The CPA Journal

In Defense of Accounting Education

By Steven J. Kachelmeier

In Brief

A Professor Presents the Counterpoint

In a counterpoint to Bruce Nearon’ radical proposal, a noted accounting educator, while agreeing with the Nearon’s educational goals, offers a different viewpoint on the state of accounting education. The author suggests an alternative interpretation of the Albrecht and Sack data and attempts to place the current declining enrollments within a broader context. He makes an interesting case for the dynamic between research and teaching ability and cites evidence for several significant changes in the accounting education model during the 1990s. His view of the accounting profession, and the education underpinning it, is refreshingly optimistic at a time when bad news has prevailed.

In the preceding article, Bruce Nearon perceives a number of ills with the accounting profession and the educational model that generates accounting professionals. To address these concerns, he presents a “radical proposal” that we replace our current educational model with a new alternative. To become a professional accountant under Nearon’s proposal, one would first obtain a liberal arts degree at the undergraduate level, followed by a “Doctor of Accounting” degree that would emphasize applied research in a program roughly analogous to medical or law school. Nearon is careful to distinguish the applied research he would emphasize from the social-science model of research he claims accounting professors currently conduct.

Nearon’s proposal itself is intriguing, although those who object to the 150-hour rule should contemplate the time needed to complete his doctorate. Nevertheless, there is merit to the objectives of this proposal: a well-rounded university education coupled with a professional degree that is not so much mired in technical minutiae but rather builds the applied research skills necessary to investigate, interpret, and keep current with the literature. Most university professors would share the educational goals of Nearon’s proposal. Many, however, would question Nearon’s characterization of the educational model we currently follow.

Nearon joins others in indicting university accounting programs for failing to pursue proper goals, most notably Professors Steve Albrecht and Robert Sack in their 2000 monograph, Accounting Education: Charting the Course Through a Perilous Future. These commentaries find accounting education largely to blame for faculty and PhD students that care only about publishing their research, undergraduate students that no longer view accounting as the most attractive major in a business school, and accounting courses that stress rules and rote over the analytical and communication skills necessary for professional success.

The implication that educators have turned a deaf ear to the many calls for reform over the past 15 years does a disservice to the many dedicated university professionals who have brought about real changes consistent with the goals Nearon and others have outlined. Nearon asserts that the way accounting education is delivered has remained largely unchanged for over 60 years, but many have seen it change dramatically in just the past six years. Nor does the hesitant acknowledgment (similar to that in Albrecht and Sack) that “a few” schools are exceptions reflect the reality of what has occurred. While irrefutable evidence for the pervasiveness of change is no more reliable than Nearon’s evidence for no change, there are reasons to believe that the real exception these days is the narrow, rule-based accounting education stereotype in Nearon’s commentary.

Accounting Professors and PhD Students

Consider the person entering a PhD program with the goal of becoming an accounting professor. Is such a person motivated by the opportunity to make lots of money from research publications? A highly motivated individual could probably find more financially rewarding opportunities than academic accounting research. The new PhD students entering the University of Texas at Austin are outgoing, dedicated individuals whose first and foremost goal is to teach and contribute to accounting education. Contrary to Nearon’s assertion, substantially all of them have meaningful, practical work experience in accounting. The Texas PhD program would be very reluctant to admit an applicant otherwise.

Certainly, PhD programs stress research skills, and neither PhD students nor accounting faculty can succeed at reputable universities without conducting and publishing quality research using the social-science model, to borrow Nearon’s term. Nevertheless, we must interpret this research within its broader educational context. Research helps professors stay fresh and introduce new ideas, instead of just dusting off last semester’s notes.

In the December 1993 Accounting Horizons, KPMG professional Timothy Bell and university professors Thomas Frecka and Ira Solomon published a comprehensive national study of the relationship between academic research productivity and teaching effectiveness in accounting, collecting confidential data on 473 faculty members at 31 universities. On average, those who were more successful at publishing academic research also tended to be better teachers, as measured by both student teaching evaluations and other metrics.

There are two important caveats. First, while the relationship between research productivity and teaching effectiveness is positive and statistically significant, it is certainly not a one-to-one relationship. There are plenty of outstanding teachers that find other ways to keep their teaching skills fresh, and there are also outstanding researchers that are less outstanding in the classroom. Second, this positive correlation does not prove that research benefits teaching. Nevertheless, the evidence reported by Bell, Frecka, and Solomon convincingly refutes the cynical view that those who pursue accounting research publications do so to the detriment of teaching. The trade-off between the model of research Nearon criticizes and the quality of teaching he desires is more imagined than real.

