The crisis in accounting education; the CPA's role in attracting the best and the brightest to the profession.

Much has been written about a crisis in accounting education. Professors W. Steve Albrecht and Robert J. Sack sounded the most recent alarm in a 2000 monograph, Accounting Education: Charting the Course through a Perilous Future, www.aaahq.org/pubs/AESv16/toc.htm. This study found that many practicing accountants perceived the accounting education graduates get today to be outdated and in desperate need of an overhaul. If these practitioners were completing their own education over again, some said they would choose not to major in accounting. As stakeholders in the success of accounting education, CPAs must recognize their input is urgently needed. This article examines the crisis and explains how CPAs can become active partners to improve accounting education.

THE CRISIS

The global marketplace is changing. Businesses rely more and more on changing technology. The companies, services and industries that fuel economic growth also are evolving. In this new marketplace, traditional accountants are a dying breed. Technology has made preparing and disseminating financial information so inexpensive anyone with the right software can produce basic data. Yet, many accounting educators have failed to restructure accounting curriculum to equip graduates with the tools and expertise they need in today's business world. As a result, fewer and less-qualified students choose accounting careers, and the future of accounting schools as top-tier providers of business graduates is at risk.

One of the early warning signs that major changes in accounting education were needed came when major CPA firms reengineered themselves as "professional services" rather than "public accounting" firms. So convinced were they of the need for dramatic change, not even intense SEC pressure could deter them from offering the services the marketplace demanded. Unlike the academic community, CPA firms were quick to realize that new business realities demanded a broader set of competencies.

Some faculty argue that the loss of the best students to other majors is due to higher starting salaries. Employers, they say, aren't paying accounting graduates as much as those with other majors such as consulting and computer systems. While starting salary is certainly an issue, is it the only reason the best and brightest students are choosing fields other than accounting in growing numbers? Why have the starting salaries of accounting majors decreased relative to other majors? Perhaps salary differentials reflect marketplace expectations about valuable skills, knowledge and abilities. Faculty who label starting salary as the culprit should consider that the real reason may be an accounting curriculum that both employers and students no longer value.

A PROACTIVE MODEL

The flight of the best students to other areas of study exposes a deeper problem: The academic community, in general, tends to resist major curriculum shifts. In many accounting programs, it isn't unusual to find decision-making models focused exclusively on enrollment trends, number of students hired by major firms, starting salaries and anecdotal testimony of alumni, campus recruiters and employers as proxies for program quality.

By contrast, the need to maintain profits and increase partners' wealth forces CPA firms to be proactive in anticipating and responding to opportunities. As public accounting firms quickly realized, reactive firms--those that respond to change only when forced--don't survive in highly competitive markets. The academic culture, however, lacks the wealth incentives and management structures necessary to anticipate opportunities or reward innovations. As one faculty member at a highly respected university described it: "The academic environment is based on tradition. It holds tightly to the time-honored independence of faculty with respect to classes and scholarship. Our evaluation and reward system is based on individual efforts and our faculty's most respected attribute is an independence of thought.... With this in mind, no one should be surprised to find resistance to change."

When declining enrollment or feedback from campus recruiters suggests something is broken and needs to be fixed, accounting educators react by assigning a committee to study the problem. Unless it is "generally acceptable" to both administration and faculty, the solution the committee recommends will face significant opposition. As a result, accounting educators are limited in what they can do to reverse the loss of top students to other careers.

Exhibit 1, at right, models two types of information collected by accounting programs and public accounting firms:

* Major changes in the business environment.

* Proxies that measure the success of programs and firms (profits for professional service firms and enrollment trends and alumni and employer satisfaction for accounting programs).

[ILLUSTRATION OMITTED]

Proactive accounting programs and firms use both types of information. Reactive ones focus only on feed back about recent successes. The use of this information by each results in different outcomes. Proactive programs and firms respond to changing market conditions by strategically positioning themselves for future success. (One example of this is the decision many accounting firms made to become professional service firms.) Reactive programs and firms ignore market changes until lower profits, declining market share and other negative feedback forces them to change how they do business or risk extinction.

The Albrecht and Sack monograph (see review on page 84) highlights the plight of reactive accounting programs. But some of them, such as the 13 that were part of the Accounting Education Change Commission (AECC) "Project Discovery" grant program to encourage curriculum experimentation (see exhibit 2, below), have been proactive. Enrollment trends, employer/alumni surveys and similar assessment data support their efforts.

Exhibit 2: Curriculum Innovation

The Accounting Education Change Commission, formed in 1989 to improve the academic preparation of accountants, allocated funds to a curriculum grant program to encourage experimentation and stimulate curriculum projects that would become prototypes for nongrant accounting programs. Ultimately, these 13 schools with accounting programs were chosen for funding:

* Arizona State University

* Brigham Young University

* Kansas State University

* Kirkwood Community College

* Mesa Community College

* North Carolina A&T State University

* Rutgers University--Newark

* University of Chicago Graduate School of Business

* University of Illinois

* University of Massachusetts at Amherst

* University of North Texas

* University of Notre Dame

* University of Virginia

Source: The Accounting Education Change Commission Grant Experience: A Summary. Edited by R.E. Flaherty. Accounting Education series, Volume no. 14, 1998.

