Solving the shortfall in accounting classrooms.

As students return to campus this fall, who will be teaching these future members of the CPA profession?

The Baby Boomer faculty members have begun to retire and soon this retirement trend will become a tidal wave--possibly as soon as 2011 when the first born members of this generation reach their 65th birthday.

In 2003, the president of the American Accounting Association (AAA) commissioned a study to determine the possible shortfall of "academically qualified" faculty members (those with doctorates in accounting) within the next five years--meaning the year 2008. This timeframe is somewhat perplexing because the largest exodus of Baby Boomers would not likely begin for at least three more years beyond the time frame of the study.

Regardless, the study, results of which were covered in the May 2006 edition of Issues in Accounting Education, indicated a likely shortage of academically qualified faculty members as early as 2008, a shortage that will only escalate in the next five years. This poses a serious problem for institutions accredited by the Association to Advance Collegiate Schools of Business--International (AACSB International), the premier accrediting agency for business schools. AACSB requires half of an institution's faculty hold academically qualified credentials.

On a national scale, the number of graduates with a doctorate in accounting has been declining for more than 15 years. In fact, this decline has taken nearly dramatic proportions as evidenced by the statistics shown in the Accounting Faculty Directory 2006-2007, compiled by James R. Hasselback.

This directory shows that from 1990--1994 an average of 194 people graduated with a doctorate in accounting. During the next five years this average fell to 148 graduates per year, and in the last five years for which data is available, an average of only 93 people completed a doctorate in accounting (2000-2004). This represents a more than 52% decline in the average number of doctorates granted in accountancy since 1995. Another sobering piece of reality is that more than 90% of states require accountancy graduates to earn at least 150 semester hours before taking the CPA exam, which increases the need for qualified faculty.

At the 2005 national meeting of AAA, the ratio of open positions to the number of available candidates was greater than six to one. By the time this article appears, it is quite likely this shortfall of academically qualified faculty members will have increased to a ratio of eight to one.

While this shortage of academically qualified accounting faculty members may cause alarm, particularly at AACSB accredited institutions, there is a solution to this problem--at least from a temporary perspective.

A change in qualifications

Recognizing the growing shortfall in qualified faculty members, the AACSB refined accreditation standards to recognize two types of faculty members. The first type is academically qualified faculty members, which is defined as instructors who hold a doctorate with a concentration in accountancy from an accredited institution. The second category pertains to those who are professionally qualified. Typically that would encompass those who have been in accounting practice in positions of significant responsibility.

The AACSB recognizes such individuals as qualified, for accreditation purposes, for up to five years. In addition, the AACSB has started a new training program called the "bridge program." For a fee, this program will expose practitioners to a brief but intense training program to provide them with the latest teaching techniques used in higher education. The successful completion of this program allows practitioners to serve as professionally qualified faculty members for five years.

A Big Four firm steps up

With the advent of the change in AACSB requirements, PricewaterhouseCoopers (PwC) has announced a pilot program called PwC Teaches, which commits approximately 20 senior partners to teach accounting classes in selected colleges and universities. A number of these appointments will begin during the 2007 fall term. According to Jean Wyer, the PwC principal who manages the program, this represents a commitment of approximately 5,000 hours of partner effort. Also, the program is designed so that the partners will comply with the professionally qualified standards for faculty members as defined by the AACSB.

John Carroll University (JCU) is one of the participating institutions in the PwC Teaches program this year. "We are extremely pleased to be among the programs PwC has selected to support in this pioneer effort to meet the shortfall in qualified faculty members," said Gerald Weinstein, chair of the Department of Accountancy at JCU. "We will whole-heartedly welcome our PwC partner from the practice community as an integral member of the JCU accounting community."

Bringing business experience to the classroom

JCU has had a long history of drawing from the practice community to teach in the accountancy program. For example, George G. Goodrich, CPA, a JCU alumnus and former managing partner of Arthur Andersen in Cleveland, has been the Accounting Executive in Residence, teaching the Advanced Income Tax class at JCU. Goodrich, who had also been director of global taxes and assistant treasurer for Andersen Worldwide, brings immense practical business experience to the classroom.

