Characteristics of master's in accounting degree programs.
The enrollment data show that the number of graduate students in accounting has increased in recent years, for both existing programs and for new programs added in response to the 150-hour requirement. However, the average enrollment level of these programs is not large, especially in comparison to M.B.A. programs. The input quality of students is assessed based on GMAT score data. For a sample of 11,255 students over the four-year period 1998-2001, the average GMAT score for students in graduate accounting programs is 586, significantly lower than for students enrolled in highly ranked M.B.A. programs. In addition, average GMAT scores of graduate accounting programs are highly correlated with program rankings and at least one (then) Big 5 firm's hiring ratio. Our analysis of program design and curriculum indicates a great deal of commonality across programs. Most programs, including programs with modest enrollment levels, offer three or four specialty tracks. Most programs require a large number of accounting courses, and there is substantial commonality among the sets of courses. In contrast, the nonaccounting business coursework is not well developed in most programs. Also, while there is an emphasis on course content, we do see evidence of a focus on functional, personal, and broad business competencies as suggested by the AICPA Core Competency Project. As evidence of curriculum innovation, we discuss several examples of specialized or "focused" programs.
We conclude by discussing the implications of the results for accounting education and professional practice.
The purpose of this study is to assess characteristics of master's in accounting degree programs by focusing on student input quality and enrollment trends, program design and curricula, and professional opportunities for graduates. It is motivated by several considerations. First, a primary motivation is to fill an information void resulting from the lack of large-sample data describing graduate accounting programs. For example, in the widely discussed Albrecht and Sack (2000) survey, the authors provide a negative assessment of the state of accounting education. While their study is comprehensive in the sense that a variety of qualitative and quantitative assessment tools are used in analyzing responses from both practitioners and accounting educators, the study did not gather or present a detailed analysis of the kinds of graduate accounting program data that we provide.
In addition, Nelson et al. (2002) analyze the characteristics of both graduate and undergraduate accounting students and conclude that the quality of undergraduates is not declining relative to measures taken five years earlier. However, when assessing graduate accounting students, they warn that their data "necessitates the use of caution when drawing the conclusion that student quality is not declining" (Nelson et al. 2002, 276). Both the Albrecht and Sack (2000) and Nelson et al. (2002) studies investigate real or perceived changes in the quality of students electing to major in accounting. We extend this line of inquiry by specifically focusing on the quality of graduate accounting students and by benchmarking the input quality of graduate accounting students relative to other students pursuing graduate business degrees.
Second, the 150-hour requirement is now effective in 44 jurisdictions and an additional four states have passed 150-hour legislation scheduled to become effective within the next decade. In short, the 150-hour requirement is now a fait accompli and it has caused accounting educators to focus on graduate accounting education as never before. (1) Third, recent events related to business and accounting scandals, the restructuring of the CPA exam, new program delivery possibilities, and a host of other environmental factors have the potential to impact accounting education greatly in the coming years. The data presented in this study provide a starting point, or baseline, for evaluating inevitable future changes.
Based on an analysis of 42 graduate accounting programs covering the period 1998-2001, we provide evidence that the quantity of graduate accounting students is increasing. However, based on Graduate Management Admission Test[R] (GMAT) scores as a proxy for student quality, we conclude that the quality of graduate accounting students is not high relative to a "best and brightest" criterion and based on a comparison with GMAT scores of students enrolled in highly ranked M.B.A. programs. Further, our analysis indicates that the average GMAT score at ranked master's in accounting programs is significantly higher than at unranked programs and that at least one (then) Big 5 firm's hiring ratio from ranked accounting programs is 2.5 times greater than from unranked programs. (2)
Our analysis of program designs and curricula provides data that have not been summarized before and yields several interesting insights. First, most programs, even relatively small programs, offer several traditional "tracks" (assurance services/financial reporting, taxation, managerial, and information systems). Second, within the assurance services/financial reporting track, we find a great deal of commonality among coursework. The combination of low average program enrollment, the presence of multiple tracks, and the commonality of coursework across programs are considerations that lead us to question the design efficiencies of graduate accounting programs and, consistent with Albrecht and Sack (2000), to call for greater innovation in program offerings. In addition, based on practitioners' assertions that "our educational model is broken and obsolete" (Albrecht and Sack 2000, 1, footnote 5), and Albrecht and Sack's own suggestions for structuring programs to fix the problem, we profile the curriculum designs of several innovative accounting programs.
In summary, we attempt to assess key characteristics of graduate accounting programs by focusing on inputs, curriculum (processing), and the relation between a student quality indicator (GMAT score) and employment opportunities (outputs).
The remainder of the study is organized as follows. The next part summarizes our research methodology and information sources. Discussions of enrollment trends and analyses of student input quality based on GMAT scores are then provided in subsequent sections. Next, we discuss graduate accounting program design issues and profile the curricula and course contents of four innovative programs, and finally conclude with a summary and discussion of implications of the results.
We used telephone and email requests to obtain data from administrators of graduate accounting programs. Our objective was to obtain data for a large and representative sample of master's in accounting programs. The starting point was the CPA Personnel Report's (2000) ranking of top graduate programs in accounting. (3) Nineteen programs were identified from this source. Fifteen of these programs are offered at one of the 56 universities that have M.B.A. programs appearing in either the Business Week (1999, 52) or the U.S. News & World Report (2000, 86) rankings of top-tier M.B.A. programs. Six of the remaining 41 universities with ranked M.B.A. programs also have active master's in accounting programs. Adding these six programs to our original sample brings the total number of graduate accounting programs identified from rankings data to 25. (4) All of these programs provided data for our project.
Hasselback (1999) was used to identify 50 additional large state and private universities whose master's in accounting programs were not ranked by one of the above publications. After 17 of these programs responded to our initial request for data, bringing our final sample to the 42 graduate accounting programs, we considered our sample large enough and did not make repeat requests for data from the nonresponding programs. Table 1 lists the universities in our sample, website addresses, graduate accounting degree designations, and codes for tracks (specialties) offered by the graduate accounting programs. Based on how our sample was constructed, it is biased toward larger, nationally recognized graduate accounting programs.
We requested enrollment data and average GMAT score data from the graduate accounting programs in our sample as of Fall 1998, 1999, 2000, and 2001. We limited the data request to encourage a high response rate and because Albrecht and Sack (2000, 23, footnote 4) found that most accounting departments do not track student quality. Even though our data request was limited, most programs did not have the data readily available and had to perform special analyses to gather it. A few programs indicated that their data are confidential and should not be separately disclosed. Therefore, we do not report detailed results at the individual program level.
INPUTS: ENROLLMENT TRENDS
We begin our analysis of characteristics of graduate accounting programs by examining enrollment trends and relative program sizes. If enrollment is increasing in these programs, then it indicates a market perception that the programs add value, they are needed in the sense of meeting a broad objective (e.g., the desire to practice as a CPA), and they are successfully competing with other types of graduate programs. In addition, the size of graduate accounting programs is important given the loss in efficiency and flexibility associated with low-enrollment programs and the possible transfer of resources away from low-enrollment graduate accounting programs to M.B.A. programs that may result from the perceived importance of highly publicized M.B.A. program rankings. We discuss this issue in more detail below.
The American Institute of Certified Public Accountants (AICPA) study of The Supply of Accounting Graduates and the Demand for Public Accounting Recruits (AICPA 2002, 4, Table 3A) estimates the number of master's in accounting graduates in recent years. Data from the past decade are summarized in Panel A of Table 2. The estimated 8,700 graduate accounting degrees awarded in 2000-01 is at an all-time high. (5) However, for the 1999-2000 academic year, the AICPA estimated the total number of accounting degrees awarded at 45,095 (37,115 undergraduate and 7,980 graduate), a 26 percent decline from the 1994-95 estimate of 61,220 (53,360 undergraduate and 7,860 graduate) and the lowest total since the 44,600 combined estimate for 1975-76. The degree count recovers somewhat in 2000-01 to 46,555 (37,855 undergraduate and 8,700 undergraduate), an increase of 3 percent over the prior year.
The most recent AICPA supply survey had a response rate of 31 percent (AICPA 2002, 3, Table 1). The enrollment estimates for nonresponding universities are projected based on the relative number of accounting faculty members for responding and nonresponding universities and the accuracy of these estimates, to the best of our knowledge, has not been validated (AICPA 2002, 38). Furthermore, the most recent data reported is for students enrolled in 2000 (graduating in 2001). Thus, some independent and more current verification of enrollment/graduation trends, particularly related to graduate accounting programs, appears useful.
