The Future of Accounting Education: Assessing the Competency Crisis

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The Future of Accounting EducationAssessing the
Competency Crisis

• James E. Sorensen, Ph.D., CPA, CGMAS
• School of Accountancy, University of Denver
• Colorado Society of CPAs
• Accounting Faculty Symposium
• October 18, 2014

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Development Vetting of Proposed Framework

• Development
• First meeting of Task Force on September 10, 2010
• Have had virtual meetings nearly every other week
  since then
• Numerous side meetings to focus on specific
  aspects of the framework
• Conference Presentations
• 2011, 2012 and 2013 AAA annual meetings
• 2012 and 2013 IMA Annual Conference Exhibition
• 2012 and 2013 AAA Management Accounting Section
  mid-year meeting
• Input from numerous colleagues and members of the
  Pathways Commissions Common Body of Knowledge
  task force

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Publications and Manuscripts Under Review

• Lawson, et al. 2014. Focusing Accounting
  Curricula on Students Long-Run Careers
  Recommendations for an Integrated
  Competency-Based Framework for Accounting
  Education. Issues in Accounting Education, 29
  (2) 295-317.
• Lawson, et al. (2015) Thoughts on Competency
  Integration in Accounting Education, Issues in
  Accounting Education, 30 (3) 149-171.
• P. Brewer, J.E. Sorensen, D.E. Stout. (2014).
  The Future of Accounting Education Addressing
  the Competency Crisis. Strategic Finance, XCVI
  (2) 28-37.

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Motivation for Development of Framework
Accountants responsibilities are expanding
But, our extensive review of the literature shows
that these responsibilities are not being met
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Pathways Commission Report

• On the education of accountants and the need for
  change
• Accounting education is challenged to keep pace
  with opportunities and expectations that students
  learn to think in new ways and develop the
  necessary skills and knowledge to maintain the
  professions ability to meetevolving
  opportunities. Without innovation and change, the
  discipline and profession risk becoming
  supplanted by technology or possibly rendered
  irrelevant because of mechanical rules and
  artificial contrivances. (p. 22)

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Pathways Commission Report

• On developing curriculum models 
• accounting curricula have evolved with limited
  commitment or agreement about core learning
  objectives in recent years. Vital accounting
  programs, courses, and learning environments need
  systematic attention to foundations for
  curriculum and pedagogy and opportunities for
  renewal for accounting educators. Accounting
  educators must bring together the broad
  accounting community to develop a shared vision
  for a body of knowledge that can serve as the
  foundation for varied curriculum models, allowing
  flexibility across varied educational
  institutions and missions. (p. 36)

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Pathways Commission Report

• If the accounting community continues to
  concentrate on the financial accounting system
  and not understanding the technology and dynamic
  business processes that run companies of the 21st
  century, the accounting profession has the
  potential to become obsolete. (p. 68) (emphasis
  added)

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The TASK FORCE RECOMMENDATIONS
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TF Recommendation 1

• The perspective of accounting education should be
  reoriented to a greater focus on curricular
  requirement for long-term career demands.
• Demski (2007) "... a vast amount of the
  curriculum is arguably aimed at preparing the
  student for the initial job ... important, but so
  are the ones that follow."
• Academic and practitioner sources have cited the
  academic need to start building competencies
  required for the long-run.

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TF Recommendation 2

• The focus of accounting education should be
  broadened to move beyond a narrow focus on public
  accounting.
• over 80 of accounting graduates ultimately
  choose careers outside of public accounting
• accounting curricula should establish the base of
  knowledge and skills needed for career
  requirements across a variety of organizations.

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TF Recommendation 3

• The educational objectives of accounting
  curricula today should reflect how accountants
  add organizational value
• The way accountants add value within
  organizations has evolved and continues to
  evolve.
• Numerous surveys of financial executives confirm
  that accountants today are being asked
  increasingly to complement traditional accounting
  competencies with broad management competencies
  that enable them to collaborate with other
  managers to improve organizational performance. 

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Workplace Reality Underlying Expected Competencies

• Overarching responsibility of ALL professional
  accountants is to ADD values to clients and
  organizations by all accounting disciplines
• Audit
• Tax
• Financial accounting
• Management accounting
• Accounting information systems
• Others
• Ways to Add Value
• Have evolved
• Continue to evolve

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TF Recommendation 4

• The competencies (KSAs) of an accounting
  education should emerge and be developed within
  the curriculum as integrated competencies.
• There are many ways to deliver the content
  competencies go beyond traditional "silos."
• The challenge is achieving integration within and
  among competencies we have work to do.

