Masters Degree in Accounting Texas

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					  Accounting Education: Charting The
   Course Through A Perilous Future

Presentation to the Northeast Region,
 The American Accounting Association
  May 4, 2001 - Portland, Maine

Basis for Presentation: Monograph by Steve
                        Albrecht & Robert Sack

A Study Sponsored by: IMA, AICPA, AAA and
                      ―Big 5‖
              Our Charge

―Write a high-level thought piece, supported
by evidence where possible, about the future
of accounting education.‖

           Timetable: 6 months
  Sponsor’s Task Force

Steve and I greatly appreciate the help of
Bud Kulesza and Keith Russell (IMA), Bea
Sanders and Karen Pincus (AICPA),
Michael Diamond and Jan Williams
(AAA), and Ellen Glazerman and Brent
Inman (Big 5).

But we are the authors of the Report
Research Methodology

   Read everything possible, especially
    past reports about accounting
   Interviewed key accounting leaders
   Held focus group meetings
   Conducted surveys
       Practitioner Survey
       Educator Survey
       Department Chair Survey
 Previous Warnings about the
       need to Change
 IMA Studies (Counting More, Counting Less, etc.)
 AICPA Vision Study

 AAA Committee Reports
    Bedford Report (1986!)
    Changing Environment Committee Report

 AECC   Monographs
 “Big 8” White Paper
    Our Conclusion

While we have been long-time
supporters of accounting
education, if we were starting a
new business school today, we
would not have separate
accounting programs, at least
not structured the way they are
      Our Conclusion

the Accounting Education Community
             is in trouble
               Our Rational
1. The number and quality of accounting
   students is down.
2. Previous majors would elect other majors if
   starting over again today.
3. Our constituents tell us that our educational
   model is broken and needs to be fixed.

The fact that these issues arise at the same
   time does not necessarily point to a cause
   and effect relationship. But…
              Our Rationale

1   The number and quality of
     accounting students is down.
2   Previous majors would elect other majors if
     starting over again today.
3   Our constituents tell us that our educational
     model is broken and needs to be fixed.
  Decreases in Enrollments
Afew schools report stable enrollments but
 most are down by 20% or more.

 On a per-school basis, those schools with an
 AACSB or an ACBSP accreditation saw
 their enrollments drop by 38%. Other
 schools saw their enrollments rise by 10%

 We don‘t have comparably quantified data,
 but the consensus is that quality is down too
 Why Enrollments are Down!

1. Accounting salaries haven’t kept up.
2. More attractive career alternatives .
3. Profession has lost some of its gloss
4. Increased willingness to choose risky majors
   and career tracks.
5. Lack of information and considerable
   misinformation about accounting profession.
6. 150-hour program rule has increased
   opportunity costs to become an accountant.
  Accounting Salaries Haven’t
           Kept Up
In 1989, salaries to accounting grads averaged
  $25,223, second only to their MIS peers –
  and only $1,500 behind

By 1999, salaries to accounting grads averaged
  $34300, but ranked fourth in the business
  school, and $7,000 behind their MIS peers

Data summarized from annual reports issued by
the National Association of Colleges and Employers
          Enrollments Are Down
Message from the Profession is Confused
 All indications are that the audit business is good -
  but consulting gets all the attention
 ‗We desperately want accountants, but the fact is,
  we will pay more for IS people‘
 Accounting grads hired by All CPA firms has
  slipped only slightly in the past 5 years
       But the major firms hired 20% less (tax??),
       While the smaller firms hired 4% more
   The major firms are hiring more experienced hires
    and more paraprofessionals (tax??)
    Enrollments are Down

If the decline in enrollments (and the loss of
our quality edge) concern you, you would
be well advised to read and study:
 The AICPA Supply/Demand Study - 2000
 The Taylor Report commissioned by the
 And, of course, our Report which cites other
    150-hour rule isn’t problem--
    graduate school is preferred
Practitioners who would recommend graduate school                85.7%
Educators who would recommend graduate school                    95.7%
High school students who plan on graduate degree                  76%
College students who plan on graduate degree (57% in 1990)        80%
Additional year would deter studying accounting
  High school students                                            22%
  College students                                                15%
Requirements to be CPA seem fair                    General    150-hour
  High school students                                   71%      74%
  College students                                       81%      95%
  Switchers away from accounting                         80%      91%
  Eliminating the 5th-year

The Problem isn‘t the extra 30 hours,
  it‘s the nature of the 30 hours we
              have offered