Panels B, C, and D of Table 2 summarize 1998-2001 enrollment data for the master's in accounting programs in our sample. (6) Panel B reports fall enrollment totals for all 42 programs in our sample. The Fall 1998 enrollment data reported are comparable to the AICPA's 1998-99 estimate of master's in accounting spring graduates. The data from our sample show that any graduate program enrollment decline evidenced from the AICPA data in 1992-93 and again in 1995-96 and 1998-99 appears to have reversed since that time. For example, the AICPA's 1999-2000 estimate of graduates shows an increase of 18.7 percent over 1998-99. For our sample programs, the enrollment data show further growth in 2000 and 2001, with the 2001 enrollment of 4,077 students over 36 percent greater than the enrollment in 1998. (7)
Four master's in accounting programs in our sample were started during the 1998-2001 period. Therefore, they explain some of the large increase in number of students enrolled during that period. Panel C of Table 2 reports enrollment trends for the 38 master's in accounting programs that were active during the 1998-2001 period. These programs realized a 29.1 percent increase in enrollment from 1998 to 2001. (8)
Panel D of Table 2 reports enrollment trends for the subset of master's in accounting programs that were active over the 1998-2001 test period, were ranked by CPA Personnel Report, and have M.B.A. programs ranked by Business Week and/or U.S. News & World Report. This group of programs realized a 35 percent enrollment growth over the test period, a level that exceeds the enrollment growth of the 38 programs in Panel C.
Another issue related to enrollment is the relative size of master's in accounting programs compared to M.B.A. programs. Panel E of Table 1 reports Fall 2001 enrollment comparison data for the 42 universities in our sample. (9) M.B.A. programs appear to have a significant enrollment advantage when compared to master's in accounting programs. For our sample, the median enrollment for M.B.A. programs of 264 students is almost four times greater than the median enrollment for master's in accounting programs of 64 students. (10) Actually, the size difference is much greater than the above comparison indicates. The M.B.A. enrollment totals are for full-time students and do not include executive M.B.A. students or part-time students. In terms of number of students and overall impact, we believe that M.B.A. programs have a huge advantage in comparison with graduate accounting programs. (11)
The absolute program size issue is important for at least two reasons. First, as we discuss later, the typical graduate accounting program offers several within-program specializations, or "tracks." The relatively low enrollment of graduate accounting programs in combination with the tendency to offer several tracks leads us to conclude that most graduate accounting programs are not very efficient. This lack of efficiency relates to significant fixed costs (e.g., program administration and marketing, community and team space, placement infrastructure) and step costs (e.g., offerings of required courses) that are spread across a smaller number of students. These costs can be financial costs or expenditures of human capital. For example, a program with lower enrollment than desired may only be able to justify offering one section of a certain course each year requiring the faculty member assigned to that course to add an additional preparation to his or her teaching load and potentially adversely affect research and other output. Or, small programs may need to rely on M.B.A. programs for course offerings and other forms of administrative support. The willingness to include in the same course M.B.A. students having considerable business experience and graduate accounting students having little business experience is an issue at many business schools. Second, because of M.B.A. program size advantages and the perceived importance of M.B.A. program rankings, resources and other support attached to graduate accounting programs by deans, other administrators, and business school faculty members may be low relative to M.B.A. programs.
INPUTS: ASSESSING STUDENT QUALITY BASED ON GMAT SCORES
We use GMAT scores to assess student input quality. According to the GMAT Information Bulletin--July 1, 2001 (GMAC 2001a, 5), the "GMAT measures basic verbal, mathematical, and analytical writing skills that are developed over a long period of time. It is specifically designed to help graduate schools assess the qualifications of applicants for advanced study in business and management. The test does not measure subjective factors important to academic and career success--such as motivation, creativity, interpersonal skills, study skills, or overall success on the job." An acceptable GMAT score is required for admission to all of the M.B.A. programs and most of the graduate accounting programs in our sample. (12) We recognize that GMAT scores do not measure many of the subjective factors that are of interest to employers. However, data suggest that GMAT scores are one measure of relative student quality across universities and between master's in accounting programs and M.B.A. programs. (13) While we believe GMAT scores provide a measure of input quality for these students, caution should be exercised when generalizing the ability of GMAT scores to predict either academic performance in master's in accounting programs or professional accomplishments after graduation. (14)
From 1995-96 to 1998-99, the mean GMAT score for all test takers increased steadily from 506 to 531 then declined slightly to 528 and 527 in 1999-2000 and 2000-01, respectively (GMAC 2001c, 7). For the three-year period 1998-2000, the standard deviation for all test takers is 111 (GMAC 2001b, 13). We used this standard deviation to generate percentile rankings using Z-scores for a standard normal statistical distribution. For example, based on the 2000-01 mean GMAT score of 527 and standard deviation of 111, a score of 580 is at the 68th percentile, 620 is at the 80th percentile, 660 is at the 89th percentile and 700 is at the 94th percentile.
GMAT Scores of Master's in Accounting Students
For our sample of 11,255 students enrolled in master's in accounting programs for which GMAT scores were reported over the four-year test period 1998-2001, the average GMAT score is 586, or the 70th percentile. (15) A GMAT score of 600 is considered an indicator of quality at many universities. Yet, only 11 of the 42 universities in our sample consistently reported GMAT score averages of 600 or higher over the four-year test period. In 2001, these 11 programs had approximately 1,600 graduate accounting students enrolled. (16)
Additional analysis of master's in accounting program and M.B.A. program GMAT scores for 2001 is provided in Figure 1. (17) In 2001 the average GMAT score of 587 for the master's in accounting programs in our sample is significantly higher (18) (t-statistic of 94.50) than the 527 average GMAT score for all test takers. However, the 587 average GMAT score is 83 points lower than the 670 average GMAT score for students enrolled in ranked M.B.A. programs. The data in Figure 1 show a strong relation between GMAT scores and program ranking status. For example, the average GMAT score of 611 for the 15 universities having both their master's in accounting program ranked (by CPA Personnel Report) and M.B.A. program ranked (by BusinessWeek and/or U.S. News & World Report) is significantly higher (t-statistic of 49.77) than the 567 average GMAT score computed for the other 27 master's in accounting programs in our sample.
The average GMAT score for M.B.A. students enrolled in the 15 universities with dual rankings is 661-50 points higher than the GMAT score for the graduate accounting students enrolled at these universities. This is a particularly interesting comparison since the master's in accounting programs at several of these universities use M.B.A. courses to satisfy elective course requirements. Conse-quently, master's in accounting students having an average GMAT score of 611 are sharing the learning experience with M.B.A. students having an average GMAT score 50 points higher (661) and also having several additional years of work experience. The average GMAT score for the highest 20 ranked M.B.A. programs is 692, the 93rd percentile. This score is higher than the average M.B.A. GMAT score for the 15 universities with dual-ranking because only one of the highest 20 ranked M.B.A. programs has a separate graduate accounting program.
In summary, both in absolute terms and in comparison with M.B.A. programs, we conclude that, on average, the GMAT scores of students enrolled in master's in accounting programs are not high. To the extent that GMAT scores are valid measures of student input quality, the results indicate that, on average, the "best and brightest" students are not enrolling in graduate accounting programs. (19)
[FIGURE 1 OMITTED]
Relation of GMAT Scores to (then) Big 5 Hiring Data
We obtained a variety of employment, salary, overtime, and turnover data based on a survey of the recruiting directors of (then) Big 5 firms. In this paper, we only report data describing the relation of GMAT scores to entry-level salaries and hiring ratios for our sample programs.
We asked the (then) Big 5 firms to compute the average entry-level salary for the 21 master's in accounting programs in our sample with the higher average GMAT scores and compare it with the 21 lower GMAT score programs. Two (then) Big 5 firms provided between-group entry-level salary data. The average entry-level salary for master's degree graduates from the higher GMAT score programs was only 4.3 percent higher than from the lower GMAT score programs. (20)
One (then) Big 5 firm provided between-group data on the number of graduate accounting students hired into its assurance services function for 1999 and 2000. Importantly, these data show a significant difference in the program-size-adjusted hiring ratio between the two groups, with approximately 2.5 graduate students hired from the higher GMAT score programs for each graduate student hired from the lower GMAT score programs.
GRADUATE ACCOUNTING PROGRAM DESIGN AND CONTENT: ISSUES AND EVIDENCE
Our primary objective in this section is to raise issues about curriculum design and course content of master's in accounting programs and to provide evidence bearing on these issues for the programs in our sample. We begin by summarizing background information related to the 150-hour requirement, accounting accreditation, various curricula initiatives, and expressed concerns about the relevance of accounting education. The discussion provides context for considering various graduate accounting programmatic issues.
The need for the 150-hour requirement is premised on the belief that a traditional four-year undergraduate degree is inadequate for obtaining the required knowledge and skills to become a CPA. The 150-hour requirement is justified based on significant increases in accounting, auditing, and tax regulations; the increasing complexity of business; and the increasing business demands for a variety of highly technical accounting services (see, the 150-Hour Requirement, AICPA website). However, because accounting is a dynamic profession, flexibility in allowing for a diverse set of approaches for meeting the educational requirement has been recommended by the profession. For example, the AICPA suggested minimum requirement is for 150 semester hours of education, to include a baccalaureate degree and a concentration in accounting (AICPA/NASBA 1994). Most states have written their 150-hour laws in a similar, general fashion.
