From here to technology in less than an eternity.

Despite many recent alterations in emphasis and focus, accounting and tax education is about to undergo changes unprecedented in their scope and impact. These changes are being imposed by technology, and go to the heart of what is taught, how it is taught, and what kind of person it is going to take to become an accounting professional in the near future.

In response, many schools of accounting have modified their teaching approaches, to include more emphasis on interpersonal communication and group interaction skills that enhance leadership and team work.

While these changes meet some of the criteria for a better-educated accounting professional, there is another, more complex issue that has not been addressed by most schools. Technology is changing both the nature of the accounting profession and the delivery of the associated instruction.

New technology has become integral to professional practice; the profession is becoming dominated by technology-based tools, and accounting professionals have become information technology workers. Technology tools have greatly affected the traditional practice areas of auditing and tax, and the accounting profession is actively expanding its role in information systems consulting and assisting clients with business decision-making.

There is a tremendous deficiency between current opportunities and the supply of information professionals, one that is widening due to increasing needs.

Many aspects of accounting are, in fact, systems analysis, and many common accounting tools now have significant elements of technology in their makeup. The increase in demand in these critical areas is not being met with a corresponding growth in academic production of technologically trained accountants. These deficits in production provide exceptional opportunities for qualified accounting graduates. Consequently, there is an ever-growing demand on the accounting education profession to produce graduates with adequate technological training.

Accounting educators need to develop a business plan to obtain funding for a heavy initial investment in hardware and software, and to secure continuing operational budgets to support technology use in the academic process.

Customarily, accounting education has focused on process, details and regulation. Traditional approaches, based on textbooks and lecturing in a classroom environment, have been satisfactory to prepare students to enter the profession. New classroom technology, such as computer-driven projection systems, has allowed traditional delivery to change somewhat. For example, lectures and student projects can be organized and presented electronically, using slides developed from easily accessible software. However, these technology tools have not changed the basic approach to teaching. While a university that cannot afford technology enhancements to the classroom can still enable students to pass certification examinations, they will be less able to cope with the demands of the profession without a good understanding of information technology and an ability to work effectively with technology tools. In addition, an accounting practitioner's ability to engage in continuous learning after graduation depends on using rapidly changing technologies effectively.

Some accounting education programs that cannot afford to integrate technology into accounting courses have responded by adding required or elective courses already offered by computer information systems (CIS) departments. This approach has been somewhat hindered by the artificial barriers that seem to separate accounting studies from CIS studies.

Even if barriers can be overcome, the need to expend more resources on technology cannot be avoided. Schools with small technology budgets, which have managed in the past because CIS departments have served a small number of majors, will be overwhelmed as accounting majors are required to take CIS classes and the delivery of education moves beyond the classroom, using new technology such as the Internet. Meeting this demand requires some fundamental curriculum changes, an increase in the information technology components of courses and a corresponding increase in the availability of appropriate technology. Technology needs to be available in the classroom for instructional use and out of the classroom for students to use it.

The Problem

The first question is how accounting programs acquire the technology to support the curriculum changes. Accounting programs face a historic bias--traditional techniques used for accounting education have not required an extensive capital budget. Accounting education is in a critical transition from a labor-intensive activity (classroom teaching) to a capital-intensive, technology-based activity. While large universities may have the resources to meet this challenge, the problem is acute at smaller schools, where accounting programs must convince collegiate administration of the need to develop computer classrooms and laboratories and invest in an entirely new form of professional development for the faculty to deliver the new curricula.

This is somewhat of a chicken-and-egg problem. An accounting program cannot begin using technology in its instructional programs until it has a technology infrastructure, including both equipment and a faculty trained in its use. Therefore, programs must begin by assembling a technology base and ensuring that it continues to be up to date.

This "ever green" approach requires significant dedication to maintaining and implementing a comprehensive business plan. To navigate a transition to technology-based systems, a faculty must determine where it is and where it is going. The following steps are one way to accomplish this task in a hypothetical situation.

Step one. Determine the technology level of the accounting program, the accounting faculty's skill level and the shared resources available to the program.