  There may also be a timing issue
              Our Rationale

1   The number and quality of accounting students
     is down.

2   Previous majors would elect other
     majors if starting over again today.

3   Our constituents tell us that our educational
     model is broken and needs to be fixed.
             Accounting Majors
            Wouldn’t Major Again!
                                                     % of         % of
               Type of Degree                      Educators   Practitioners
                                                   Who Would   Who Would
Earn a bachelors degree in something other than
  accounting and then stop                              0.0           7.9
Earn a bachelors degree in accounting, then stop        4.3           6.4
Earn an MBA Degree                                     37.7          36.4
Earn a Masters of Accountancy Degree                   31.5           5.9
Earn a Masters of Information Systems Degree           17.9          21.3
Earn a Masters Degree in Something Else                 5.4           6.4
Earn a Ph.D.                                            1.6           4.4
Earn a J.D. (Law Degree)                                1.6          11.4
        “Accounting” Careers
         are Less Attractive

   Less attractive financially
       Starting salaries
       Wealth accumulation

   Less psychic income
       True of all professions?
       Much of what we did is no longer valued

   Technology has replaced much of what
    we do
“Accounting” careers are less
 Our   friends in industry are leading the way
   NACA=NAA=IMA= ??
   Management Accounting=Strategic Finance

 The―Accounting‖ Function is either
 insourced or outsourced
     either way it‘s a dead end job

 Technology has isolated accounting in favor
 of information
“Accounting” Careers are less
The scratching sound you hear is the
 sound the bright people are making, as
 they scramble to avoid the
 ―Accounting‖ trap

Instead, I‘m a ―finance professional‖ or
  an ―information provider‖
              Our Rationale

1   The number and quality of accounting students
     is down.

    Previous majors would elect other majors if
     starting over again today.

3   Our constituents tell us that our
     educational model is broken and needs
     to be fixed.
            Accounting Education
                 is Broken
1   We teach accounting as if information were still costly.

$10/hour     $30/hour      $100/hour      $300/hour $1,000/hour
Recording    Summarizing     Converting       Turning         Making
business      recorded        data into     information    value-added
 events        events       information   into knowledge    decisions

Teach too much here!                       Teach too little here!

                                  Introductory Accounting
                                  Intermediate Accounting
2 Major culprits
                                  Cost Accounting
                                  Other Specialized courses
          Changes in Business
Globalization—Technology—Concentration of Market Power

    Increased Competition — Inexpensive Information

Fundamentals are assumed — But life is much more complex,
   and more demanding
The people who can deal with that complexity will have all the
  fun, and the rewards
 e.g. Delta‘s fuel inventory – LIFO, FIFO, LCM
 Vs. measuring risk of fuel inventories and futures, in various
  currencies, with planned revenues from various countries
  What Change Means For Us
Globalization—Technology—Concentration of Market Power

     Increased Competition — Inexpensive Information

Too many of us teach Accounting as it was
practiced in the good old days.
•Recording, Processing, Reporting as the end all, be all
•Debits & Credits, Standard Cost, Financial Reporting

But Its Different Than It Was -
- and we risk becoming an anachronism
             A Helpful Analogy
             Accounting is like Dentistry

Practitioners Can‘t Live by ―Filling Teeth‖/ ―Preparing

  Technology has changed the market place forever

           We can train people to become
           ―Hygienists‖ / ―Processors‖ or
We can raise our sights and educate people to become
            ―Orthodontists‖ / ―Analysts‖
          Perceptions About
         Accounting Programs
                                         Percent of
                                   Educators   Practitioners
                                      who agreed with
                                       the statement
is more attractive than Finance       38.6            49.5
is more attractive than I/S           22.8            31.1
and I/S should be combined            57.5            52.0
and finance should be combined        41.2            58.6
Business majors are too isolated      62.3            47.3
Accounting is integrated enough       25.0            36.4
         Perceptions of Pedagogies
                               Percentage Too    Too
           Type of Pedagogy     who use much    little
Assignments with companies        40.8    4.3   52.7
Case analysis                     69.3    8.5   37.5
Quizzes (feedback exercises)      75.6   10.5   11.7
Lecture                           90.6   41.4    1.5
Oral presentations                62.4    8.4   34.3
Reading textbooks                 84.0   12.1    7.8
Role playing                      15.3    5.1   34.1
Group work                        74.6   20.4   27.8
Team teaching                     11.1    4.3   48.5
Technology assignments            77.0    5.1   53.0
Videos                            37.6    5.4   12.9
Writing assignments               78.4    2.4   45.8
         Representative Quotes

The tremendous benefit that comes from an accounting
  education is the organization and the structure and the
  discipline and the understanding you gain from looking at
  the business from an accountant’s eyes. But then, the
  course goes off into a study of paragraph 114 of SFAS 131,
  and all that perspective is lost.

