January 2002

New Competencies for Accounting Students

By Sheila Foster and Cynthia Bolt-Lee

Educators must keep pace with a changing business world, continuous curriculum revision, and a challenging student body. Professional organizations have examined the needs of the accounting profession with an eye toward ensuring that an accounting education prepares students for professional success.

The American Accounting Association (AAA), a professional organization for accounting educators, appointed a commission in 1984 to study accounting education and the future of the profession. “Future Accounting Education: Preparing for the Expanding Profession” (Bedford Report) subsequently concluded that accounting education required extensive revision. The Accounting Education Change Commission (AECC) was created by the AAA in 1989 to develop a “change of focus in the philosophy of accounting education.” The AECC concluded that accounting education was not keeping pace with the profession. The AECC published several statements, including a “Composite Profile of Capabilities Needed by Accounting Graduates.” The commission also provided grants to help several accounting programs implement and study recommended curriculum changes. Accounting education and research began a slow transformation.

Several studies address accounting education change. The 1989 Big Eight white paper, “Perspectives on Education: Capabilities for Success in the Accounting Profession,” examined concerns about accounting graduates. In 1994, the Institute of Management Accountants (IMA) presented the results of its study addressing the needs of corporate accountants, “What Corporate America Wants in Entry-Level Accountants.” The AICPA issued its “CPA Vision: Focus on the Horizon” in 1998.

The most recent attempt by professional organizations to address issues of accounting education is the AICPA “Core Competency Framework for Entry into the Accounting Profession”. In 1998, the AICPA’s Accounting Education Executive Committee charged the Pre-Professional Competency Task Force with developing a competency guide based on the CPA Vision. The Framework was prepared for educators to develop a curriculum of broad-based accounting education, with a focus on the needs of the future professional accountant.

When completed, the Framework will have three primary components. The first component defines a set of competencies that all students entering the field of accounting should possess. The second component will provide classroom strategies and techniques. The third component will evaluate how well courses and programs address the core competencies.

The task force made the decision to focus on competencies, or skills, rather than subject content or a body of knowledge because of the rapidly changing nature of the accounting profession. Students that possess a core set of competencies will be able to adapt to change and will be more valuable in the workplace, in turn opening more career opportunities to them.

In July 1999, the first component of the Framework—the set of core competencies—was released. In it, three categories of competencies are delineated: functional, personal, and broad business perspective. The competencies address the skills necessary for students to receive a well-rounded accounting education regardless of their choice of career path, and they encourage lifelong learning. These competencies, discussed in detail below, will form the basis for the teaching methods and assessment tools to be developed in the second and third parts of the Framework.

Functional Competencies

“Functional competencies relate to the technical competencies which are most closely aligned with the value contributed by accounting professionals.”

Decision modeling. Accounting professionals need strong decision-making skills, utilizing both strategic and critical approaches to the process. This requires an objective consideration of a problem and the ability to identify alternatives. In order to do this, the student must be able to quantitatively determine the importance and likelihood of different scenarios, examine the problem and test possible solutions using model-building, and evaluate the cost and benefit of available solutions. Each student must employ SWOT (strengths, weaknesses, opportunities, and threats) analysis.

Risk analysis. Accounting professionals must understand both audit risk and business risk. They must also identify the risk of negative outcomes (including fraud), and evaluate methods that might mitigate those risks through prevention, detection, or corrective controls. The future accountant should be able to both assess and control unmitigated risks. Finally, it is important that professionals communicate the possible impact of identified risks and recommend corrective action.

Measurement. Accounting students must first be able to identify what needs to be measured. In order for measurement to be useful, students must be familiar with the appropriate measurement criteria, GAAP, OCBOA (Other Comprehensive Basis of Accounting), tax reporting, EVA (Economic Value Added); use the appropriate measurement; present the results of the measurement objectively; and resolve ambiguities involving estimates.

Reporting. Communication is an integral part of accounting. Professionals must be able to prepare reports that are objective, concise, and clear. If the reports are to be useful for decision makers, they must contain relevant information that leads to appropriate conclusions. Additionally, professionals must be able to use different technologies and media, depending upon the report’s audience.