For accounting professionals nearing the end of their practice careers, many institutions will likely welcome them as adjunct faculty members. As part-time faculty members they would teach one or two classes at a college or university.

Over the past several years, JCU has used several professionally qualified individuals as adjunct faculty members, a number of which are also school alumni. JCU is confident that students of these adjunct instructors will receive the same relevant material content presented with the same rigor and completeness that they would have received from a full-time academically qualified faculty member.

From the university's perspective at both the accountancy department and business school, these adjunct or part-time faculty members are much like discretionary fixed costs in a factory. If properly managed, they can provide a high quality of expansive capacity as well as a reduction in capacity when needed--and their cost is not prohibitive for the high quality of talent they bring to the classroom.

There are also a number of benefits for the adjunct faculty members. For example, Frederick L. Lilly, who was the managing partner of Lilly and Harris, CPAs, has found great pleasure sharing his knowledge with accounting students at JCU. Lilly has published numerous articles in professional accounting journals and recently taught an upper-division class in accounting information systems at JCU.

Visiting faculty members: Another valuable source of talent

Another source of talent that institutions may use is visiting faculty members. This includes people who may wish to explore a career alternative by teaching at the college level for a period of time before deciding to pursue a doctorate in business or accounting. Amanda English, CPA, opted to join the JCU faculty as a visiting instructor for just such a reason. After five tax seasons in public accounting while also successfully teaching as an adjunct, English decided to explore the option of full-time teaching as a visiting faculty member.

"I am extremely pleased to give back to the profession some of the educational benefits I received while I was a student at John Carroll. Given my recent experience as a senior accountant in practice, I am able to help students prepare for the rigorous demands they will face when they enter the practice community," English said.

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The institution gains a high quality of instruction for its students from these professionally qualified practice individuals, while it also gains flexibility in managing the numbers of instructors in the classroom. The university will likely experience a cost saving since adjunct teachers do not cause the university to incur such costs as health-care, vacation, or tuition-waiver benefits that may often accrue to full-time tenure track faculty members.

Long-term problems still face academe

While there are many advantages to using professionally qualified faculty members for both the institution and the practitioner, there still looms the long-term problem of not enough academically qualified faculty. How will business schools fill the void left by academically qualified Baby-Boomer faculty members who retire in the next decade? It appears that accreditation agencies such as the AACSB have come to recognize and accept the reality that a long-run shortfall of academically qualified faculty is going to exist. It also seems evident that academia must accept that accountancy departments of colleges and universities will be largely a mix of clinically-qualified faculty members from the practice community and faculty members with doctorates.

PwC has taken a first step on the part of both the academic community and the practice profession in making a temporary change in the composition of the faculty a reality. The AACSB still requires at least half of an institution's faculty hold academically qualified credentials. The author, who has significant experience in both practice and the academic community, sincerely hopes that this first step taken by a Big Four firm will be favorably accepted so that other firms in the practice community will become partners in this very important joint venture for the betterment of the accounting profession.

In the meantime, accounting education will still be faced with the long-term issue of addressing how to make the pursuit of a doctorate in accounting more attractive and alleviate the shortage of academically qualified faculty in all types of programs.

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Only the passage of time will give us the ultimate answers to this problem, but in the interim, there exists a great window of opportunity for those practitioners in business and accountancy to perhaps consider a change in their careers as they near retirement from professional CPA practice. If you are an accounting professional who is thinking about winding down your career, why not contact a college or university in your local area to see if there is an opportunity to share your business knowledge as an adjunct faculty member.

Roland L. Madison, CPA, Ph.D. is a professor of accountancy at John Carroll University. Madison is a former president of the Cleveland Chapter of The Ohio Society of CPAs and is a past president of the Ohio Region of the American Accounting Association.

By Roland L. Madison, CPA, Ph.D.