AICPA MTC in graduate accounting programs. (Tax Education).

Originally published in 1996, a revised AICPA Model Tax Curriculum (MTC) was issued in 1999. In calling for change, the MTC project asserted that some aspects of tax curricula are obsolete and also recommended both improved and broader skills for today's practitioners. The MTC has several undergraduate and graduate variations, including three different curricula for just as many types of accounting master's degree programs.

This column examines the degree to which the graduate programs in accounting and taxation have adopted the MTC. It uses survey data and analyzes information gleaned from course syllabi provided by the colleges surveyed. While several published MTC studies exist, none specifically addresses graduate programs. Yet, higher education is of growing importance to firms and industry, due largely to the states' 150-hour requirement. As more states adopt that criterion, fewer new hires at CPA firms will have only a bachelor's degree. Further, industry is competing for the same talented students.

Colleges Surveyed and Data Collected

Member institutions of the Federation of Schools of Accountancy (FSA) were sampled for this study. The FSA requires member schools to use an accrediting organization (currently, the Association to Advance Collegiate Schools of Business (AACSB)) recognized by the FSA's board of directors, to independently accredit their accounting graduate degree programs and commit to the FSA's objectives (establishing and maintaining processes that ensure quality graduate accounting programs). Members must be active in improving both the profession and the academic discipline of accounting. Thus, FSA-member schools were chosen for this study, because they are likely to pursue proposals (such as the MTC's) to improve accounting curricula. The respondents are located in 24 different jurisdictions (FSA-member schools are in 37 states and the District of Columbia).

To solicit information about MTC implementation, 85 member schools were contacted in March 2002 and asked to (1) supply course syllabi for all required graduate tax courses and (2) fill out a questionnaire about their MTC program. Of the 85 schools, 31 submitted a completed survey (a 36.4% response rate). Six of the respondents indicated that they offer no graduate programs (despite the FSA'S stated objectives and mission), totaling a final sample size of 25 schools.

MTC for Graduate Programs

The general introduction to the MTC applies to all its curricula, and is concise and direct. Foremost, the introduction emphasizes the need for students to develop (1) communication and leadership skills, (2) an ability to support strategic decisionmaking, leverage technology and anticipate the changing needs of clients, employers, customers and markets and (3) an awareness of business and professional ethics. After the introduction, an individualized preamble addresses each MTC program. The heart of the MTC, which follows the preamble, is a detailed list of suggested topics for each program. At the graduate level, the MTC provides details for three distinct approaches:

1. A master of accounting degree program with a tax emphasis (MA/MS), to include programs titled master of arts, master of science, master of accounting or a related title (such as one school's program, called master of professional accountancy);

2. A master of science in taxation program (MT/MST), to include programs titled master of science in taxation or master of taxation; and

3. A master in business administration program with a tax emphasis, referred to as a tax for management decision-makers program (MBA or MBA-tax).

The preamble to each approach outlines basic prerequisites and includes a concise, informal statement of objectives. Specific course content to be covered is then noted. For non-MBA degree options (e.g., MS, MA, MT and MST), the content is subdivided based on a program's total required tax-course hours. For an MBA-tax degree, content is separated on the basis of class contact hours, which assumes 42 hours of classroom instruction (generally 14 weeks, at three hours per week). The total hours do not include time for examinations or for activities additional to classroom time (e.g., attending a guest lecture).

While acknowledging that the MTC survey's goal is to determine the degree to which members schools use the MTC as a guide for designing their own curricula, understanding whether and to what extent any model curriculum improves a student's soft skills (e.g., communication and leadership) is difficult. Thus, this column does not focus on evaluating the degree to which tax programs enhance these skills, but rather on each program's adoption of MTC subject matter or content. (When respondents provided information on soft skills, those skills are described.)

Survey Results

The questionnaire asked about the types of degrees offered, course hours required for each degree and content and skills covered. The respondents represent business school enrollment of approximately 59,000 undergraduates, 11,000 graduate students and 650 doctoral students. The business programs range in size from 120-6,000 undergraduates, 50-3,000 graduate students and 15-100 doctoral candidates. Thirty of the 31 schools that completed the survey indicated that they offer programs on a semester basis, while the other is on a quarterly system. Only two schools have a tax certificate program for tax professionals (which may represent an opportunity for some colleges to offer this type of program).