The AACSB accreditation requirements for master's in accounting programs are also quite general. "To stimulate innovation and diversity, a variety of approaches to meeting the graduate educational objectives is encouraged" (AACSB 2000, 45). The primary curriculum guidance is that a 30-semester-hour (the minimum hour requirement) graduate accounting program "should contain not less than 15 semester hours in courses dealing with the development, measurement, analysis, validation, and communication of financial and other information" (AACSB 2000, A-C.3.d). Instead of specifying curriculum content, the AACSB focuses on the establishment of mission-driven educational objectives based on the environmental and institutional setting in which the accounting program operates.
While 150-hour and AACSB accreditation requirements are quite general, the accounting profession has provided substantial curriculum design guidance and support for curriculum change. For example, the AICPA Board has endorsed an online competency framework for academic use called the AICPA Core Competency Framework for Entry into the Accounting Profession (AICPA 1999a, see AICPA website). Importantly, the Framework supports a skills-based curriculum in what it calls a paradigm shift away from a content-driven curriculum. Specific core functional, personal, and broad business perspective competencies are identified. The focus on a skills-based as opposed to a knowledge-based curriculum is advocated due to the perceived rapid pace of change in the accounting profession.
Recently, traditional graduate accounting programs that satisfy the 150-hour requirement have come increasingly under attack. For example, Albrecht and Sack (2000, 30) first opine that "the 150-hour rule is almost universally seen as a mistake," but then state that "the problem is not with the 150-hour requirement but with the kinds of requirements universities have implemented to fulfill the 150-hour programs" (Albrecht and Sack 2000, 30, footnote 13). They argue that such programs force students to specialize at a time when the market is looking for students with broader business backgrounds.
As part of what appears to be a major promotional campaign focused on building public trust, (21) PricewaterhouseCoopers (2003) in its Educating for the Public Trust monograph offers its own conclusion concerning graduate accounting education. The firm states that "The overall contribution of master's degrees in accounting is not clear, with the possible exception of tax specialty programs" (PricewaterhouseCoopers 2003, 12). It argues that additional practice or continuing education alternatives should be allowed to satisfy the 150-hour requirement. While the proposal has not received much support from academia (e.g., Graves 2003), it adds additional fuel to the debate about graduate accounting education.
The current criticisms of graduate accounting programs are part of a more general attack on accounting education that could almost be characterized as an industry. Criticisms found in The Bedford Report (1986), the (then) Big 8's Perspectives (1989) report, the initiatives of the Accounting Education Change Commission (2000), and a host of other studies are well known and will not be detailed here. (22) The Albrecht and Sack (2000) study was commissioned by its sponsoring organizations during the late 1990s to investigate causes of declines in the quantity and the perceived quality of students electing to major in accounting. While the authors suggest that environmental factors such as low entry-level salaries and better job opportunities in other disciplines may have (at the time) contributed to the decline, they again conclude, consistent with the other studies, that accounting education is and remains broken. (23)
A summary comment is that accounting programs are perceived as too narrow in their focus on accounting at the expense of not providing students with a broad business understanding. A related concern is that accounting education does not focus enough on the higher levels of the value chain of information--the process of converting information into knowledge that can be used to make valueadded decisions. (24) With this background, we now examine the curriculum designs of the master's in accounting programs in our sample.
Master's in Accounting Program Design Features: Specialty Areas, Courses, and Competencies
We reviewed the design features of master's in accounting programs included in our sample using information available on websites, in catalogues, and through discussions with program administrators. Refer to Table 1 for the degree designations and specialization areas for the 42 graduate accounting programs in our sample.
Table 1 reveals a great deal of commonality among the program designs. While some programs are 3:2 programs and others are 4:1 programs, a common feature is that most allow for within program specializations or tracks. Practically all of the programs allow for a specialization in assurance services/financial reporting. However, most of the programs also allow for a specialization in either or both taxation and information systems, and many allow for a specialization in managerial accounting. Offering multiple accounting specialty areas is the most prevalent design feature of graduate accounting programs.
Assurance Services/Financial Reporting Curricula: Courses and Competencies
We believe that much of the criticism of 150-hour programs relates to the preparation required for the traditional assurance services/financial reporting track. (25) In contrast, it is generally agreed that tax professionals require a depth of tax coursework and, generally speaking, tax programs that include a heavy emphasis on tax courses have not been widely criticized. (26) Until recently, information systems tracks have been in high demand even though most of the coursework is highly technical. In contrast to these tracks, managerial accounting tracks tend to be broader in terms of both accounting and nonaccounting course coverage. We focus on the assurance services/financial reporting track.
Table 3 summarizes the course requirements for the programs in our sample that offer assurance services/financial reporting tracks. (27) First, the table reflects the influence of accreditation requirements on graduate accounting programs. All are at least 30 credit-hour programs and most require, as core or elective courses, at least 15 credit hours of accounting. In combination with their undergraduate accounting coursework, most graduates of these programs will have completed around 40 credit hours (13 or 14 courses) of accounting coursework. Second, as expected, we observe a great deal of commonality in the accounting core course requirements. For example, most of the assurance services/financial reporting tracks require advanced financial accounting and advanced auditing courses. In many cases it appears that versions of these courses that previously had been offered at the undergraduate level have been moved to the fifth year. (28) At the same time, many of the financial accounting courses appear to have more of a theory or research emphasis, consistent with graduate education. The most frequently required accounting courses fall into the following categories: financial reporting (89 percent of programs), assurance services (75 percent of programs), accounting information systems (56 percent of programs), taxation (47 percent of programs), and contemporary issues/capstone (39 percent of programs).
Regarding content gaps or omissions, we note that few programs offer separate international accounting courses. However, we believe that international content is integrated into other accounting courses. Also, most programs do not appear to include a heavy technology focus; instead, the core courses tend to focus on traditional financial reporting and auditing topics. Less than half of the programs offer separate contemporary accounting issues courses, although, based on our experience, we believe contemporary issues are being addressed in other accounting courses. (29)
Referring to the business core component of programs summarized in Table 3, 22 of the 36 assurance services/financial reporting tracks have specific nonaccounting required business courses. While commonalities in nonaccounting course requirements among programs are less evident, there does appear to be at least some recognition of the need for complementary coursework in finance. Fourteen programs require at least one finance-related course and finance electives are available at most programs. In addition, business law and business communication courses are required at seven and five programs, respectively.
A general conclusion is that the business core is neither well developed nor integrated into the overall program of study for most of the graduate accounting programs in our sample. This situation may result from a lack of control over nonaccounting courses by accounting program administrators, a desire for greater flexibility in the choice of business courses in comparison with accounting courses, or a lack of integrated program development. However, regardless of the reason, we believe the result evidences the lack of breadth that is at the heart of the criticisms of 150-hour programs.
We also attempted to assess the extent to which graduate accounting programs are emphasizing competencies along the lines of the AICPA (1999a) Core Competency Framework. As a caveat, we note that most programs do not target specific courses to cover specific competencies. Thus, it is not possible to do a thorough analysis of the coverage of competencies, without undertaking a detailed analysis of course syllabi or course assignments, a task that is beyond the scope of this study. However, we did find in published material a surprising number of references to the development of competencies, and we make the following generalizations.
* Functional competencies related to decision modeling, measurement, reporting, and research are being addressed in most programs. Based on our analysis, we conclude that the weakest area of functional competency development relates to risk analysis and control. Clearly, risk analysis and control concepts are being covered in auditing courses; however, relatively few programs appear to offer separate courses that focus on business risk issues in a broader sense.
* The personal competency that is most heavily emphasized is Problem Solving and Decision Making. Similarly, there is a great deal of emphasis on Teamwork and Group Interaction. On the other hand, there are few courses specifically devoted to developing personal competencies such as objectivity, honesty, and ethics. Additional gaps under the personal competency heading relate to the development of Leadership and Project Management competencies. Particularly in the Leadership area, there is a paucity of coursework and little mention in graduate accounting program published literature on developing leadership ability.
* The primary broad business competency being emphasized is Strategic Thinking. Business strategy courses are required at four programs, and functional courses that appear to emphasize strategic thinking (e.g., strategic cost management, strategic systems design) are required by several programs. Also, the development of Industry and Global perspectives appears to be a priority in many programs. The development of Resource Management skills and a focus on Legal Perspectives are additional features of many programs. The primary AICPA broad business competency that is given little emphasis in graduate accounting programs relates to the Marketing function.
Last, the need to leverage technology to develop and enhance Functional, Personal, and Broad Business competencies is stressed by the AICPA. Again, it is somewhat difficult for us to determine the extent to which this objective is being stressed in graduate accounting programs. While many graduate programs offer a variety of information systems and technology courses and make use of computerized data bases to support student research, the extent to which "leveraging" is taking place is unclear. Albrecht and Sack (2000) believe that much of this potential for leveraging technology remains untapped.