Step two. Perform benchmarking exercises. This should be a continuous process, which includes benchmarking not only academic peer institutions but also the profession's direction.

Step three. Develop a comprehensive business plan to obtain the necessary resources in a continuing operational budget.

Example

The following example demonstrates this approach. Of course, the specific facts will only be relevant to this particular case, but the analysis and methodology demonstrated should be generally useful. A small college of business has about 1,000 students who make regular use of campus-owned technology resources. An additional 200 students use their own computers at home, rather than depending on direct use of campus facilities. All students are served by a faculty of 45 plus 10 adjuncts. There are 10 clerical and support staff to perform typing and other faculty and administrative services.

Physical Facility and Infrastructure

The building is a multistory classroom and office building. Each faculty member and support person has a personal computer connected to a network. The faculty on each floor share printers. There are 65 computers for faculty and support staff that are replaced every three years.

Each of 10 classrooms has a lectern containing a Pentium computer with a network connection, a monitor, a VCR and other multimedia components. Each classroom also has a high-resolution video projector with audio system. Equipping each of these classrooms costs $10,000. These facilities must be updated when other computers are updated, every three years.

In addition, there are several multi-station computer laboratories for instructional use. Each laboratory has the same multimedia-equipped lectern and projection equipment. These laboratories are available for student use 16 hours per day. If the students use the laboratory for one hour per day each, the hypothetical school will need 75 systems. Each of these systems will be replaced every three years.

All networking in the building is state-of-the-art Ethernet running on either copper or fiber-optic cable. The entire facility is connected to the Internet via a T-1 line. The installation of a network in this type of building would be a one-time cost of about $75,000. If the system is spread across several buildings, the costs escalate rapidly.

In addition, the institution must provide servers for the network and server software. For most institutions this size, the cost will be $150,000. This would include two servers at $12,500 each, server software for $10,000, a quality e-mail system for $5,000, a database system for back-office operations for $5,000 and $70,000 for site licenses for office and instructional software. Experience shows that each faculty member will request $750-$1,000 worth of additional software to support specialized needs.

Thus, the total startup costs will be $745,000:

Startup costs

Faculty/Staff    $195,000
Student labs     $225,000
Classrooms       $100,000
Infrastructure   $ 75,000
Servers          $150,000

Total            $745,000

Annual Operation

If the facility and technology infrastructure were the only expenses, most schools would have electronic classrooms. However, to be competitive and maintain current hardware and software, the college must plan to replace the entire system every three years. This will cost $170,000 each year:

Hardware replacement fund

Laboratories   $ 75,000
Faculty        $ 65,000
Classroom      $ 30,000

Total          $170,000

This figure does not consider personnel and other operational costs. Spare parts and computers, student assistants and a contingency budget to support the hardware and software is about $25,000 per year. In addition, the college will need support personnel for the network and hardware; this will cost a minimum of $50,000 per year. The connection to the Internet would be a recurring cost of about $2,500 per month ($30,000 per year). The total annual operations cost is thus $275,000. This is an enormous load to add to the annual budget. There are several ways to resolve the problem.

Staff reduction. One way to raise the annual $275,000 is to reduce the number of faculty and staff. If electronic technology brings increased productivity, the most realistic option may be to reassign or replace some clerical staff, because each faculty member has a full computer system available that limits his need for clerical support.

Increase student body or fees. Another way of raising the $275,000 annual operating cost is to increase tuition or laboratory fees (or both). With 1,200 students, each student's tuition would need to be increased $229 per year. If the college had an annual tuition of $3,000, the $229 would represent an 8% increase.

A related approach is to increase the number of students in the college. If tuition is $3,000 per year, adding 92 students, by increasing class size, would raise the entire $275,000 of technology operating expenses. Each of these approaches has advantages and disadvantages, but by using them in combination, it may be possible to cover the incremental operating costs.

