals, when along came an odd-looking elderly
gentleman who stopped to regard the boy with a smile of the
kindliest amusement. Charlie was an attractive child. Even I couldn’t
help but see that, and I was used to having people stop to watch him.
He had big, dark eyes, soft, brown curls, very deep dimples, and a
charming smile that was always in evidence. The elderly gentleman
stood watching him for some little time, his face growing gradually
very grave, and I wondered what he was thinking about. He didn’t
keep me wondering long. After a few moments he stepped
deliberately up to me and said:
“Madam, I understand you are going to the Philippine Islands.
Now I want to know if you are going to take that great, big, beautiful
boy out to that pest-ridden hole and expose him to certain
destruction.”
I grabbed my great, big, beautiful boy and rushed off to my room,
and it was a relief eventually to learn that the awful Philippine
climate, at least so far as children were concerned, existed, largely, in
people’s minds.
We found intense interest in our mission in California and San
Francisco. If there were any anti-imperialists there, they successfully
concealed themselves. The East was uncomfortably crowded with
them in those days, but the evident interest and profit that the West
coast would derive from a large Philippine trade may have been
responsible for the favourable attitude of the Californians. However,
we must not impeach their patriotism, and we ought to attribute
some of their enthusiasm in reference to the Philippines, and our
assuming control over them, to the natural enterprise of a people
who had themselves gone so far in a land of development and hope.
Everything that could be done to make smooth the path of the new
Commission was done. At their own request the powers of the
Commissioners were carefully defined so that complications with the
military government then in force in the islands, might be avoided.
They were given equal rank with ministers plenipotentiary in the
matter of naval courtesies and precedence; and Mr. Root drafted a
letter of instructions, which the President signed, outlining their
duties in such precise and correct detail that it was afterward
adopted and ratified in its entirety in the act of Congress by which
the Philippine government was established.
 So—I believed we were going to have “smooth sailing” in every
sense, when we started on the long voyage with which began this
interesting experience.
 CHAPTER III
TO THE PHILIPPINES

The United States Army Transport Hancock had been assigned to

the Commission for the trip from San Francisco to Manila and it was
at noon on a pleasant day in mid-April—the seventeenth—that she
pulled away from the crowded dock and headed straight for the
Golden Gate and the long path across the Pacific that leads to the
other side of the world. There were forty-five people in our party and,
although most of us had met for the first time in San Francisco, we
soon became well acquainted, as people do on shipboard, and
proceeded at once to prove ourselves to be a most harmonious
company.
The Hancock was the old Arizona, a one-time greyhound of the
Atlantic, which the Government had purchased and remodelled for
service as an army transport. A considerable fleet of such vessels
plied the Pacific at that time, carrying large consignments of troops
to and from the Philippines and, though there are not so many now, I
still read with interest of the comings and goings of ships whose old,
friendly sounding names became so familiar to us in the course of
our residence in the East. The Grant, the Sherman, the Sheridan, the
Thomas, and others, all named for great American generals, awaken
memories of interesting days. The Hancock was later given up by the
Army and turned over to the Navy on account of her heavy
consumption of coal. She is now used as a recruiting ship at the
Brooklyn Navy Yard.
We found her very comfortable. There were few people aboard
besides the members of our party, and, as she was equipped to carry
the officers and men of an entire regiment, we found ourselves
commodiously quartered. Moreover, the commissary of the transport
service had received instructions to give us excellent fare; this, I
believe, through the thoughtful kindness of Mr. McKinley himself.
Mr. McKinley never failed to take a personal interest in the
everyday welfare of all those in his administration who came under
his own observation and we were made to feel this throughout our
experience on the Philippine Commission, while he lived. On every
appropriate occasion we were certain to receive from him some
kindly compliment, a cablegram or other communication, and it
made everybody who came within range of his influence anxious to
serve him well and to make the work which was being done
satisfactory and pleasing to him. I owe to our connection with
President McKinley’s administration some of my happiest
recollections.
The men who made up the second Philippine Commission were
Mr. Taft, General Luke E. Wright of Memphis, Tennessee; Judge
Henry C. Ide of Vermont, Professor Dean C. Worcester of the
University of Michigan, and Professor Bernard Moses of the
University of California. A short introduction of my husband’s
colleagues and the members of their families who went with them to
the Philippines will be necessary at this point, because I was destined
to be constantly associated with them during four of the most
interesting years of my life. Our co-operation, social and
governmental, was based upon a common purpose, and our
attachment to this purpose, as well as the bonds of friendship which
united us, were greatly strengthened by the opposition we had to
meet for some months after we reached Manila, not only from the
Filipinos, but also from the military government which the
Commission was sent out gradually to replace.
The men of the Commission, coming, as they did, from different
parts of the United States, were widely contrasted, no less in
associations than in their varied accents and family traditions.
General Wright was, and is, one of the ablest lawyers in Tennessee,
and enjoyed, at the time of his appointment on the Commission, the
finest practice in Memphis. He is a Democrat; and old enough to
have been a lieutenant in the Civil War on the Confederate side. But
perhaps his finest laurels for bravery and devotion to duty were won
at the time when he exerted himself to save Memphis in the days
when she was in the grip of a terrible epidemic of yellow fever. I don’t
know the exact year, but the epidemic was so out of control that all
who could, left the city, while General Wright remained to organise
such resistance as could be made to the spread of the dread disease.
Mrs. Wright was a daughter of the famous Admiral Semmes of the
Confederate Navy and for some time after the war she travelled with
her father in Mexico and abroad, thereby acquiring at an early age a
very cosmopolitan outlook. Admiral Semmes was a great linguist and
Mrs. Wright inherited his gift. She had learned to speak Spanish in
her girlhood, so when she arrived in Manila she had only to renew
her knowledge of the language. General and Mrs. Wright had with
them their daughter Katrina, who was then about fourteen years old,
but their two sons, one a naval officer, did not join them in the
Philippines until later.
General Wright had, on the whole, the most delightful social
qualities of anybody on the Commission. He had a keen sense of
humour and could recount a great number of interesting personal
experiences with a manner and wit which made him, always, a
delightful companion. He was a devotee of pinochle and he
instructed the entire party in the game until it was played from one
end of the ship to the other. He was slow to anger, very deliberate
and kindly in his judgments, and offered at times a decided contrast
to his wife who was a little more hasty and not infrequently founded
judgments on what he would jocosely criticise as “a woman’s
reason.”
Judge Ide was born and bred a Vermonter and had many of the
rugged characteristics of the Green Mountain State, not the least
among which is a certain indefinable, but peculiarly New England
caution. In addition to a large and active law practice in both New
Hampshire and Vermont, he had banking connections through
which he had gained a better knowledge of business and finance than
is possessed by the average lawyer. Moreover, a long term as Chief
Justice of Samoa had given him diplomatic experience and a
knowledge of the Polynesian races which were to serve him well in
his work in the Philippines. As Chief Justice he exercised diplomatic
and consular as well as judicial functions, and his position brought
him in close relations with the English and German officials of the
joint protectorate of the Samoan islands and in constant social
contact with the naval officers of many countries whose ships very