Innovation and Change
The analysis presented in Table 3 shows that most graduate accounting programs exhibit features that have been criticized by Albrecht and Sack (2000) and others. These features include a heavy reliance on technical accounting courses, commonality in design (or more negatively, programs that are "clones" of each other and appear to lack a strategic focus), and a failure to carefully integrate accounting and business coursework. While Albrecht and Sack (2000) suggest that some programs have made good progress in recent years in implementing change, they also conclude that such changes have not been substantial or pervasive enough given the crisis facing accounting education. Our purpose in this section is to provide additional data concerning the directions and extent of innovation and change based on data from the 42 programs in our sample.
Albrecht and Sack (2000, 62) suggest several possible ways that graduate accounting program designs can be distinctive and we found examples of each of their suggestions within our sample. (30)
Two schools that appear to emphasize the development of a broad business perspective are Indiana University and the University of Tennessee. The Indiana University M.B.A. in Accounting program, entered by accounting majors in their fourth year of study, is unique among our sample schools. The program includes a highly integrative business core and a heavy emphasis on experiential learning and consulting field projects. In a similar fashion, the University of Tennessee's graduate accounting program focuses on broad business understanding. This is accomplished through a required four-course business core sequence offered in the first semester of the fifth year. The University of Tennessee received a 1999 American Accounting Association Innovation in Accounting Education award for this program.
An example of a program that focuses exclusively on an accounting information systems track is the Arizona State University program. With both traditional accounting and information systems faculty expertise in the department, and considering market demand, it made sense for the business school to develop a program with a heavy information systems emphasis. Interesting features of this lock-step 30-credit-hour program include its heavy emphasis on technology in the broad sense (e.g., databases, process controls, electronic commerce, security, knowledge-management, and programming) and a limited focus on traditional accounting coursework.
Another approach is to focus on developing a depth of knowledge in a related discipline, such as finance. A good example of this approach is the financial analysis track for the recently inaugurated The Ohio State University program. The track requirement includes nine hours of coursework selected from a menu of six graduate finance courses.
An example of a recently launched program that was strategically designed based on a careful analysis of employer requirements is the Villanova University Master of Accountancy and Professional Consultancy program. Efficiencies are achieved by designing a lock-step ten-course core program. (31) Another unique feature of the program is its "4-1-1-4" format where students take four courses in the first summer after completing their undergraduate programs, a distance learning course in both the fall and the spring while beginning full-time employment, and then complete the program by taking four courses in the following summer.
Program Administrator Comments on Innovation and Change
In a follow-up telephone survey (Fall 2002), we asked the department chairs and administrators of the master's in accounting programs in our sample to identify what is new or innovative about their programs compared to five years ago. While we received a variety of comments, what is most important is the overall conclusion that most administrators appear to be thinking about and implementing changes. Below we summarize the most frequently mentioned categories of innovation and change.
* Administrators of most programs are concerned about the technology area and have added, or intend to add, coursework related to information systems, enterprise resource planning (ERP), e-Commerce, computer auditing, etc. The need to deal with the information systems area was the most important issue identified by administrators.
* A second emphasis, among a smaller set of administrators, is on strengthening coverage of risk analysis and control concepts. For example, one program was trying to use a strategic risk analysis focus as an integrating theme. Another reengineered former financial accounting and managerial accounting theory courses to more explicitly focus on risk management.
* Other examples of innovation and change that were mentioned include a focus on contemporary issues, a greater focus on professional research, movement toward more of an M.B.A.-type curriculum, allowing greater flexibility in course selection, and a focus on both content and competencies.
SUMMARY AND IMPLICATIONS
Our objective was to examine the characteristics of graduate accounting programs by focusing on inputs, curriculum (processing), and the relation of employment opportunities to measures of student and program quality. In this section we discuss the implications of our findings.
Enrollment Trend Implications
Over the four-year period 1998-2001, master's in accounting program enrollment grew by over 36 percent for the 42 universities included in our sample and by over 29 percent for the 38 universities in our sample that offered programs in all four years. The results indicate that many students are choosing a graduate accounting degree program as their means of meeting the 150-hour requirement. However, even with this growth, the average graduate accounting program is small, especially in comparison with M.B.A. programs. We conclude that many graduate accounting programs are not very efficient. Several program administrators we contacted also expressed concerns about the adequacy of resources provided for their programs. In a related vein, PricewaterhouseCoopers (2003) expresses the concern that universities may choose to suboptimize their graduate accounting program while providing increased support to their M.B.A. programs. These considerations all have the potential to negatively affect the quality of graduate accounting programs.
GMAT Performance Implications
Our finding of relatively modest average GMAT scores for students enrolled in graduate accounting programs, especially compared to students enrolled in highly ranked M.B.A. programs, leads us to conclude that the "best and brightest" students, on average, are not being attracted to graduate accounting programs. If the best and brightest students continue to choose options other than graduate accounting degrees, then the challenge to accounting educators is to improve both the actual and perceived value of graduate accounting programs. One implication for employers who seek high-quality talent is that they may need to look beyond graduate accounting programs to satisfy their demands. A second implication, as suggested by Albrecht and Sack (2000), is that traditional accounting careers remain unattractive to many of the best and brightest students.
Program Design and Curriculum Implications
Albrecht and Sack (2000, 53) conclude that "very few schools have effectively built their undergraduate degree with a fifth year that focuses on providing a broad business background." The most prevalent feature of the graduate accounting programs we analyzed is their multiple accounting specialty track designs. Consistent with the AACSB-accreditation requirements for such programs, their curricula are dominated by technical accounting courses. A related concern is with the nature of the technical accounting courses. We believe that some accounting courses (e.g., advanced financial accounting, advanced auditing) that used to be offered at the undergraduate level are now offered in the fifth year. Although we found several examples of fifth-year accounting courses that do not have a primary technical knowledge objective, such courses do not dominate our sample. Instead, the PricewaterhouseCoopers (2003, 29) conclusion "that the fifth year is, for the most part, an 'extension of undergraduate education,'" appears valid. We believe that the quality of graduate accounting programs can be improved by focusing more explicitly on generally accepted features of advanced learning that emphasize research, theory, less-structured problems, lifetime learning, collaborative learning, and experimental learning.
The debate about the objectives of graduate accounting education is not new. The core of this debate is about how and to what extent depth of knowledge within an accounting specialization should be traded off against broad business understanding. For example, the Accounting Education Change Commission in its Position Statement Number One (AECC 1990) discusses general education, general business education, general accounting education, and specialized accounting education and states that "Specialized accounting education should follow only after attainment of general accounting, organizational and business knowledge ... [and] ... it should be offered primarily at the post-baccalaureate level and via continuing education" (AECC 1990, 4). At the same time, M.B.A. programs that focus on developing broad business understanding and aptitude are criticized if their graduates do not have some specialized (functional area) knowledge.
The data we provide show that most graduate accounting programs look much the same and their primary focus is on developing a depth of accounting knowledge. Albrecht and Sack (2000, 53) state that such programs "are not attractive in an environment where the business world is calling for more broadly trained accountants." The implication is that the market would look favorably on graduates of programs that have a more intentional business focus. While we doubt that there is any interest in producing accountants that have a lower level of technical expertise, we do believe that the broadening objective can be achieved through more careful consideration of the business course components of graduate accounting programs without compromising on technical accounting expertise. For example, only about 60 percent of the programs we analyzed have nonaccounting core business course requirements. In cases where the graduate accounting programs do have required business courses focusing on areas such as business strategy and finance, the objective of the requirements is clear. However, in general, we believe that the quality of graduate accounting programs can be greatly improved, and at a small cost, if accounting educators will give more attention to the business component of their programs and strategically integrate such coursework into their graduate accounting curricula.
Another critical area of focus should be on what the PricewaterhouseCoopers (2003, 24) study refers to as workplace-based learning. Consistent with that study, we observed a general failure to enrich graduate accounting by integrating internship experiences and by emphasizing experiential learning and field studies. While we do not support the firm's recommendation that informal learning requirements (additional practice, continuing professional education) be allowed as "equivalent" alternatives to the 150-hour requirement, programs can be made more relevant by incorporating various forms of workplace learning.
Finally, we note the distinct impression that most graduate accounting programs are cut from the same mold. From a strategy standpoint, this makes little sense. We believe that size and other limitations of graduate accounting programs are constraints on their quality. Given the criticisms directed at existing graduate accounting programs, there are real incentives to change. Universities that design programs that focus on their markets and their distinctive capabilities, such as the programs we highlighted, have a real opportunity to distinguish themselves.
Data Accumulation and Analysis Implications
For a profession that specializes in measurement, we found that most accounting programs lack detailed admission and placement data about their graduate students. This is in stark contrast to highly ranked M.B.A. programs that can quickly produce detailed information about student selectivity, curriculum, faculty, and placement. Their information advantage is partially explained by publishers of M.B.A. program information guides (e.g., Peterson's, Princeton Review) and ranking organizations (e.g., BusinessWeek, U.S. News & World Report, The Financial Times) that solicit annual detailed data about their programs, faculty, and students. However, the explanation goes beyond information demands from these sources.