These 13 programs distinguished themselves from their less successful counterparts in a number of ways, abandoning curriculum traditions that were inconsistent with new technology and the needs of stakeholders. Several schools--Arizona State, Brigham Young and Notre Dame among them--developed entirely new approaches to accounting education delivery and content. They now use traditional accounting textbooks as only one of several resources rather than as the major driver of course content. Faculty simulates the real-world business environment with case analyses, computer searches for company and industry data and classroom discussions of issues from a business cycle perspective. These programs place a heavy emphasis on cooperative learning, field trips and interaction with accounting practitioners.

This learn-by-doing approach to teaching can also be found at the University of Illinois, where students are challenged to gain knowledge by performing meaningful activities. This is in sharp contrast to many accounting programs that still emphasize journal entries and GAAP. Proactive programs have relegated traditional financial-statement-preparation skills to a laboratory-science-type experience. The classroom focus is on interpretation and use of financial data as a source of information to make decisions about the future. These programs introduce accounting to students from an information systems perspective that views accountants as members of a team dealing with strategic issues.

CONTINUOUS QUALITY IMPROVEMENT

Because the academic culture is inherently resistant to major changes, a close relationship between alumni CPAs--those who graduated from a particular accounting program--and accounting educators probably has never been more important. Alumni CPAs can be a valuable student resource because

* Accounting practitioners know better than anyone else what the profession has to offer top students.

* Accounting practitioners are in the best position to provide expert insight about the changing nature of the profession and employer needs.

* The opportunity for practitioner interaction with students through internships and similar activities can be used as effective marketing tools to attract students.

Alumni CPAs also are a valuable resource to faculty. They understand better than anyone the disconnect between what they learned in the classroom and the skills needed in the workplace. Regular and systematic feedback from alumni CPAs about the changing business environment and their assessment of an accounting program's strengths and weaknesses can help support program improvement. Brigham Young University, for example, says increased interest in its program resulting from the AECC changes increased contributions from alumni and others dramatically. This is consistent with the high ratings it got from alumni on survey questions about the adequacy of career preparation.

A proactive model of continuous quality improvement needs experienced practitioners to form a partnership with a school's accounting educators. A reactive system that relies only on unstructured faculty/practitioner relationships and on informal feedback is inadequate for today's marketplace.

Alumni CPAs are affected by their college's success in attracting high-quality students. That gives CPAs a vested interest in helping educators bridge the gap between what goes on in the classroom and the skills, knowledge and ability the current business environment demands. While curriculum is the appropriate responsibility of accounting educators, alumni CPAs should not be passive in their efforts to influence what students are learning. They have a legitimate interest in the quality of their school's accounting program because it reflects on the training they themselves received. Both the survival and reputation of the colleges and universities from which they graduated are at stake if the existing curriculum is inadequate to prepare accounting students for successful careers.

There are several ways CPAs can support accounting program improvements. Accounting advisory boards offer practitioners an opportunity to be effective partners with educators. Advisory boards are formal vehicles colleges and universities can use to solicit stakeholder input and external financial support for accounting programs. Membership usually consists of alumni, employers of the program's graduates and local business leaders whose opinions and support the faculty values. The existence of such a board signals recruiters, students, prospective faculty members, accreditation bodies and others that the program is committed to continuous quality improvement.

In addition to regular meetings at least annually, the accounting program chairman or chairwoman should correspond with board members periodically to keep them informed about significant program issues. Faculty can call upon board members for advice, to serve as guest speakers and to provide scholarship ,and internship opportunities. In getting students to buy into their new Project Discovery curriculum, for example, the University of Notre Dame credits supportive comments from accounting practitioners as an important motivating factor.

These boards are especially important for business and accounting programs accredited by the Association to Advance Collegiate Schools of Business (AACSB). There are 382 U.S. business schools--representing more than 55% of the business and management degrees awarded--that have AACSB accreditation; 154 also have separate accounting accreditation. Since 1991, AACSB-accredited programs have used mission-linked accreditation standards and procedures. Accounting programs applying for AACSB accreditation must demonstrate continuous quality improvement consistent with their mission. This mission, in turn, must be the outcome of a process that values stakeholder input. CPAs are among the most important stakeholders and should volunteer to serve on an advisory board if asked.