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Conceptual Framework of Accounting Education

• These collective recommendations lead to a
  plausible proposed conceptual framework that
  identifies the integrated professional
  competencies necessary to create value in the
  long-run careers for all accountants.

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Competency Integration Framework
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Integration How Accountants Add Value
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Continuum of Entry-Level and Long-Term Competency
Development and Integration
Examples of Competency Areas Preparation for Initial Job Further Development of Life-Long Competencies Further Development of Life-Long Competencies
Examples of Competency Areas Undergraduate Education Early Career and/or Additional Education Long-Term Career
Integration of Formal Coursework and Professional Development Grounding in accounting and business knowledge and foundational skills Deeper expertise in area of chosen career path increasing integration across subject matters and focus on organizational value Deeper integration across subject matters greater focus on ability to gain new knowledge and skills over time to enhance organizational value
Integration of Accounting and Broad Business Knowledge Limited integration across accounting and broad business knowledge Considerable integration of accounting and broad business knowledge   Integrate accounting and broad business knowledge in highly uncertain and evolving situations develop new ways to apply business knowledge as an accounting professional
Integration of Foundational Competencies Develop foundational competencies for a business major Use foundational competencies to enhance cross-functional work Use foundational competencies effectively to anticipate and adapt to more complex business situations
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Levels of Competency Must Be Achieved Sequentially
Knowing Identifying Analyzing Prioritizing Anticipating
Demonstrate knowledge in unambiguous situations Identify ambiguous problems and relevant information Analyze relevant information, viewpoints, and alternatives Establish and apply priorities for reaching conclusions Anticipate and adapt to changing conditions
Achieve First
?Deeper Knowledge and More Contextual
Complexity
Achieve Second
Achieve Third
Achieve Last
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Level of Competency Integration (partial
representation of Accounting Competencies)
Accounting Competencies
Foundational Competencies
Accounting Competency 3
Topic E
Topic F
Accounting Competency 2
Accounting Competency 1
Topic C
Topic D
Topic A
Topic B
Broad Management Competencies
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Capital Investment Decision-Analysis Example
Accounting Competencies
Foundational Competencies
Foundational Competencies
Foundational Competencies
Assurance Internal Control Internal and
external audit implications
Communication
Communication
External Reporting Analysis Financial
statement preparation analysis
Taxation Compliance and Planning Tax
implications
Quantitative Methods
Quantitative Methods
Analytical Thinking Problem Solving
Analytical Thinking Problem Solving
Broad Management Competencies
Additional Core Management Competencies Cost of
capital, Capital structure, Real-options analysis
Interpersonal
Interpersonal
Leadership Organizational change management
Ethics Social Responsibility Corporate social
responsibilities
Governance, Risk Compliance Risk assessment
Technology
Technology
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Inventory Management Example
Accounting Competencies
Foundational Competencies
Assurance Internal Control Internal and
external audit implications
Communication
External Reporting Analysis
Communication
Inventory accounting methods
Ratio analysis
Quantitative Methods
Planning, Analysis Control Strategic
performance measurement
Information Systems Documents and data Flows
for inventories
Quantitative Methods
Analytical Thinking Problem Solving
Analytical Thinking Problem Solving
Broad Management Competencies
Interpersonal
Interpersonal
Additional Core Management Competencies
Collaborative supply chain management
Ethics Social Responsibility Global sourcing
decisions
Process Management Improvement Lean Production
Governance, Risk Compliance Managing inventory
risks
Technology
Technology
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Framework for Including Integrated
Competency-Based Learning Objectives with
Accounting Curricula
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What Can Practitioners Do?

• Practice Partner Action List How Can I Help as a
  Practitioner?
• Obtain and maintain professional credentials
• Utilize IMA resources
• Participate in IMA activities
• Integrate EPM into your company

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What Can Practitioners Do?

• Academic Partner Action List How Can I Help as
  an Academic Partner?
• Obtain and maintain professional credentials
• Involvement in and use of IMA resources
• Develop a CMA focus on campus
• Participate in national activities

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Moving Forward

• What do you think?

Comments or suggestions are welcome now. If you
like, please drop a line to James
Sorensen jsorense_at_du.edu or to Raef Lawson, Chair
of the Task Force IMA VP-Research
Professor-in-Residence Rlawson_at_imanet.org