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They can add but can they communicate?

Accounting education is undergoing a revolution. For decades, accounting educators assumed that their accounting programs prepared students well for entry into the accounting profession. However, the growing complexity of the business environment, internationalization of world markets, multimillion dollar settlements which have redefined auditor's liability for their work and major changes in the ethnic and gender backgrounds of accounting students have challenged the assumption that all is well in accounting education.

In 1989 the Big Eight accounting firms jointly issued a "white paper" which voiced concern regarding the quality and number of accounting graduates who were becoming available to the public accounting profession.(1) It echoed the American Accounting Association's Bedford Committee report which concluded that "accounting education as it is currently approached requires major reorientation between now and the year 2000."(2) Specifically, the "white paper" found that accounting graduates lack needed communication, intellectual, and interpersonal skills as well as the general knowledge expected of a broadly educated person; understanding of how business organizations work and the environment in which they operate; and a fundamental understanding of the purpose and objectives of accounting and auditing.

Accounting programs usually operate within the overall context of a school of business and major parallel changes are also being mandated in general business education. The American Assembly of Collegiate Schools of Business (AACSB), the entity which accredits schools of business which maintain the highest standards, has recently adopted significantly revised standards for business and accounting accreditation.(3) To continue to receive AACSB accreditation, California State University, Los Angeles (as well as other schools desiring accreditation) must rethink its basic mission. Among the items to be addressed in each school's mission statement are the characteristics of its students; the relative emphasis which it places on teaching, intellectual contributions and service by the faculty; its view of the future and planned evolution and its infrastructure and use of resources.

Of particular interest are the curriculum standards which require:

* Perspectives for business including ethical and global issues; the influence of political, social, legal and regulatory, environmental and technological issues; and the impact of demographic diversity on organizations.

* A requirement that general education comprise at least 50 percent of a student's four year program.

* Inclusion of both written and oral communication as an important characteristic.

The Need for Change

There are several factors that make change in accounting education inevitable. These factors are: employers' higher expectations of accounting recruits, dramatic expansion of the body of accounting knowledge and students' changing perception of the accounting profession.

In today's highly competitive and dynamic business environment, employers expect their accounting employees, including those at the entry level, to be well-rounded. In addition to being adequately trained in accounting skills, employers also expect their employees to be good communicators, team workers, and critical thinkers. Traditional accounting education has primarily focused on technical accounting skills. Students were assumed to have the other skills mentioned above from either their general educational background or their life experiences.

The knowledge base of the accounting profession has expanded tremendously, particularly in the last two decades. Evidence can be seen in the ever increasing thickness of accounting textbooks. Professors are constantly racing to cover all the materials in the texts, and students are suffocating in a sea of information. Learning, in accounting as well as in general, becomes more passive and less interesting. Students are not given enough time to digest the overload of information. Consequently, understanding gives way to memorization. The detrimental outcome is evident. One of the major criticisms of accounting graduates today is that they lack critical thinking skills.

In the past, accounting had no problem attracting the best and brightest students because accounting jobs were plentiful and usually well paid. In addition, accounting enjoyed a reputation of being a "status" occupation. A recent survey by the Gallup organization of high school and college students concerning perceptions confirms that this image is probably eroding.(4)

Some of this erosion can be attributed to image-damaging litigation settlements by major certified public accounting firms which have made headlines in the past few years. In addition, the popularity of business as a career also appears to be waning as the best students move into the hot new areas such as environmental engineering and the emerging technologies. Finally, the economic condition of the country is having an impact on the availability of accounting jobs. The 1992 edition of The Supply of Accounting Graduates and Demand for Public Accounting Recruits shows that "in 1990, new recruits declined 14 percent from 1989 levels, and firms lowered their recruiting another 14 percent in 1991."(5) Salaries of entry level accounting jobs have also fallen behind many other disciplines such as finance and computer information systems. Consequently, the accounting profession has become increasingly less appealing to the best and brightest students. While some of these factors are beyond the control of the educational process, many academicians feel that changes in the curriculum and in teaching methods can help to make accounting more challenging for students and more relevant to the problems they will face in the ever-increasing complexity of the business environment.

