Help wanted: tax and accounting educators.

A new crisis is quietly looming over the tax and accounting professions, and is occurring in accounting and tax education programs in universities around the country: a shortage in the supply of full-time tax and accounting faculty. Is the crisis real? How does it affect these professions? What can be done to correct the problem?

The Crisis

The problem is real. The Association to Advance Collegiate Schools of Business (AACSB) estimated in a 2003 study that the gap between the supply and demand of qualified business faculty (including tax and accounting faculty) will exceed 1,100 by 2007, and will more than double, to over 2,400, by 2012; see "Sustaining Scholarship in Business Schools: Report of the Doctoral Faculty Commission to AACSB International's Board of Directors," AACSB International, 2003, p. 14 (AACSB Report), available at www.aacsb.edu/publications/dfc/ SustainingScholarship.pdf.

Another indication of the problem's seriousness is the difference between the number of accounting faculty looking for positions and the number of positions available. A large number of faculty and accounting programs conduct their initial recruiting and interviewing for tax and accounting positions at the American Accounting Association's (AAA'S) annual meeting. At the 2004 meeting, over 150 accounting positions were pursuing approximately 60 accounting faculty. However, not all those who interview for an open position are new faculty. Some already hold positions at universities, but want to relocate, for example. They are not adding to the supply, but merely rearranging it.

Other signs of the imposing shortage are showing up. Many accounting programs are finding it more difficult to staff their courses adequately and are hiring part-time adjunct or "clinical" faculty in greater numbers; other programs are reducing course offerings.

The Reasons

Two primary factors are causing the faculty shortage: first, fewer doctoral students are pursuing degrees in accounting than ever before; second, many accounting professors are retiring.

Reduced supply of new faculty: From 1994 to 2002, the number of accounting doctoral degrees awarded decreased from approximately 200 per year to only 86. Tax is being hit even harder: a 2003 American Taxation Association (ATA) survey reported only 23 doctoral students pursuing degrees with a tax focus and only four were close to graduating (although not all schools responded to the survey).

The reasons for the dramatic decrease in accounting and business doctoral candidates are not really known. However, several causes have been suggested by many of the leaders in accounting and business education:

1. Fewer accounting Ph.D. programs: A decline in the number of accounting doctoral programs has occurred, due to the high costs of administering the programs and of providing fellowships, grants and faculty access to relatively few students.

2. Student finances: The high cost of pursuing a doctoral degree, both in terms of tuition, but, more significantly, because of the forgone cost of a well-paying job while obtaining the degree, also reduces the number of doctoral students. Most programs offer fellowships, grants or stipends for research assistance and/or teaching, but these amounts are only a fraction of what most candidates can earn in public or private accounting positions. The sacrifice of lost earnings is huge.

3. Lower salaries in academia: Accounting professors' salaries are lower than those in the public or private accounting sectors. This disparity may actually be more perceived than real. The mean salary of tenure-track accounting faculty (those with doctoral degrees) for the 2001-2002 academic year (9-10 months) from accredited colleges ranged from $86,100 for assistant professor to $107,000 for full professor, according to an annual study conducted by the AACSB More recent, but unofficial, inquiries indicate that starting salaries exceed $120,000 at major accounting programs that emphasize research activities.

4. Long Ph.D. program duration: Currently, it takes five to six years to earn a doctorate at some of the large programs. While the coursework can generally be completed within two years, followed by proposing and completing a dissertation, many programs prefer doctoral candidates to begin establishing their research and publication record while finishing their dissertation. The intent is to strengthen the candidates' progress toward future tenure and promotion before they even accept a faculty position. However, this prolongs the process.

5. Failure of faculty career guidance: Most accounting programs promoting career opportunities in accounting and tax do not mention education. Typically, they focus on careers in public or private accounting.

6. Growth of nonacademic opportunities: Once they graduate, accounting doctoral candidates are finding more alternatives. Lucrative positions in industry are enticing some graduates away from the academic path, further reducing the anticipated faculty supply numbers.

Retirements: The second critical factor fueling the crisis in accounting programs and exacerbating the shortage of new tax and accounting faculty is the large percentage of "baby boomer" faculty who are starting to retire. This exodus will not only continue, but will increase over the next five to 10 years. Also, it is likely that retirements will occur in multiples, while usually only one (or possibly two) new position(s) would be approved per year. In some budget-constrained states, even one new position might not be granted automatically each year.