In recent years, many M.B.A. programs have participated in the Educational Benchmarking, Inc. (EBI) project. For a fee, EBI will provide an M.B.A. program with data benchmarking it against six pre-selected M.B.A. programs. Data from the six benchmarks are presented anonymously. These benchmarking data provide M.B.A. programs with comprehensive, credible, comparative, and confidential assessment tools that can be used in their continuous improvement efforts. Master's in accounting program directors and/or professional organizations could provide valuable assessment tools by managing a similar benchmarking project for accounting programs, both at the graduate and undergraduate level. (32) At a minimum, graduate accounting programs should attempt to systematize data collection in order to provide time-series information for strategic planning and program marketing.
Creating Demand for Financial Reporting and Assurance Specialists
We conclude by again focusing on the assurance services/financial reporting specialization because salary data that we obtained (but do not present) indicate that entry-level premiums paid for master's in accounting degrees to students entering tax and consulting services are substantially greater than premiums paid to graduates entering traditional attestation services.
If accounting programs are able to attract outstanding graduate students to the assurance service/financial reporting specialization and if the ability of these graduate students, based on advanced accounting knowledge, business knowledge, and experience is measurably greater than that of undergraduate students, then the profession must be willing to pay more for their services. (33) The profession will only be willing to pay more for their services if it can utilize them in a more productive fashion. Our impression is that the work performed by, say, entry-level assurance service/financial reporting professionals, is exactly the same for new hires from undergraduate programs and from graduate accounting programs. (34) Again, if graduate accounting students are bright, well trained, and experienced, then the profession needs to create greater challenges and opportunities for these individuals.
We thank two anonymous reviewers and especially Associate Editor Richard E. Baker for helpful comments on earlier versions of this manuscript. We gratefully acknowledge financial support provided by the Mendoza College of Business and research assistance provided by Phil Mishka, Brett Rechel, Rene Sopiarz, Jessica Xu, and Tommy Xu, all M.S. in Accountancy or M.B.A. students at Notre Dame. We also thank graduate accounting program administrators and (then) Big 5 and industry recruiters for their assistance in gathering and sharing data.
TABLE 1 Master's in Accounting Programs Included in Sample, Website Address, Degree Designations, and Program Track Codes University Program Website Addresses Arizona State University http://wpcarey.asu.edu/top/degree_programs.cfm Auburn University http://www.business.auburn.edu/acct/ Baylor University http://business.baylor.edu/acc/default.aspx Brigham Young University http://marriottschool.byu.edu/SOAIS/programs/ MAcc/MACC.cfm Case Western Reserve http://weatherhead.cwru.edu/acct/macc/ University MAcc_main.htm College of William & http://business.wm.edu/mac/ Mary DePaul University http://www.kellstadt.depaul.edu/html/ msprograms/msProg.shtml Florida State University http://www.cob.fsu.edu/grad/macc/ Georgia State University http://robinson.gsu.edu/academic/graduate/ catalog2002_2003/35.html Indiana University http://kelley.iu.edu/sagp/mpa/mpa.cfm Iowa State University http://www.bus.iastate.edu/grad/Accounting/ macc_cur.asp Kansas State University http://www.cba.k-state.edu/departments/macc/ index.htm Miami University http://www.sba.muohio.edu/sba_web/ Academic_Depts/acc/default.asp Michigan State http://www.bus.msu.edu/acc/ University North Carolina State http://www.mgt.ncsu.edu/faculty/ University accounting.html Northern Illinois http://www.cob.niu.edu/accy/accy_mas.html University The Ohio State http://fisher.osu.edu/macc/index.html University Oklahoma State http://www2.bus.okstate.edu/acct/dept/ University Texas A & M University http://business.tamu.edu/acct/ The University of http://www.cba.ua.edu/accounting/ Alabama University of Arkansas http://gsb.uark.edu/ACCT/default.asp University of Florida http://www.cba.ufl.edu/fsoa/ University of Georgia http://www.terry.uga.edu/accounting/ University of Illinois http://www.business.uiuc.edu/accountancy/ The University of Iowa http://www.biz.uiowa.edu/acct/ professionalprogram/index.html University of Kansas http://www.business.ku.edu/ University of Michigan http://www.bus.umich.edu/Academics/ MAccProgram/ University of Minnesota http://www.csom.umn.edu/Page673.aspx University of Missouri http://business.missouri.edu/About/Academic/ Acct/ The University of North http://www.kenan-flagler.unc.edu/Programs/MAC/ Carolina University of North http://www.coba.unt.edu/acct/ Texas University of Notre Dame http://www.nd.edu/~acctdept/ University of Oklahoma http://price.ou.edu/accounting/ University of Southern http://www.marshall.usc.edu/web/ California Leventhal.cfm?doc_id = 2229 University of Tennessee http://bus.utk.edu/acct/macc/ The University of Texas http://www.mccombs.utexas.edu/dept/accounting/ University of http://www.commerce.virginia.edu/ Virginia (c) academic_programs/ms_accounting/acctg- overview.htm University of Washington http://www.depts.washington.edu/mpacc/ University of Wisconsin http://www.bus.wisc.edu/graduateprograms/ fulltime/prospective/academics/degrees/ macc.asp Villanova University http://www.mac.villanova.edu/ Virginia Polytechnic http://www.cob.vt.edu/accounting/ Institute & State University Wake Forest University http://www.wfu.edu/Academic-departments/ Business-and-Accountancy/ Track Codes (b) University Degree Designations (a) A T M S E EN Arizona State University MAIS, MSIM, MTAX X X Auburn University MAC X Baylor University MACC, MTAX, BBA/ MACC, BBA/MTA X X Brigham Young University MACC, MISM X X X Case Western Reserve MACC X X X University College of William & MAC X X Mary DePaul University MACC, MSA X X X X X Florida State University MACC X X X Georgia State University MPA, MTX X X X X Indiana University MBA-ACCT, MPA, MSIS X X X Iowa State University MACC, MSIS, MSIA X X X X X Kansas State University MACC X X X Miami University MACC X X X X Michigan State MSA X X X X University North Carolina State MAC X X University Northern Illinois MAS, MST X X X University The Ohio State MACC X X X University Oklahoma State MSA 4/1, MSA 3/2, MSMIS/AIS X X X X University Texas A & M University MSA X X X The University of MACC, MTA X X Alabama University of Arkansas MACC X X X University of Florida 3/2 BSAC-MACC, MACC X X X University of Georgia BBA-MACC, MACC X X X University of Illinois MAS, MSA, MTAX X X X X The University of Iowa MAC X X X X University of Kansas MAIS X X X University of Michigan MACC X University of Minnesota MBT X University of Missouri MACC, BSACC-MACC X X X The University of North MAC X X Carolina University of North BS/MSA, MSA X X X X Texas University of Notre Dame MSA X X X University of Oklahoma MACC, BACC/MACC X X University of Southern MACC, MBT X X California University of Tennessee MACC X X X The University of Texas MPA, PPA X X X University of MSMIT, MSA X X X Virginia (c) University of Washington MPACC X X University of Wisconsin MACC X X X Villanova University MAC, MTAX X X X X Virginia Polytechnic MACIS X X X Institute & State University Wake Forest University MSA X X (a) 3/2 BSAS-MACC = Joint Bachelor of Science in Accounting and a Master of Accounting BACC/MACC = Combined Bachelor/Master of Accountancy BBA/MACC = Joint Bachelor of Business Administration/Master of Accountancy BBA/MTAX = Joint Bachelor of Business Administration/Master of Taxation BS/MSA = Combined Bachelor of Science and Master of Science MAC, MACC = Master of Accountancy MACIS = Master of Accounting and Information Systems MAIS = Master of Accountancy and Information Systems MAS = Master of Accounting Science MBA-ACCT = MBA in Accounting MPA = Master of Professional Accountancy MPACC = Master of Professional Accounting MSA = Master of Science in Accountancy MSIA = Master of Science in Information Assurance MSIM = Master of Science in Information Management MSIS = Master of Science in Information Systems MSMIS/AIS = Master of Science in Management Information Systems/ Accounting Information Systems MSMIT = Master of Science in the Management of Information Technology MST = Master of Science in Taxation MTAX, MTA = Master of Taxation PPA = Professional Program in Accounting (b) A = Assuance Services/Financial Reporting T = Taxation M = Managerial S = Information system E = e-business EN = Entrepreneurial (c) Assurance Services/Financial Reporting track is restricted to students enrolled in E & Y Program. TABLE 2 Graduation and Enrollment Data for Master's in Accounting Programs (MAPs) Panel A: AICPA's Estimate of MAP Graduates Academic Year 1991-92 1992-93 1993-94 1994-95 Number of graduates 7,070 5,330 7,170 7,860 Percentage change -24.6% 34.5% 9.6% Enrollment Year for Panel B through Panel D Panel B: Enrollment Data for 42 MAPs in Sample Universities offering MAPs Graduate accounting student enrollment Cumulative percentage change in enrollment from 1998 Panel C: Enrollment Data for 38 MAPs Offered 1999-2001 Graduate accounting student enrollment Cumulative percentage change in enrollment from 1998 Panel D: Enrollment Data for 14 MAPs Offered at Universities with CPA and M.B.A. Ranking (a) Graduate accounting student enrollment Cumulative percentage change in enrollment from 1998 Panel E: Fall 2001 Enrollment Comparison Data for 42 MAPs in Sample-- Graduate Accounting Enrollment vs. M.B.A. Enrollment Smallest 25th Program Percentile Median Mean Graduate accounting student enrollment 19 51 68 97 M.B.A. student enrollment 150 217 264 382 Panel A: AICPA's Estimate of MAP Graduates Academic Year 1995-96 1998-99 1999-00 2000-01 