A Survey

In a recent survey, the authors asked a group of California State University, Los Angeles accounting alumni to rank the importance of the following five skills to success in their careers: technical accounting, general business, communication, interpersonal and intellectual. Almost invariably, the alumni ranked communication as the most important skill--followed by interpersonal, intellectual, technical accounting and general business.

When asked for specific areas they wished had been emphasized more strongly in their undergraduate accounting program, respondents frequently mentioned ethics, writing and speaking skills, research techniques, computer applications, business survival skills, international perspective and analytical (thinking) skills. In general graduates felt the technical accounting skills they had obtained were excellent and more than adequate for the demands which employers placed on them.

These results are consistent with the current accounting literature, feedback from recruiters and similar studies done at other institutions.

Catalysts for Change

For over 25 years, academics and others have been advocating the addition of a fifth year of academic study for those desiring to become certified public accountants. These efforts began gaining momentum in 1988 when the members of the American Institute of Certified Public Accountants (AICPA) in a formal ballot overwhelmingly approved (83 percent of those voting) a requirement for candidates wishing to join the AICPA after the year 2000 to have 150 semester hours of college-level education. Since the AICPA is the premier professional association for certified public accountants, this vote provided a mandate for major changes in the education of accountants.

The AICPA action was quickly followed in 1989 by a white paper issued by the chairmen of the "Big Eight" certified public accounting firms detailing their expectations and providing a commitment of $4 million to the academic community to find ways to improve the quality of accounting education. This grant provided support for creation of the Accounting Education Change Commission (AECC) under the oversight of the American Accounting Association (the academic arm of the accounting profession). In turn, the AECC has provided seed grants to several universities to support experimental projects designed to improve both the content and delivery of accounting education. Thus change in accounting education is not simply adding more courses. It also involves restructuring the curriculum and the individual courses which comprise that curriculum.

Since accountants are certified, licensed and regulated by individual state boards of accountancy, the ultimate catalyst for change will come when legislation is passed making 150 semester hours of education a requirement for certification. Under the leadership of the AICPA and the National Association of State Boards of Accountancy, states are rapidly adopting the model accountancy law or some version of it. As of October, 1992, 24 states have enacted laws or regulations requiring 150 semester hours of education to practice as a certified public accountant. In an additional three states, legislation is under active consideration and 21 states are working on legislative packages which will be submitted soon.

Unfortunately, California (which is usually thought of as a leader in these initiatives) has failed to pass legislation and appears to be against such a requirement. The reasons for failure to act include concerns that such legislation might inhibit minorities from qualifying for the profession, concern over the cost of implementation in these years when the state budget is severely constrained, and fear of how the transition period might affect the supply of accounting graduates entering the profession. Based on the trend from other states, it seems likely that California will eventually have to join the national consensus or risk public accounting being substandard in the state. Such a conclusion has serious implications for the entire business community in California.

It is important to note several conditions underlying the 150 semester hour proposal. First, it only applies to certified public accountants--not to accountants in general. Second, the 150 hour requirement is nonspecific as to academic degrees required or even course work needed to fulfill the requirement. Finally, the intent clearly is that the additional 30 semester hours should not be devoted to more technical accounting courses. The call is for increased breadth--not depth.

University Initiatives

Under the mandate of change, many universities have already revised or are in the process of revising their curriculums. However, different universities are approaching the changes differently. For example, the McIntire School at the University of Virginia is creating a broad-based four year accounting degree with the more technical accounting courses moved into the fifth year. At the University of Southern California, the School of Accountancy is restructuring its entire program starting with major conceptual and pedagogical changes in its introductory accounting courses.

California State University, Los Angeles also has undertaken several initiatives to revise its curriculum. The first initiative which has already been approved is a change in the writing proficiency requirements needed by all Cal State L.A. students as a condition of graduation with a baccalaureate degree. The new requirements include completion of a writing proficiency examination earlier in their program or an additional upper division writing course for those who fail the proficiency examination. Thus, the general education requirements have been strengthened which will improve the English writing capabilities of those students desiring to become accounting majors.