The Effect

What are the implications of this faculty shortage to the tax and accounting professions? Ironically, the supply of accounting faculty is decreasing, while student enrollment in accounting courses is stabilizing (and may be rising). The positive trend in enrollment comes at a particularly good time for the accounting profession, as new legislation creates tax and accounting career opportunities. Increased enrollment usually means more classes and faculty. Unfortunately, the shortage of tax and accounting educators will likely result in fewer classes (at least in the short-term), making it harder for students to take the classes they want or the ones they need to graduate. This is already occurring with tax courses and some accounting courses at several large accounting programs; it could affect how well students are prepared and, ultimately, how many students are available to the profession.

Possible Solutions

What does the future hold for tax and accounting education, with fewer full-time faculty available to teach the future generations of CPAs? While the outlook sounds bleak to many, it could provide alternative career opportunities for others.

Use full-time faculty: First, the question often arises whether a doctoral degree is necessary to teach tax and accounting. If not, this would lead to accounting programs using more adjunct or clinical faculty who are also practitioners. To answer the question, the AACSB International Board of Directors created the Doctoral Faculty Commission (DFC) to analyze trends related to the supply and demand of business doctoral faculty, assess the magnitude and gravity of the shortage and offer solutions, if necessary; see the AACSB Report.

The DFC's report strongly supports the need for full-time faculty, trained to perform research and scholarship activities. While the use of practitioners who can bring real-world experience to students is encouraged, the report does not recommend this as the primary source of business faculty. In addition, one of the AACSB's functions is to accredit business schools and accounting programs. In this capacity, it requires a certain portion of the business faculty to be "academically qualified" (i.e., an appropriate terminal degree (e.g., Ph.D., or a J.D. or LL.M. for law)). If the required balance between full-time academically qualified faculty and part-time adjunct faculty is not maintained, a business school or an accounting program runs the risk of losing its accreditation.

Additionally, adjunct faculty currently practicing in the profession do not typically have time to spend on curricula matters and academic service and student activities outside of class, creating an administrative void. This could change, however, if on retirement, these practitioners choose to go into academia full-time. The outcome of the debate between using academically qualified faculty versus adjunct faculty remains to be seen. It may rest with the AACSB, or it may be resolved by reality and practicality if the shortage of academically qualified faculty becomes as severe as expected and there are few alternatives.

Recruit more students: Second, accounting doctoral candidates are faced overall with many obstacles. The AAA recently created a task force to design a survey to better understand why more students are not pursuing accounting doctoral degrees and to gather other data that will help in finding solutions. The AAA was represented at a September 2004 meeting, organized by the AACSB, to discuss the shortage problem. The meeting also included representatives from the AICPA, "Big Four," national and regional accounting firms and education. Participants discussed ways to (1) increase the profession's awareness of the problem, (2) increase the number of students in accounting doctoral programs and (3) assist them once they are enrolled.

Some state accounting societies are also taking action. For example, California's Society of CPAs' Accounting Education Committee is reinstating a scholarship program for students in doctoral programs who agree to return to that state to teach tax or accounting.

Conclusion

Will tax and accounting education survive this crisis? No doubt it will; these professions may just look a little different. The demand for tax and accounting students appears to be strong, which will continue to keep the education operating in some form.

In general, a career in accounting has never been an easy sell. It helps to get a student into his or her first accounting or tax class, where he or she can learn about the vast array of opportunities that accounting offers, which is how most students become interested. The same holds for accounting careers in academia. Most people get hooked once they teach an accounting course and experience the challenges, rewards and fun of working with students and others in the accounting, tax and business arenas. It is an exciting and stimulating career--a sentiment that educators do not express often enough.

Similar to the successful student recruitment program that the AICPA undertook several years ago, tax and accounting professionals and faculty need to put time and effort into promoting a career in academia. The issues and obstacles of the shortage of tax and accounting faculty need to be discussed and resolved; the first step is to acknowledge that there is a problem. Accountants are natural problem-solvers, so solutions to this new crisis should naturally follow. Every member of the tax and accounting professions needs to know about the problem and then determine his or her part in solving it.

Editor's note: Prof. Nellen is a former member of the AICPA Tax Division's Strategic Planning Task Force and Tax Executive Committee. For more information about this column, contact Prof. Carr at [e-mail].

Author:

Janice Cart, CPA, Ph.D.

Professor of Accounting and Tax

California Polytechnic State University 

San Luis Obispo, CA