Number of graduates 7,630 6,725 7,980 8,700 Percentage change -2.9% -11.9% 18.7% 9.0% Enrollment Year for Panel B through Panel D 1998 1999 2000 2001 Panel B: Enrollment Data for 42 MAPs in Sample Universities offering MAPs 38 39 42 42 Graduate accounting student enrollment 2,992 3,215 3,531 4,077 Cumulative percentage change in enrollment from 1998 7.5% 18.0% 36.3% Panel C: Enrollment Data for 38 MAPs Offered 1999-2001 Graduate accounting student enrollment 2,992 3,203 3,475 3,864 Cumulative percentage change in enrollment from 1998 7.1% 16.1% 29.1% Panel D: Enrollment Data for 14 MARs Offered at Universities with CPA and M.B.A. Ranking (a) Graduate accounting student enrollment 1,564 1,696 1,875 2,111 Cumulative percentage change in enrollment from 1998 8.4% 19.9% 35.0% Panel E: Fall 2001 Enrollment Comparison Data for 42 MAPs in Sample-- Graduate Accounting Enrollment vs. M.B.A. Enrollment 75th Largest Percentile Program Graduate accounting student enrollment 118 395 M.B.A. student enrollment 542 869 (a) Fifteen MAPs are offered at universities having Graduate Accounting Programs ranked by CPA Personnel Report and M.B.A. Programs ranked by BusinessWeek and/or U.S. News & World Report. However, one of these universities, the University of Washington, did not initiate its program until 2000, therefore, its enrollment data are not included in this panel. TABLE 3 Course Analysis for Assurance Services/Financial Reporting Tracks Panel A: Accounting Core (a): Course Keys University Cr. Hrs. 1 2 3 4 5 Auburn University 12 X X Baylor University -- Brigham Young University (b) 21 X X X X X Case Western Reserve University 6 X College of William & Mary 9 X X X Florida State University 15 X X X Georgia State University 9 [DELTA] [DELTA] [DELTA] Indiana University 10.5 [DELTA] X X Iowa State University 5/8 Kansas State University 15 X X X X Miami University 12 [DELTA] [DELTA] [DELTA] [DELTA] Michigan State University 15 X X North Carolina State University 9 X X X Northern Illinois University 15 X X X X The Ohio State University (c) 14 X X X Oklahoma State University 18 X X X Texas A & M University 24 X X X X The University of Alabama 15 X X X University of Arkansas 12 X University of Florida 18 X [DELTA] [DELTA] X [DELTA] University of Georgia 9 X X X University of Illinois 8 X The University of Iowa 12 X X [DELTA] University of Kansas 15 [DELTA] X X University of Michigan 18 X X X X University of Missouri 9 X University of North Texas 18 X X [DELTA] [DELTA] University of Notre Dame 12 X X X University of Oklahoma 3 X University of Southern California 18 X X X The University of Tennessee 18 X X X X University of Texas 18 X [DELTA] [DELTA] [DELTA] University of Washington 33 X X [DELTA] [DELTA] X University of Wisconsin 12 X X Villanova University 18 X X X X Virginia Polytechnic Institute & State University 27 X X X X University Cr. Hrs. 6 7 8 9 10 Auburn University 12 X Baylor University -- Brigham Young University (b) 21 X X Case Western Reserve University 6 X College of William & Mary 9 Florida State University 15 X X Georgia State University 9 [DELTA] [DELTA] Indiana University 10.5 [DELTA] Iowa State University 5/8 [DELTA] X Kansas State University 15 Miami University 12 X [DELTA] [DELTA] Michigan State University 15 X X North Carolina State University 9 Northern Illinois University 15 X The Ohio State University (c) 14 Oklahoma State University 18 X X Texas A & M University 24 X X The University of Alabama 15 X X University of Arkansas 12 X University of Florida 18 [DELTA] [DELTA] University of Georgia 9 University of Illinois 8 X The University of Iowa 12 [DELTA] [DELTA] [DELTA] University of Kansas 15 [DELTA] University of Michigan 18 X University of Missouri 9 X X University of North Texas 18 [DELTA] University of Notre Dame 12 X University of Oklahoma 3 University of Southern California 18 X X X The University of Tennessee 18 X University of Texas 18 [DELTA] X University of Washington 33 X [DELTA] University of Wisconsin 12 Villanova University 18 X Virginia Polytechnic Institute & State University 27 [DELTA] X [DELTA] University Cr. Hrs. 11 12 13 14 Auburn University 12 X Baylor University -- Brigham Young University (b) 21 Case Western Reserve University 6 College of William & Mary 9 Florida State University 15 Georgia State University 9 Indiana University 10.5 Iowa State University 5/8 X Kansas State University 15 Miami University 12 [DELTA] Michigan State University 15 X North Carolina State University 9 Northern Illinois University 15 The Ohio State University (c) 14 Oklahoma State University 18 Texas A & M University 24 The University of Alabama 15 University of Arkansas 12 X University of Florida 18 University of Georgia 9 University of Illinois 8 The University of Iowa 12 University of Kansas 15 University of Michigan 18 University of Missouri 9 University of North Texas 18 X University of Notre Dame 12 University of Oklahoma 3 University of Southern California 18 The University of Tennessee 18 University of Texas 18 University of Washington 33 University of Wisconsin 12 X Villanova University 18 X Virginia Polytechnic Institute & State University 27 Panel B: Business Core: Course Keys University Cr. Hrs. 15 16 17 18 19 20 Auburn University -- Baylor University -- Brigham Young University (b) 12 [DELTA] [DELTA] [DELTA] [DELTA] X Case Western Reserve University -- College of William & Mary 6 X Florida State University 6 Georgia State University -- Indiana University 12 Iowa State University 3/6 [DELTA] Kansas State University 3 X Miami University -- Michigan State University -- North Carolina State University 3 Northern Illinois University -- The Ohio State University (c) 12 [DELTA] [DELTA] [DELTA] [DELTA] Oklahoma State University 6 [DELTA] [DELTA] Texas A & M University 3 X The University of Alabama 3 University of Arkansas -- University of Florida 17 X X University of Georgia -- University of Illinois -- The University of Iowa 12 X [DELTA] [DELTA] X University of Kansas 3 X University of Michigan -- University of Missouri -- University of North Texas 3 X University of Notre Dame 6 X University of Oklahoma -- University of Southern California 6 The University of Tennessee 12 University of Texas 6 X University of Washington 12 University of Wisconsin -- Villanova University 12 X X Virginia Polytechnic Institute & State University 3 X University Cr. Hrs. 21 22 23 24 Auburn University -- Baylor University -- Brigham Young University (b) 12 X Case Western Reserve University -- College of William & Mary 6 X X Florida State University 6 X Georgia State University -- Indiana University 12 X X Iowa State University 3/6 X [DELTA] Kansas State University 3 X Miami University -- Michigan State University -- North Carolina State University 3 X Northern Illinois University -- The Ohio State University (c) 12 [DELTA] Oklahoma State University 6 [DELTA] Texas A & M University 3 The University of Alabama 3 X University of Arkansas -- University of Florida 17 X X X University of Georgia -- University of Illinois -- The University of Iowa 12 X University of Kansas 3 University of Michigan -- University of Missouri -- University of North Texas 3 University of Notre Dame 6 X University of Oklahoma -- University of Southern California 6 X X The University of Tennessee 12 X University of Texas 6 X University of Washington 12 X X University of Wisconsin -- Villanova University 12 X X Virginia Polytechnic Institute & State University 3 Panel C: Electives Accounting Other Total University Cr. Hrs. Cr. Hrs. Cr. Hrs. Auburn University 9 9 30 Baylor University 18 15 33 Brigham Young University (b) 0/3 6/9 42 Case Western Reserve University 12/15 15/18 36 College of William & Mary 0/15 0/15 30 Florida State University 6/12 0/6 33 Georgia State University 12 9 30 Indiana University -- 7.5 30 Iowa State University 12 9 32 Kansas State University 3/6 6/9 30 Miami University 3/7 11/15 30 Michigan State University 0/6 9/15 30 North Carolina State University 9/12 6/9 30 Northern Illinois University 6 9 30 The Ohio State University (c) 12 7 45 Oklahoma State University 0/8 0/8 32 Texas A & M University 0/9 0/9 36 The University of Alabama 6/12 0/6 30 University of Arkansas 6/9 9/12 30 University of Florida -- -- 35 University of Georgia 9 12 30 University of Illinois 8/16 8/16 32 The University of Iowa -- 6 30 University of Kansas 0/3 9/12 30 University of Michigan 3 12 33 University of Missouri 12 9 30 University of North Texas 6/9 6/9 36 University of Notre Dame 3/9 3/9 30 University of Oklahoma 12 18 33 University of Southern California 0/9 0/9 33 The University of Tennessee -- -- 30 University of Texas 6 6 36 University of Washington (c) -- -- 45 University of Wisconsin 18 -- 30 Villanova University -- -- 30 Virginia Polytechnic Institute & State University -- -- 30 (a) Required Courses for Accounting and Business Core (x = required course and [DELTA] = required course selected from this set, if in bold more than one course in cell): 1. Financial Reporting (including financial theory and concepts, advanced financial accounting, mergers and acquisition) 2. Assurance Service (including introductory and advanced courses) 3. Taxation 4. Accounting Information System (including security, concepts, EDP auditing) 5. Research Skills (including practical and academic) 6. International Accounting 7. Contemporary Issues or Capstone Course 8. Managerial 9. Financial Statement Analysis and Valuation 10. Government and Not-for-Profit 11. Internal Auditing 12. Consulting 13. Risk Analysis and Assessment including Corporate Governance 14. Other Accounting Core Courses 15. Financial Policy 16. Corporate Finance 17. International Finance 18. Investments (including security markets and financial market theory) 19. Business Policy/Strategic Planning 20. e-commerce 21. Management Information Systems 22. Business Law 23. Communication 24. Other Business Core Courses (b) Students earn credit hours toward the master's in accounting degree in their fourth year. A normal fifth-year load is 24 to 30 credit hours. (c) Credit hours are on a quarter system.