Research. Rules and standards are evolving continuously, both inside and outside the entity. The future accountant needs the research skills to access, understand, and apply standards, rules, and other information. These skills include evaluating information and reconciling ambiguous or conflicting information for application in situations not explicitly addressed by current rules or standards. Professionals must be able to identify relevant information found in industry trends, internal performance history, benchmarks, and best practices.

Technology. Technological change is a constant. Students planning a career in accounting must use technology effectively and efficiently. They must be able to use technology as a tool to assess and control risk, document work performed, research data, and build models. But technology and automated business processes are not without their own risks; today’s students must be able to assess such risks.

Personal Competencies

“Personal competencies relate to the attitudes and behaviors of individuals preparing to enter the accounting profession. Developing these personal competencies will enhance the way professional relationships are handled and facilitate individual learning and personal improvement.”

Professional demeanor. A reputation for objectivity, integrity, ethics, and excellent work performance is critical to the accounting profession. Professionals must be committed to quality and efficiency. They must behave in a manner consistent with the established standards of the profession. Professionals must be willing to grow, to make changes in personal conduct and appearance, and to learn from mistakes. They must see personal development as a lifelong process. Managing stress, performing well under changing conditions, and evaluating information without distortion, bias, or conflict of interest are necessary for a successful career. Individuals entering accounting must be able to see the ethics in situations and conduct themselves with integrity while respecting client confidentiality.

Problem solving and decision making. Students entering the accounting profession must be able to make valid and reliable evaluations of information, facts, evidence, alternative solutions, and the impact of those alternatives. Prospective accountants must form opinions based upon experience, adapt to new situations, see and propose novel approaches, build consensus, and follow the lead of others when the situation dictates.

Interaction. In order to interact effectively with others, professionals must be willing to work toward common goals and must recognize the value of working within diverse, cross-functional teams. Other important competencies include the ability to work productively with others, to respect the group protocol, to facilitate free expression, and to coach or mentor other members when appropriate.

Leadership. Students need to acquire and develop the tools of leadership: the ability to motivate, to rally support, to facilitate consensus, and to persuade others of a point of view. Future professionals must practice the principles of effective governance, including valuing the input of others.

Communication. Accounting has long been called the language of business. In the areas of reading, writing, listening, and speaking, accountants must be able to organize and express information with conciseness and clarity, determine what information is appropriate in context, and select the best medium for information exchange.

Project management. Projects vary in size and importance and professionals need the ability to adjust and direct them accordingly. In order to be an effective project manager, the entrant to the profession must be able to determine goals, prioritize, delegate, estimate requirements, allocate resources, manage human resources, maintain control, take corrective action, recognize and respond to emergency situations, and see a project through to completion.

Technology. Technology opens entire new avenues of communication, such as e-mail, discussion boards, and video-conferencing. Students must be willing to explore these new avenues and acquire the skills to use them effectively. At the same time, new advantages and opportunities create new disadvantages and threats. The future professional will have to deal with issues of privacy, intellectual property rights, and security in the new technological age.

Broad Business Perspective Competencies

“Broad business perspective competencies relate to the context in which accounting professionals perform their services. … They must be conversant with the overall realities of the business environment.”

Strategic and critical thinking. Critical thinking in accounting involves the ability to see the big picture and use data and knowledge from numerous disciplines in order to make good decisions. Under the Framework, entrants to the accounting profession should be able to communicate “the vision, strategy, goals, and culture of organizations.” In order to do this, knowledge of the strategic planning process is required. Data gathered from many sources must be utilized and transferred from one situation to another. Using such information, professionals must be able to perform a SWOT analysis. Moreover, professionals must be able to both analyze and prepare strategic information.

Industry perspective. Students entering the accounting profession must be able to identify the economic, broad business, and financial risks that face an organization and its industry. Accountants should be able to recognize the market forces that could cause an organization to be viewed as a target for merger, acquisition, or strategic alliance. They must be familiar with the organization’s performance, both financial and nonfinancial, and its particular advantages and disadvantages.