Comparison of degrees and required course hours. In general, the total degree hours for most MA/MS and MT/MST programs is 30, with an average of 14 hours for required courses and nine hours for required tax courses for MA/MS programs, and 21 and 18 required hours for MT/MST programs, respectively. The total hours for MBA-tax programs are approximately double that of the other programs, with an average of 36 required course hours and nine required tax-course hours. However, because the sample size for MBA-tax programs was small (only two), the results are merely anecdotal.

Because the FSA uses the AACSB to accredit members, that association's standards were examined. The standard for meeting the requirements for a specialization within master's programs is at least 12 semester hours within the area of specialization. All the MT/MST programs surveyed comply with this requirement, but some of the MA/MS programs may not. (The survey did not intend to evaluate such compliance, nor can it from the data collected.)

Extent of MTC adoption and content coverage. The MTC played some role in tax course design in approximately 72% of the schools surveyed. However, no school used it as the primary guideline. Because many factors compete in the curriculum design process, this indicates the MTC is serving its stated purpose.

Exhibit 1 on p. 736 presents MTC-suggested topic coverage and the extent to which the MA/MS and MT/MST programs require that content. It combines the four separate degrees, because most of the MTC topical treatment of these programs is identical.

According to class syllabi gathered from the member schools, most programs cover traditional tax topics (e.g., business entities' formation and operation and distributions to owners), but some schools did not indicate this on the questionnaire. A question arises as to whether these topics are part of advanced undergraduate studies or whether the schools consider them unnecessary in a curriculum that emphasizes tax (which seems unlikely).

Most schools cover tax research and communications, which is encouraging; these skills continue to be recognized by both the academic and practitioner communities as at least as important as traditional and technical content knowledge of some of the Code and the regulations.

Few programs address international tax issues, despite an increasingly global marketplace. With the growing use of off-shore tax havens by many U.S. companies, colleges may be doing a disservice to students by not providing some international tax basics.

Surprisingly, only two programs included coverage of accounting periods and methods--fundamental topics that businesses must address, both at formation and as they evolve under changing circumstances. Some programs omit this topic at the graduate level, perhaps assuming it was adequately covered in undergraduate courses. The same assumption may apply to the MMMS programs' coverage of property transactions.

Course syllabi. In addition to the questionnaire, syllabi for all required tax courses offer a better understanding of the environment in graduate-level tax classes. The syllabi obtained from the member schools presented several different types of required tax courses. Ignoring variations in course titles, the syllabi showed 15 distinguishable courses (see Exhibit 2 on p. 736).

Course titles clearly overlap, but each course has its own recognizable set of textbooks, other readings and objectives. Likewise, the myriad skills and knowledge addressed in the courses and the assigned projects represent the diverse subject matter covered in today's tax programs. As expected, a course on corporations and partnerships was required at more schools than any other course. However, none of the courses in Exhibit 2 is unique to any single school. The same can be said about both skills/knowledge and course assignments.

Course assignments are also diverse, which is quite different from that of the 1970s and 1980s, when most graduate grades were based only on examinations and class participation, with little or no group work required. Class participation is still the most common non-examination-based method of grading. In some classes, it represents as much as 50% of a student's grade. This is not uncommon in law school seminars, but is generally not the rule in accounting programs.

Course hours. Exhibit 3 presents the MTC MBA-tax program course-hour requirements for different topics. The MTC curriculum differs from the MA/MS and the MT/MST programs in that it suggests a minimum number of class hours for each topic.

The data represent only two MBA-tax programs, which is insufficient for making generalizations. The total required course-hours adopted by the two respondents was 24 and 40.

Conclusion

The survey results indicate that the MTC has had a noticeable influence on graduate tax curricula. Graduate tax programs are addressing the majority of MTC-recommended topics and requiring students to demonstrate the knowledge and skills needed to become successful practitioners, which demonstrates that these programs are serving the profession's needs. However, the MTC Task Force recognizes that its efforts have not solved all tax education problems; it expects and encourages other institutions to continue their efforts, especially in improving teaching methodologies. The dialogue between the profession and academia should continue, enabling tax education to respond to the changing business climate.

The MTC can be found at www.aicpa.org/members/div/career/ edu/introduc.htm. (For further information, see Tax Education, "Experiences with the ModelTax Curriculum" TTA, May 2001, p. 340; Tax Education, "Assessing the Impact of the AICPA Model Tax Curriculum on the First Tax Course Taught at AACSB-Accredited Institutions," TTA, August 1999, p. 596; and Tax Education, "Tax Practitioners' Response to Education Survey," TTA, November 1999, p. 806.)