Students don’t have the luxury of learning about business on
   the job - They have to be productive from day one.
      Minimum Changes Needed

1. More emphasis on skill development, less emphasis on content
2. Less emphasis on statement preparation, more emphasis on analysis,
   planing, interpretation and decision making
3. Change focus from rule based learning to conceptual understanding
4. Less specialization in accounting , more understanding of business
5. Breakdown the silos - teach accounting/information as an integral
   part of business - and of the market place
6. Emphasize the role of accounting and information in the
   management of a GLOBAL enterprise
7. Bring the best of the practice world into the classroom - and vice
Bluntly said, teach what students need, not what we
   want to teach - or are comfortable teaching
        The prize will go to...

The team that can quickly teach the process

  (this is a hammer, and you hold it by the

 But move promptly to the use of the

  (here is how you build a house)
       Minimum Changes Needed

 1. Must develop school-specific mission playing to your
    strengths. Copycat mentality won’t work anymore (too
    much information available that exposes weaknesses).
 2. Consider your environment.
 3. Consider carefully every degree offered—maybe consolidate.
 4. Consider carefully every course offered—is it still relevant or
    has technology, globalization, etc. rendered it obsolete?
 5. Consider carefully the pedagogy of every course.
 6. Invest in faculty development—we can only do what we
    know how to do.

What can your school and program do better than anyone else?
     The “Problem” is Complex
Three things need to be said:
 Many schools have made significant change:
  Some schools/some professors have not.

   Even where dramatic change has been
    implemented, there is no time to catch a breath.

   It may be that the same criticisms can be laid to
    Finance & IS programs. But we have to be better,
    because we are losing the competition for the
    bright people
   Summary of our Problem

 At   best we are losing market share

 At   worst we are losing in absolute terms

     of students = loss of positions = loss of
 Loss
 budget and resources

 Loss of Quality = more effort and less
         Reactions to the Report
 Little disagreement about the problem
 Lots of disagreement about the reasons
       The 150 hour rule
       The greed of the big firms
       The emphasis on student evaluations
       The exam, the textbook, the regulators, etc.
       The Accounting Review, etc.
       The dean, the department head, etc
        We have to work with the profession --
        But in he end we have to solve what is
        our problem
     Reactions to the Report

Some argue that students will come back,
  when the economy returns to ―normal‖

But it seems clear to us that the technology
 genie is out of the bottle, and that we will be
 forced to re-define ―normal‖

The practice of Accounting will never look
 the same, like it or not
      How Should a school
The report carefully avoided any attempt to
   tell a school what to do.
It seems clear that every school must think
   through its own response, after a careful
   analysis of its environment
 Strengths and weaknesses of the department

 Expectations of the University and the
 Present and potential student body
  For Example…U Maryland,
        College Park
 Majors  dropped from 250 to 125, and the
  pipeline is similarly depressed
 Strategic Planning Committee, with the
  Dean and the Advisory Board
 Great Location in an unusual market

 Considering a ―Diffusion Strategy‖
   Small Professional Program
   Intense MBA participation

   Service to the rest of the Business School
      For Example... U Virginia
           Mcintire School
 Majors  dropped from 120 to 60 with similar
  pipeline problems
 Major Info Systems Department - great
  reputation overall with the major firms
 Dean aheming, about tax staff

 Is considering a ―Redefinition Strategy‖
   Working in Risk Management
   Marketing Exec Ed Programs - to the big firms!
      How Should a School
Other Strategies??
 Define accounting-as-information, and
  integrate IS and accounting (Arizona, BYU,
 A Law School Model ??

 A Re-intellectualized curriculum ??

 For your school ??
    We are Not Alone…..But

 An  Umbrella Group has been formed to
  deal with marketing to potential students
 We have Leadership from the IMA,
  cooperation from the AICPA, and the
  interest of FEI
 And in general, the big 5

 The CPA exam is ready for revision

 We have the attention of NASBA

 AACSB???
  How Should We Respond?

Important decisions face us as individuals:
 As senior faculty
 As prime-of-life faculty
 As new young Doctoral candidates

Important decisions face us as individual
  members of the Association
 How Should We Respond?

It will be difficult to predict where this is all
 going – but one thing is clear

      Maintaining the Status Quo is
           Not An Option

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