Another way CPAs can support continuous quality improvement is to respond fully to alumni surveys. Such surveys are usually designed to solicit feedback about alumni satisfaction with various aspects of the accounting program including curriculum, advising and support services. Programs may also want to know how satisfied alumni are with their chosen career. Legislators, state boards of education and accreditation bodies have, over the last 15 years, demanded more accountability from colleges and universities about program quality. The result has been a significant increase in formal surveys. Practitioners should not underestimate the power of alumni opinion to create change. It drives accounting program behavior in much the same way as profits drive corporate behavior. Employer satisfaction surveys of CPA firms that employ new accounting graduates also provide faculty and administrators with an important measure of program success.

A 1999 committee report from the American Accounting Association assessment task force documented the importance of employer/alumni feedback. The task force examined the final report summary of each AECC grant school, providing a rough benchmark for identifying assessment best practices among doctoral, AACSB nondoctoral and non-AACSB schools with accounting majors. (See exhibit 3, below.)

The task force found that 10 of the 13 programs acknowledged the importance of alumni or employer feedback in developing curriculum changes and assessing the success of innovations. Of the 13 programs, eight used both employers and alumni input to support curriculum changes. Even when they collect feedback from CPA stakeholders using only well-designed surveys, faculty and college administrators still receive clear warnings or endorsements of program quality.

PROMOTING TO THE BEST AND BRIGHTEST

The horse-and-buggy era of accounting education is over. The shift from smokestack industries, mass-production assembly lines and financial statements prepared using 10-key calculators is irreversible. A new generation of Internet-savvy consumers will replace traditional college students. Given the pace of technological change, it will be difficult for accounting programs to follow a reactive decision-making model and still retain "market share." Successful programs must anticipate market shifts and put the lethargic academic machinery in motion to exploit emerging paradigms.

While accounting faculty are best suited to helping students develop the skills necessary for an accounting career, CPAs have a similar advantage when it comes to describing the nature, variety, challenges and rewards of practicing accounting. This is perhaps one of the least appreciated and underutilized contributions CPAs can make to attracting talented students to accounting.

For their part, students need to better understand the CPA's evolving role in today's economy. To gain this understanding, students need more opportunities for meaningful and timely interaction with CPAs. This will enable them to see how they will fit into accounting firms after they graduate and how an accounting major is relevant preparation for a business career. The bottom line is that CPAs must and should work with accounting educators to share their real-world experiences and provide input to foster accounting program innovations.

Fast Facts

* The percentage of college students majoring in accounting dropped to 2% in 2000 from 4% in 1990.

* The percentage of high school students who intend to major in accounting fell to 1% in 2000 from 2% in 1990.

* More than 80% of faculty members surveyed said there were fewer qualified accounting students than five years ago.

* Accounting department heads reported that information systems graduates commanded the highest starting salaries among business-related graduates.

* Faculty members and practitioners agreed paying higher starting salaries was the most important step corporations and accounting firms could take to attract better students into the accounting profession.

Source: Accounting Education: Charting the Course through a Perilous Future. www.aaahq.org/pubs/AESv16/toc.htm

EXECUTIVE SUMMARY

* THE CRISIS IN ACCOUNTING EDUCATION IS GROWING. According to a 2000 study by Professors Albrecht and Sack, Accounting Education: Charting the Course through a Perilous Future, practicing accountants perceive the education most accounting graduates get today to be outdated. As stakeholders, CPAs must recognize their input is needed.

* MANY ACCOUNTING EDUCATORS HAVE RESISTED restructuring the accounting curriculum to equip graduates with the tools they will need in today's changing business environment. With fewer and less-qualified students choosing accounting careers, the future of accounting schools as top-tier providers of desirable graduates to business employers is at risk.

* THE FLIGHT OF THE BEST STUDENTS TO OTHER careers ex poses a deeper problem--the resistance in the academic community to major curriculum shifts. Accounting educators have been slow to make the kind of changes needed to reverse the loss of top students to other careers.

* ACCOUNTING PRACTIONERS KNOW BETTER THAN anyone what the profession has to offer. They also are in the best position to provide expert insight about the changing nature of the profession and employer needs. Involvement in alumni advisory boards, offering internships and similar activities are good ways for CPA to help attract students to accounting.

* CPAs ALSO CAN HELP BY RESPONDING TO ALUMNI surveys. These surveys provide accounting programs with information about alumni satisfaction with the program and how well it prepared them for a business career.

Exhibit 3: Employer/Alumni Input Used by AECC Schools

                      Providers of input           Type of input

                                            Curriculum
                                            effectiveness   Curriculum
Grants        Total   Employers   Alumni    evaluation      development

Doctoral        5         3          3            3              1
Nondoctoral     6         5          5            5              1
Non-AACSB       2         2         --           --              2
Total          13        10          8            8              4
                       (76.9%)    (61.5%)      (61.5%)        (30.7%)

ALEXANDER L. GABBIN, CPA, PhD, is the KPMG LLP Professor of Accounting at James Madison University in Harrisonburg, Virginia. He is a former director of the School of Accounting and a member of the accounting accreditation committee of the AACSB.