Exhibit 1: Content Coverage of MA/MS and MT/MST Programs

                                          Number (%) of programs
Topic                                        addressing topic

Tax research and communications:     (26 programs)
* Technical writing                  24 (92)
* Oral presentation skills           21 (81)
* Practice and procedure             21 (81)

C corporations:                      (26 programs)
* Advanced issues of formation,
  operations and distributions       25 (96)
* Consolidations                     19 (73)
* Reorganizations                    23 (88)

Partnerships/S corporations/
Limited liability companies
(LLCs):                              (26 programs)
* Advanced issues of formation,
  operations and distributions       19 (73)
* Passive activities                 20 (77)
* Al-risk rules                      22 (85)

Other areas:                         (19 MA/MS and 7 MT/MST programs)

* Property transactions              13 (68)
* Estate, gift, and generation-
  skipping transfer taxes            11 (58)
* Employee compensation              7 (37)
* Multi jurisdictional issues        9 (47)
* Estate, gift and fiduciary tax     4 (57)
* Characterization of income and
  property transactions              6 (86)
* Accounting periods and methods     2 (29)
* International taxation             1(14)
* State and local (including
  multijurisdictional)               2 (29)

                                           MTC requirement for
Topic                                   MA/MS and MT/MST programs

Tax research and communications:
* Technical writing
* Oral presentation skills           All programs
* Practice and procedure

C corporations:
* Advanced issues of formation,
  operations and distributions
* Consolidations
* Reorganizations                    All programs

Partnerships/S corporations/
Limited liability companies
(LLCs):
* Advanced issues of formation,
  operations and distributions
* Passive activities                 All programs
* Al-risk rules

Other areas:

* Property transactions              MA/MS
* Estate, gift, and generation-      MA/MS
  skipping transfer taxes
* Employee compensation              MA/MS
* Multi jurisdictional issues        MA/MS
* Estate, gift and fiduciary tax     MT/MST
* Characterization of income and
  property transactions              MT/MST
* Accounting periods and methods     MT/MST
* International taxation             MT/MST
* State and local (including
  multijurisdictional)               MT/MST

Exhibit 2: Sample Syllabi Grouped by Content, Skills and Knowledge
Addressed and Assignment Type

Course titles grouped by content

* Corporations and partnerships
* Research and planning
* Estates and trusts
* State and local
* International
* Consolidations and reorganizations
* Accounting methods and periods
* Property transactions
* Business strategy
* LLCs and other flowthrough entities
* Theory
* Jurisprudence
* Tax procedure
* Advanced seminar
* Financial planning

Skills and knowledge addressed

* Oral communications
* Written communications
* Internet research
* Library research
* Return preparation
* Global issues
* Ethical issues
* Teamwork skills
* Computer skills
* Leadership
* Legal analysis
* Issue recognition skills
* Presentation skills
* Personal marketing
* Creative thinking
* Code and regulations

Types of course assignments

* Class participation
* Problem sets
* Case studies
* Return preparation
* Term papers
* Tax memoranda
* Group projects
* Group presentations
* Journal article summaries
* Guest speakers
* Research problems
* Issue spotters
* Court case briefs

Exhibit 3: MTC Class-Hour Requirements for MBA-Tax Programs

Topic                                                      Class hours

Introduction (tax systems, legal environment, etc.)            2
Choice of entity (tax and nontax factors)                      4
Income (judicial doctrines, tax vs. book, etc.)                4
Deductions and losses (excluding cost recovery)                3
Sales and exchanges of property                                4
Cost recovery (including depreciation and amortization)        2
Tax computations (basic, alternative minimum tax,
   credits)                                                    2
Distributions to owners                                        2
Reorganizations and dissolutions                               3
Employee compensation (including retirement plans and
   employment taxes)                                           6
Multijurisdictional issues (international, treaties,
   state)                                                      4
Tax planning for owners and investors                          4
Professional responsibilities (including ethics and
   penalties)                                                  2

Total                                                          42

William H. Dresnack, CPA, J.D., MS Associate Professor

Gary P. Briggs, CPA, MBA Associate Professor

State University of New York College of Brockport Brockport, NY