Second, the dean of the School of Business and Economics has created two school-based task forces. The Reaccreditation Task Force is charged with assessing the School of Business and Economic's programs and processes against the revised AACSB standards. One of the outcomes of this assessment is likely to be significant changes in the core curriculum for a degree in business. Since the core curriculum contains the breadth courses in business, improvements in this area will help to meet the needs of those specializing in accounting. The Long-Range Planning Task Force will review the school's mission statement and make recommendations for changes in it. Among the unique characteristics of Cal State L.A. is the ethnic and cultural diversity of its students. Another is it's near downtown location in Los Angeles which is likely to continue to grow in importance as a major international trading center. Focusing on these, as well as other strengths as part of the School's mission, will provide a strong base on which the accounting curriculum can be developed.

Accounting Faculty Study

The accounting department faculty has already explored the conceptual foundations of a revised accounting program. It concluded that there is a need for both a four-year and a five-year program in accounting. The five-year (150 hour) program is appropriate for those desiring a career in public accounting. Others may also pursue this program if they want to become higher level technical managers in industry or government. Students who complete this program should expect to eventually become fully qualified professional accountants. As such, their education should include more advanced accounting topics as well as a heavier emphasis on oral and written English skills, logic, research and analysis.

However, the accounting faculty believes there is also a need for accountants who complete only a four-year program. These students would have a general background in accounting which would permit them to obtain entry level jobs in industry, government and not-for-profit organizations, and as employees in some public accounting firms doing write-up work and lower level tasks under supervision. Thus the four-year degree would produce a generalist accountant who could be expected to perform many accounting jobs--though not at the level expected of a professional accountant.

The distinction between a four- and a five-year accountant is a fundamental one. In designing the curriculum to support these two programs, the accounting faculty felt that the Master of Science in Accountancy would be the appropriate vehicle for obtaining the additional year of education since it provides the student with additional academic credentials. Though the curricula for the two programs are still under discussion, it appears that some of the more technical accounting topics such as pensions, consolidations and leases would be deferred to the Master's level in order to make room for more courses involving logic, problem solving, ethics, etc. at the undergraduate level. The entire program, both in content and in delivery methodology, is being re-evaluated and major changes in the traditional approaches to accounting education are being considered.

An Invitation

In today's dynamic society, the only thing constant is change. It is abundantly clear that changes are occurring and will continue to occur as the accounting curriculum evolves into the 21st century. Readers, either accountants or employers of accountants, are encouraged to become involved in the change process by sending their comments and suggestions for change to the authors. Correspondence should be addressed to them at California State University, Los Angeles, School of Business and Economics, Department of Accounting, 5151 State University Drive, Los Angeles, CA 90032. If accounting education is to meet the expectations of both students and their employers in the year 2000 and beyond, accounting education will need input from many sources including academics, business and governmental leaders and the public which they serve. It is a window of opportunity for our readers to become involved and to make a difference in the accountant of the future.

1 Perspectives on Education: Capabilities for Success in the Accounting Profession, a white paper prepared by chairs of the "Big Eight" certified public accounting firms, 1989.

2 "Future Accounting Education: Preparing for the Expanding Profession," Special Report of the American Accounting Association Committee on Future Structure, Content, and Scope of Accounting Education published in Issues in Accounting Education, 1986.

3 "Achieving Quality and Continuous Improvement Through Self-Evaluation and Peer Review: Standards for Business and Accounting Accreditation," American Assembly of Collegiate Schools of Business, St. Louis, MO., 1992.

4 Accounting Recruiting Research, Survey of High School and College Students, (New York: AICPA, 1991).

5 "The Supply of Accounting Graduates and the Demand for Public Accounting Recruits," (New York: AICPA, 1992). Reported in the Journal of Accountancy, December, 1992, p. 18.

RICHARD LAU, Ph.D., is an assistant professor of accounting at California State University, Los Angeles. He is a member of the American Accounting Association and he recently presented research at the annual conference of the Financial Management Association.

D. LYNN RANS, D.B.A., is a professor of accounting at California State University, Los Angeles. An active member of nine professional associations and fraternities, Dr. Rans is a sought-after conference speaker and a frequent contributor to many journals and magazines.
COPYRIGHT 1993 California State University, Los Angeles
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:accounting education
Author:Lau, Richard; Rans, D. Lynn
Publication:Business Forum
Date:Jun 22, 1993
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