(1) However, PricewaterhouseCoopers (2003) has suggested that the 150-hour requirement remain in place, but that learning alternatives (what it calls "equivalent alternatives") such as additional practice and continuing professional education be allowed to substitute for formal university education. See our section on Program Design and Curriculum Implications for additional discussion.
(2) We obtained data from the then existing Big 5 firms, including Arthur Andersen before its demise, and therefore use (then) Big 5 terminology throughout this paper.
(3) The CPA Personnel Report's (2000) 19th Annual Survey of Accounting Professors ranks the top 23 graduate accounting programs. Data from the survey also appear in the Public Accounting Report (2000), but that publication only provides rankings of the top-ten programs. The University of Chicago, the University of Pennsylvania (the Wharton School), New York University, and Penn State University are ranked in the survey. However, the first three schools do not have separate graduate programs in accounting. It appears that their inclusion in the rankings is based on the reputation of their M.B.A. programs. Penn State University has only a handful of students in its M.S. program (e.g., potential Ph.D. students) and it has not developed a program in support of the 150-hour requirement. Therefore, Penn State University's data are not included in our analysis. We comment on selected M.B.A. programs later.
(4) We assume that metrics used by BusinessWeek (survey data from M.B.A. graduates and recruiters) and U.S. News & World Report (measures of student selectivity, placement success, and reputation) are correlated with the quality of graduate business programs. We also assume that most of the master's in accounting programs offered by universities with highly ranked M.B.A. programs are of high quality.
(5) The AICPA did not collect and analyze data for the 1996-97 and 1997-98 academic years.
(6) We use enrollment data rather than data on the number of graduates because it enables us to report more recent data (e.g., 2001 enrollment data reflects 2002 graduates), and GMAT score data for enrolled students is much more readily available than GMAT score data for graduates. For our sample of universities, we attempted to include all master's-level graduate accounting programs that are listed in Hasselback (1999) as Accounting Department degree programs. Graduate students enrolled in M.B.A. programs with identified accounting concentrations are not included in our analysis.
(7) In a recent comment, Howard and Lubich (2003) are critical of the use of AICPA data to draw supply and demand imbalance conclusions concerning master's in accounting students. They argue that data collected for the Integrated Postsecondary Education Data system (IPED) are more accurate than that provided by the AICPA since IPED does not require projections for nonreporting schools. The Howard and Lubich (2003, 413, Figure 3) study reports the IPED supply estimate for master's in accounting graduates at about 4,000 in recent years compared to AICPA estimates of 7,000 to 8,000 graduates for the same time period. The enrollment level for the 42 programs in our sample is 4,077 (see Table 2) with practically all of these students graduating within one year. This leads us to conclude that IPED data underestimate the supply of master's in accounting graduates.
(8) Before completing the study, we were able to obtain 2002 enrollment data for ten programs. 2002 enrollment for these programs is 12 percent higher than in 2001. Anecdotal evidence for 2003 indicates that graduate accounting program enrollment is at about the same level as in 2002.
(9) Graduate accounting enrollment data are compiled from our survey. The 2001 M.B.A. program enrollment data were obtained from U.S. News & World Report (2002, 56).
(10) The average (mean) fall 2001 master's in accounting program enrollment is 97 students. However, the mean is from a skewed distribution that is impacted by several large programs. A better indicator of average program size is the median of 68 students. Further, only 14 of the master's in accounting programs in our sample have more than 100 students enrolled. Nineteen programs (42 percent of the sample) enrolled 60 or fewer students.
(11) The Association to Advance Collegiate Schools of Business' (AACSB 2002) Overview of U.S. Business Schools: Data from the 2001-2002 Business School Questionnaire provides additional evidence of the size of the population of M.B.A. students relative to the size of the population of master's in accounting students. Questionnaires were completed by 393 of the AACSB's 655 U.S. member schools. The responding schools enrolled 130,495 M.B.A. students and 7,344 master's in accounting students, respectively (AACSB 2002, Tables 35 and 46).
(12) Brigham Young University, the University of Illinois, and The University of Texas are included in our sample and offer highly ranked master's in accounting programs that did not use GMAT scores as a basis for admission to at least one of their graduate programs during our test period. Brigham Young University's primary graduate accounting program is a five-year integrated M.Acc. program that undergraduate accounting majors enter in their junior year. Admission is based on grade point averages and the GMAT is not required of these students. However, we assume these are highly qualified students based on their SAT scores that were reported to us. At the University of Illinois, the business school was going through a major 150-hour program development phase in response to legislation becoming effective in the state on January 1, 2000. Undergraduate accounting majors in an experimental version of the program were not required to take the GMAT. The mean GMAT score for the 2001 entering class and for other existing University of Illinois graduate accounting programs exceeds 600 and are included in our totals. The University of Texas integrated five-year PPA program does not require the GMAT for admission. However GMAT scores are included for its other MPA programs and their mean score exceeds 600.
(13) For over two decades, the Graduate Management Admissions Council (GMAC) has studied the predictive validity of GMAT scores by examining the relation among GMAT scores, undergraduate grade point averages, and grade point averages earned by first-year M.B.A. students. In the most recent three-year period studied, the median correlation of first-year M.B.A. grade point averages with undergraduate grade point averages and GMAT scores is .26 and .41, respectively (GMAC 2001b, 11). When GMAT scores are combined with undergraduate grade point averages, the median correlation increases only to .47. These results suggest that both measures of student quality have explanatory power, but that GMAT scores dominate undergraduate grade point averages when predicting first-year M.B.A. grade point averages.
(14) Caution should be exercised for at least four reasons. First, the validity of GMAT scores to predict academic performance in other (non-M.B.A.) graduate business programs, while expected, has not been established. Second, the undergraduate background of master's in accounting students is more homogeneous than M.B.A. students (i.e., most master's in accounting students were undergraduate accounting majors, whereas the undergraduate majors of M.B.A. students are very heterogeneous). When predicting graduate grade point averages after holding undergraduate major constant, we would expect an increase in the relative predictive power of undergraduate grade point average relative to GMAT scores. However, the challenge of varying grading standards across universities still exists and helps justify the use of GMAT scores as a relative quality indicator. Third, data linking GMAT scores and/or academic performance in graduate business programs to professional accomplishment are incomplete. Fourth, some accounting program administrators believe that master's in accounting students do not take the GMAT exam seriously. We comment on this latter point below.
(15) Individual year averages ranged from a low of 584 in 1998 to a high of 589 in 2000. For the year 2000 sample, the average GMAT score of 589 is consistent with data reported in Nelson et al. (2002). They use self-reported survey data gathered in 2000 from students enrolled in accounting programs at 22 universities that are members of the Federation of Schools of Accountancy. Their survey instrument asked respondents to identify their GMAT score range. Thirty-seven percent reported scoring below 551 and 61 percent reported scoring below 601. Therefore, the median GMAT score was between 551 and 601. These data are not reported in Nelson et al. (2002). We are grateful to Professor Vendrzky for supplying data from their Table 2 after purging responses in the "have not taken" GMAT category.