International perspective. Treaties and technology are creating a borderless commercial world. Students needs to develop future skills to analyze the cultural and financial impact of decisions to move into new markets or expand existing markets, including issues such as managing human and financial resources, customer demographics, and the social costs and benefits of decisions made in a global environment.

Resource management. The Framework recognizes the need to coordinate and develop an appreciation for an organization’s resources. This requires that accounting students be able to use information from a variety of sources in a process of continuous improvement.

Entrants to the accounting profession must be able to articulate how the availability of resources affects an organization, how a lack of access to such resources affects an organization, and how organizations allocate scarce resources. Also needed is the ability to identify traditional and nontraditional ways of evaluating an organization’s performance and the effects of market forces. Accountants must recognize the social costs and benefits of the decisions an organization makes.

Legal and regulatory perspective. The Framework states that “Regulatory forces are being shaped by collaboration, migration, and reform as the various stakeholders globalize, share information, and force their particular needs and viewpoints onto political agendas.”

Because of these forces, accounting professionals must identify and describe the changing legal and regulatory environment as well as the threats and opportunities for an organization. Accountants should recognize that political and environmental forces affect the accounting standards-setting process.

Marketing. Future accountants require marketing skills that focus on the needs of their customers and stakeholders. In order to be “marketing- and client-focused,” students must understand factors that affect relationships among these groups and build good working relationships.

Technology. Students planning to enter the accounting profession must understand and appreciate the effects of technology on the broader business environment and be able to locate, recognize, and use the information that technology makes available. In addition, professionals must appreciate the opportunities and risks associated with electronic commerce and use technology to improve business strategy.

What’s Next?

The task force says that the Framework “supports a paradigm shift from a content-driven to a skills-based curriculum.” This shift is supported “because the body of knowledge and the accounting profession are changing so rapidly.” The task force thought that the core set of competencies would have enduring value even as the body of knowledge changes over time. The task force leaves it to educational institutions to vary their program to best suit individual “environments, resources and missions.”

The Framework appears to present a new and broader business education for the accounting major than the traditional curriculum’s closely prescribed courses in accounting, taxation, and auditing. These changes seem to recast the accountant as a generalist member of an organization’s team rather than a specialist with a specific body of knowledge to transmit to other members of the team. These competencies also align with proposed modifications to the 2003 CPA exam.

The Framework’s competencies and the elements of each acknowledge that the accounting curriculum will overlap with many other business courses. It seems clear that more emphasis will be placed on making areas such as management theory, strategic management, management information systems, organizational behavior, oral and written communications, interpersonal skills, research, ethics, statistics and quantitative methods, human resource management, and international business and marketing a standard part of the accounting curriculum.

The task force has not finished its work. Now that the core competencies for functional, personal, and broad business perspectives have been developed and released to the public, the task force must tackle the remaining two parts of its mission. The first step is to provide educators with “sample strategies and ‘best practice’ classroom techniques that directly address the development of competencies” that assist in the implementation of the core competencies. For administrators, the Framework should provide strategies that aid curriculum development though its online resources.

The third and final part of the task force’s mission is to provide educators with “a tool to evaluate how effectively their courses or entire accounting programs address the competencies.” Employees, students, and accreditation boards can use the Framework as a benchmark for assessing an accounting program. The third component will undoubtedly assist accounting program curriculum development.

Ultimately, of course, the achievement of the task force will be measured in the workplace. How well do students entering the profession perform? Does the Framework produce graduates with the necessary skills and knowledge to become valuable members of firms or organizations? Only time can answer these questions with certainty.

Sheila Foster, PhD, CPA, is an associate professor and Cynthia Bolt-Lee, CPA, is an assistant professor, both at the Citadel’s department of business administration, Charleston, S.C.
Authors’ Note: The authors would like to solicit the opinions of practicing professionals, accounting educators, and interested parties in business and industry. Does the Framework address the needs of the constantly changing profession and the competencies required of future accounting professionals? Will it affect how students are prepared? Will it improve the quality of students entering the profession? Will the effect be the same for students entering public accounting versus those entering business or industry?
Please share your thoughts and comments with us at Fosters@citadel.edu and Boltc@Citadel.edu.


Robert H. Colson, PhD, CPA
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