Attracting Undergraduates

After criticizing accounting educators, Nearon turns to the undergraduates we attract, implying that weak university accounting programs contribute to the recent decline in the number of high-quality students attracted to accounting as a major. Albrecht and Sack offer similar comments, along with evidence indicating that as of their publication date (2000), the number of qualified accounting students is indeed down.

The numbers are incontrovertible, but what about the cause? To infer that a downturn in the propensity of the best students to choose accounting as a major is the direct consequence of poor accounting education requires a leap of logic that is simply bad science. To Nearon’s credit, he stops just short of this conclusion. Albrecht and Sack are less hesitant to blame accounting education for the decline in the quality and number of accounting majors, although they fail to recognize that some of their own data refute this conclusion. Albrecht and Sack asked survey respondents to identify why the number of qualified accounting students is down, offering seven choices plus an “other” category. Even among practitioners, by far the top response was “Starting salaries are lower than in other disciplines, such as information systems.” Fully 57.7% of the respondents identified this item as the most important or second most important reason for the downturn. By contrast, the response “University professors do not do a good job of getting students excited about accounting,” the only response directed toward education, came in dead last. It was chosen by only 5.7% of the practitioner respondents as the most important or second most important reason, about one-tenth of the number that blamed starting salaries.

As a profession, accounting fares less well than other areas in the best economic times, and it does not suffer as much in the worst economic times. In the soaring economy of the late 1990s, we should not have been shocked to see 20-year-old undergraduates attracted to the starting salaries available in other disciplines. Accounting practitioners often contend that starting salaries in accounting are market-driven. This is true, but markets can reach equilibrium in multiple ways. Either salaries increase to attract the quality of students that accounting firms say they want, or the quality of students will decrease to match the salaries that firms pay.

Of course, the economy today is not what it was in 1999. And just as one might suspect, we continue to produce five-year accounting students that have jobs waiting for them, while their fellow graduates find it more difficult to get interviews. First-year PhD students of 2000 at Texas found the Albrecht and Sack monograph to be provocative and timely, whereas the first-year class of 2001 emphasized how outdated it appeared. The economy changes, just as accounting education has changed.

Subject Matter of Accounting Education

The meat of Nearon’s criticism falls on accounting education itself. Nearon asserts that accounting students are ill served by a dull, rule-based accounting curriculum that requires them to memorize details without understanding concepts. To pick on this stereotype is to attack a straw man. Those of us who are old enough can remember the days when an accounting degree produced walking encyclopedias that could instantly recite the number of every accounting standard. Now there are online and CD-Rom databases that take care of the memorization, and most accounting educators are fully aware of this. At state-of-the-art accounting programs, traditional rule-based textbooks have become like dictionaries in an English course: useful as a reference manual but not as an end in itself. Instead, such programs stress instructional cases that challenge the student’s reasoning skills, along with research exercises and opportunities for communication and interviewing.

How many accounting programs have adopted this more enlightened model of accounting education? Is it 10% or 90%? Perhaps a more accurate view is to recognize that it is misguided to view accounting education as either broken or fixed. The reality is closer to a continuous improvement process, whereby professors listen to the demands of a changing world and make corresponding incremental changes in their courses. If so, it is erroneous to conclude that the curriculum has not changed just because many of the course titles remain the same. The title of a course is superficial; the substance of accounting education has changed fundamentally over the years, even if the course catalog seems familiar.

To illustrate that change is more pervasive than Nearon may realize, the author scanned the four most recent issues of Issues in Accounting Education, the American Accounting Association’s journal devoted to contributions in accounting education. There were 16 instructional cases published in these four issues, most of which were consistent with the applied-research model of education Nearon favors. By contrast, in the four issues of the same journal in 1988–1989, only seven articles could be liberally interpreted as instructional cases. Of course, this journal is not the only source of instructional cases. The broader point is that educators are indeed paying attention to the calls for a model of accounting education that emphasizes thinking over memorization.

Research and Teaching Revisited

Nearon questions whether research really benefits professors in the classroom. The evidence showing that research and teaching are compatible does not imply that research actually benefits teaching. There is a strong argument that it does, however, both directly and indirectly.

The direct benefit is that research places accounting in a social context, providing students with insights into who cares about accounting and why. For example, when a student asks if anyone really cares that FASB discontinued the pooling-of-interests method for business combinations, a professor can offer an answer based on research. Apparently, managers care, because there is evidence from multiple studies that firms paid a premium to accomplish pooling treatment, whereas the evidence is more mixed on whether the market actually rewarded poolings. Ideally, such research “bites” can prompt debate in the classroom, putting the rules in a much more interesting perspective.