(16) Miller (2003) analyzes AICPA enrollment data through 2001 and concludes "that accounting programs continue to produce substantially more master's degrees than the public accounting profession demands" (Miller 2003, 212). The conclusion takes into consideration the AICPA's 2001 public accounting demand estimate for master's in accounting graduates of 3,035 students. However, the AICPA notes that its 3,035 demand estimate is probably understated due to nonreporting by Andersen in that year. In contrast, our analysis based on GMAT scores suggest that there is a severe shortage of master's in accounting students of the quality demanded by the public accounting profession.
(17) We obtain average 2001 GMAT scores and enrollment data from U.S. News & World Report (2002, 56) for the 56 ranked M.B.A. programs identified during the sample selection process. Based on these data and consistent with the accounting program GMAT score calculations, we computed various weighted-average GMAT scores for the M.B.A. program sample and various subsamples. Average M.B.A. program GMAT scores ranged from a high of 718 (Stanford University) to a low of 623 (Universities of Illinois and Wisconsin).
(18) Based on t-tests for differences in means, see Figure 1. All t-tests for differences in means shown in Figure 1 are significant at the 1 percent level or higher.
(19) We are aware of the perception that the quality of graduate accounting students is higher than that suggested by GMAT scores. However, before dismissing GMAT scores as an unimportant or invalid measure of student quality, consider the following. There is a general perception (e.g., Albrecht and Sack 2000) that the quality of undergraduate accounting students is declining. Our conclusion that the average quality of graduate accounting students is not high is consistent with beliefs about the quality of undergraduate accounting students. As previously discussed, large-sample studies sponsored by the GMAC show that GMAT scores have a higher correlation with first-year M.B.A. grade point averages than with undergraduate grade point averages. While in footnote 14 we urge caution in generalizing this result to include graduate accounting students, the differences between average GMAT scores at highly ranked M.B.A. programs compared to highly ranked accounting programs are so large that they are difficult to dismiss. Further, accounting students have strong incentives to take the GMAT seriously. Scholarship funds are awarded to students based on, among other factors, GMAT scores, major consulting firms (e.g., Booz-Allen & Hamilton, McKinsey, etc.) require pre-interview reporting of GMAT scores and restrict their interview schedules to high GMAT applicants, and data reported below show that, for at least one (then) Big 5 firm, average program GMAT scores are highly correlated with hiring rates. Thus, GMAT scores are correlated with other factors related to the hiring decision. Finally, data previously cited show that the ranking status of programs is highly correlated with GMAT scores. To the extent that program ranking status has resource allocation or other quality of program implications, program administrators should be concerned about GMAT scores.
(20) For undergraduate programs the average entry-level salary for the higher GMAT score programs was less than 0.6 percent higher than for the lower GMAT score programs. These data were limited and comparisons were only possible for the assurance services function for 1999 and 2000. We also asked the (then) Big 5 firm representatives to comment about their willingness to pay salary differentials based on quality considerations. A common answer is that the firms have not been willing to compromise on quality and that they only hire what they consider high-quality individuals. Based on competitive considerations, they may be willing to pay more for certain entry-level people. However, the compensation may be in the form of a higher signing bonus.
(21) See DiPiazza and Eccles (2002) for a discussion of the PricewaterhouseCoopers' suggestions for improved corporate reporting to build public trust.
(22) A good summary of the criticisms and recommended directions for change is provided by the American Accounting Association's (1998) Report of the Changing Environment Committee. The areas of concern noted by the committee include: (1) scope--accounting should be approached as a broad information discipline; (2) information sets--GAAP/GAAS-based accounting is too narrow; (3) the need to develop learning to learn (lifetime learning) skills; (4) the need to focus on developing communication, intellectual, and interpersonal skills; (5) customer focus--the need for greater understanding by students of user information needs; (6) the need for a greater focus on higher value-added information activities; (7) the need to embrace information technology; and (8) the need to develop a global perspective.
(23) It should be noted that the Albrecht and Sack (2000) study was undertaken at a time when the stock market was surging, the economy was strong, and at a time when there was great demand for professionals with consulting, finance, or information systems training. The current environment is completely different. Presently, there is weak demand for students with consulting, finance, and information systems training. We also find accounting Ph.D. program enrollment and AAA membership declining, and (then) AAA President Joel Demski calling for a renewed focus on creativity and innovation by accounting faculty members, both in terms of the scholarship of teaching and the scholarship of research. One initiative sponsored by the AAA was a curriculum contest. Several curriculum summaries were presented at the 2002 AAA Annual Meeting and contest winners were announced, and subsequently published in Issues in Accounting Education (February 2003). At the same time, in the wake of Enron and other accounting failures, there is perhaps a greater appreciation for the importance of high-quality accounting information than ever before.
(24) This latter concern and the perceived opportunities for adding value through knowledge leveraging led the AICPA to pursue its failed "new credential project" (Elliott 2000). While the new credential initiative was soundly defeated when put to vote by the AICPA membership, the perception of accounting practitioners that accounting education is too narrowly focused remains.
(25) The following quote from Robert Elliott, (then) Chairman of the AICPA, is illustrative: "On the traditional side, there are a number of positive curriculum changes at a number of institutions. However, many schools still train people only to prepare and audit financial statements. While this is a core service of the profession, the education is not broad enough to equip graduates to take advantage of all the opportunities the Vision Project identified" (Albrecht and Sack 2000, 38).
(26) See Model Tax Curriculum, Model Tax Curriculum Task Force, AICPA Tax Division's Tax Education Committee (AICPA 1999b); AICPA website. However, it is clear that the higher value-added tax work is related to tax planning/strategy and consulting, rather than compliance work, and therefore many of the general criticisms of accounting education may apply equally to taxation. The task force stresses the need for a broader knowledge base for tax professionals.
(27) The Table 3 analysis includes 36 of the programs in our sample that have identifiable assurance services/financial reporting tracks and whose fifth-year requirements were readily available on websites or from other sources. It excludes Arizona State University (systems tracks only), DePaul University (assurance services/financial reporting track is for nonaccounting undergraduate majors), the University of Minnesota (tax program only), The University of North Carolina (one-year program for nonaccounting undergraduate majors), the University of Virginia (track discontinued for open enrollment students), and Wake Forest University (integrated five-year program, track concept not applicable). We especially caution readers that our categorization of accounting and business core courses based on website descriptions is somewhat subjective and is only an attempt to capture some general program characteristics. We suggest that readers who need more detailed information first reference the websites using the addresses given in Table 1 and then contact individual program administrators.
(28) Many schools used to have a nine-credit-hour undergraduate financial reporting sequence consisting of two intermediate accounting and one advanced accounting course. Many schools have now condensed the three-course coverage into two courses by using a more conceptual/research-oriented approach and by condensing the advanced accounting coverage. Similarly, the audit coverage has been cut back at the undergraduate level. Interestingly, the Universities of Michigan and Missouri have no auditing coursework requirements in their respective undergraduate accounting programs.
(29) For example, many schools have recently developed and offered courses related to Enron and other contemporary issues.
(30) Space limitations prevent us from providing detailed descriptions of the example programs. Readers are encouraged to refer to each program's website for special course requirements and descriptions.
(31) Note the uniqueness of this program as evidenced by its course titles: Foundations of e-Business. Taxes and Business Strategy, Innovative Financial Instruments/Securities. Performance Measurement/Strategic Cost Management, Corporate Restructuring, Enterprise Computing and e-Business, Advanced Topics in Disclosure and Financial Reporting, Risk Management, Global Financial Markets, and Legal Environment of e-Business and the Firm.
(32) The AACSB's new maintenance of accreditation process may provide a solution to this dilemma. It will require accredited master's in accounting programs to annually report data to the AACSB's International Knowledge Service. These data will be used to produce statistical reports that include comparisons with peer and aspirant schools. The set of specific data to be included for graduate accounting programs is not yet defined. However, we do know that data being required of undergraduate, M.B.A., and doctoral programs include applicant pool and employment opportunity metrics.
(33) A concern raised by the PricewaterhouseCoopers (2003) is that firm training programs are not challenging enough. Apparently, all new recruits are trained in the same way. "There is no assessment of the knowledge and skills of new ABAS hires, and the 'experience inventory' given to TAX hires prior to training is not used to tailor the training of individuals" (PricewaterhouseCoopers 2003, 37).
(34) This comment is probably an overstatement in the following sense. There is some evidence that students from graduate accounting programs who have had multiple internship experiences with a firm start out at higher salaries and with advanced responsibilities. Again, the value of experience is evident.
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Thomas J. Frecka and William D. Nichols are both Professors at the University of Notre Dame.
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|Author:||Frecka, Thomas J.; Nichols, William D.|
|Publication:||Issues in Accounting Education|
|Date:||May 1, 2004|
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