Built-in trap. The foregoing discussion assumes that student usage averages one hour per student per day, with a 16-hour per day availability; however, if changes in the program are successful, demand will increase. The college may be able to forestall the problems that increased demand creates by extending laboratory hours; however, there will still be a peak demand problem. Another option is to increase the number of computers, but this increases costs. If student usage increases from one hour per day to three hours per day, the initial costs for the labs will triple, as will annual operating costs.

It should be evident that costs can easily get out of control with successful programs. The basic problem lies in the assumption that the college should maintain a sufficient technology infrastructure for all students at their desired usage level. However, as daily usage increases over time, the budgetary demands simply continue to escalate.

Ownership

A college could require students to buy laptops. Ownership does not solve the entire problem; at best, it eliminates the need for student computer labs. There will always be demand for on-campus facilities and infrastructure. The negative aspect of required ownership is that it influences the cost of education and perceived value. Required ownership raises issues of:

* Equity. Not all students will be able to afford their own systems. This may require the school to find innovative financing techniques.

* Student aid. The ownership requirement may affect the overall student aid package. The rules may not allow students to use part of their aid package to buy computers, even though they may have been able to use the funds to pay any technology fees.

* Perception. Students paying for their own computers may be unwilling to spend money on lab fees or increased tuition to support the basic infrastructure that will still be needed.

Several state universities have directly addressed the ownership problem. For example, the University of Texas now requires all MBA students to acquire systems with particular characteristics. The university is not a broker or vendor; it established criteria and asked vendors to submit proposals for a contract. Students buy equipment directly from one vendor at favorable prices.

Thick/Thin Client Technology

Recycling older systems is another avenue to explore in cost-cutting. Known as thick/thin client technology, this technology enables students, faculty and staff to work with the latest Windows NT-based technologies using older Intel 286- or 386-based systems. This approach reverts back to a mainframe philosophy: A single large server running Windows NT allows many "dumb" terminals to run sophisticated programs. Many colleges salvage PCs from other areas within the university at an average cost of less than $50 per system. A college may be able to create a computing lab from which students and faculty can access a Citrix WinFrame system, for example. This is an easy way to increase the number of systems available in the laboratory or in the hands of students, and to decrease capital and operational costs.

Avoid Capitalizing Scrap

The combination of rapid change in technology and university capital budgeting procedures can result in what amounts to the university "capitalizing scrap." By the time the budgeting and purchasing procedures are implemented, and the equipment is delivered, it is not far from being obsolete, at which point the whole procedure has to start over.

As an alternative, colleges can consider leasing equipment. Most academic institutions are nonprofit institutions that cannot take adequate advantage of depreciation or other tax advantages. In an academic setting, leasing offers many attractive aspects. It is a creative solution to deal with obsolescence. An obvious advantage is that leasing reduces out-of-pocket expenses, and keeps equipment current and under warranty. In addition, leases frequently include all software upgrades to the common suite. A further benefit is that rent is an operational expense. This allows more stable funding for technology needs than would be present if they needed to go repeatedly through the capital budget. Leasing, however, does not avoid the infrastructure, staffing and management costs.

The Next Step

Acquiring technology infrastructure, as discussed in this article, merely provides the necessary platform on which the real changes in curricula and instructional methods must be constructed. To achieve effectiveness in a new environment of professional accounting, both the curriculum and the pedagogic approach to teaching accounting must change. The challenge is increasing the overall technology components, and their attendant critical-thinking skills, in the curriculum without diluting the accounting content of programs.

Course delivery systems must also be examined, which involves making an orderly transition from traditional classrooms to technology-enhanced classrooms, distance-based classrooms or Internet-based classrooms. Corey D. Schou, Associate Dean, Information Systems, Kenneth A. Smith, Associate Dean and Director of Accounting Programs and William E. Stratton, Dean, College of Business, Idaho State University, Pocatello, ID

Jane T. Rubin, CPA
Director of Accounting Accreditation
American Assembly of Collegiate Schools
of Business
St. Louis, MO

Editor's note: Ms. Rubin chairs the AICPA Tax Division's Tax Education Committee.

If you would like additional information about this article, contact Ms. Rubin at [phone].3