The indirect teaching benefit of research is subtler. Research is a process by which professors continually challenge each other to come up with new ideas and defend their own rigorously. Without research or similar scholarly activity, the professor runs the risk of becoming stale, teaching yesterday’s rules rather than tomorrow’s challenges. For further thoughts on this indirect process benefit of research in accounting education, see an excellent commentary by Joel Demski and Jerold Zimmerman in the September 2000 Accounting Horizons on the symbiotic relationship between research and teaching.

Nearon’s Radical Proposal

Nearon presented a radical proposal to replace our current accounting education model with an alternative system that combines a liberal arts undergraduate degree with a Doctor of Accounting professional degree stressing applied research, similar to the programs offered in medical or law school. One benefit of Nearon’s proposal is that professional accountants would attain a deep-seated value for keeping current with research developments, much as medical doctors do. Of course, the research Nearon envisions is different from the research described in this counterpoint. He favors an applied-research model, in contrast to the more esoteric social-science model he claims characterizes the current academic research literature.

Nearon has a point, but as with most such dichotomies, reality cannot be so neatly divided between “applied” and “social-science” research. Indeed, accounting is by its very essence an applied discipline. Viewed in this perspective, even what Nearon calls social-science research in accounting is in fact an application of underlying theories from other disciplines, such as economics and psychology, to the issues that face accountants. Of course, researchers want practical applications from their research. The academic tradition also demands rigor: To be publishable, research must make substantive advances defended by compelling evidence. To see the value of this perspective, one need look no further than the question of whether academic research by accounting professors benefits teaching or hurts it. We can tell deceptively convincing stories about imagined professors who care only about publishing and not about educating their students, but the research study by Bell, Frecka, and Solomon (Accounting Horizons, December 1993) suggests otherwise. Data speak louder than opinions.

More basically, the split between social-science and applied research that concerns Nearon is not that problematic, at least not in accounting. The social sciences give us a rigorous model for conducting research, and accounting researchers are responsible for applying that model to research questions of interest to an accounting audience. These applications may vary in level of detail and their immediate usefulness, but ultimately everyone cares about practical accounting questions. Nearon is quite correct in lamenting the fact that professional accountants are not as closely aligned to applied research in accounting as perhaps they could be. Improving this state of affairs is a two-way street. Educators have an obligation to communicate their research in a practical, understandable manner (an obligation not always met), and practitioners have an obligation to listen and engage the material in the manner that Nearon says characterizes other professions.

Two quick examples illustrate some of the frustration professors feel. First, in 1987, the American Accounting Association launched Accounting Horizons, a journal devoted to narrowing the gap between academic research and accounting practice. The articles in Accounting Horizons are for the most part excellent and readable. Nevertheless, its readership remains largely academic. We can provide the resource, but we cannot make people read it. For a second example, consider the widely read Journal of Accountancy. In the early 1970s, the Journal of Accountancy published many thought-provoking articles consistent with Nearon’s ideal of applied research, such as “The Accountant’s Social Responsibility” (January 1970) and “Some Thoughts on Research Needs in Accounting” (September 1970). In the past decade, however, this journal has become a trade publication of how-to interpretations of rules and notes on practice development and management, such as “The Importance of Customer Focus” (April 1997) and “Surviving Soaring Insurance Costs” (May 2002). This may help to explain why in a survey among professors of journal quality, the Journal of Accountancy ranked 20th out of 44 accounting publications listed (Brown and Huefner, Contemporary Accounting Research, summer 1994).

Could Nearon’s applied-research – based radical proposal improve the situation? Maybe, but pragmatically we may be better served by incremental changes to the present model. Many of those incremental changes are by no means trivial. Whereas Nearon sees a static accounting education model, this author sees a dynamic process that is challenged anew each semester. This is not to advocate complacency, nor to deny that there is room for much improvement in both accounting education and practice. As evidenced by the recent business debacles, we face serious problems in our profession, and this is no time to rest on our laurels. The typical accounting professor really does care about students and about accounting practice, however, and is continually striving to produce the well-rounded graduates the profession demands. The tenor of Nearon’s comments, and those from Albrecht and Sack, is that we need a wake-up call. The wake-up call has already been heard—certainly since the Accounting Education Change Commission initiatives of the early 1990s—but our efforts are far from complete. Let us work together to achieve common goals.

Steven J. Kachelmeier, PhD, CPA (not in public practice), is a professor of accounting, Pricewaterhouse - Coopers Faculty Fellow, and director of the PhD program at the University of Texas at Austin.