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March 1993

Industry's view of the 150-hour requirements. (CPA in Industry)

by Heminway, James R.

    Abstract- There is a consensus in the field of accounting that the educational requirements for entrance into the profession should be increased to keep up with the changing business environment. Educational institutions are seriously considering proposals made by influential agencies, including the AICPA, to extend these requirements beyond the traditional four-year degree program. A sample of accounting professionals in industry were surveyed to learn their views on the need for greater educational requirements. Most of the 155 management accountants who participated in the survey felt that accountants should be encouraged to seek certification (96.1%), that the four-year degree program is enough preparation for an entry-level staff accountant (88.4%), and that they would give a higher starting salary to a professional with an MBA in accounting than to someone with just a Bachelor's degree (76.8%).

Currently, many educational institutions are considering methods of altering their accounting programs to meet new educational requirements enacted by the AICPA and the various states to sit for the CPA exam and recommendations by the IMA to sit for the CMA exam. The proposals under consideration include:

* Adding a five-year degree program while, at the same time, maintaining the four-year program.

* Adding a five-year degree program and, at the same time, dropping the present four-year program.

* Maintaining the four-year degree program only.

In considering changes in accounting-degree programs, universities should consider the needs of all potential users of accounting graduates (public, industry, government, etc.). However the current point of view of public accounting has received far more attention than the views of nonpublic accounting (industry and not-for-profit) in the development of the educational requirements.

Much has been written about the increasing complexity of the business environment and how the accounting profession must increase its educational requirements to meet the demands placed on it by business, government, and society.

However, to date most research has addressed the educational changes needed in public accounting while virtually ignoring the educational needs of the nonpublic accounting sector.

The objective of this project is to update attitudes of management accountants concerning the perceived need for increased educational requirements. The results should be of help to administrators of accounting programs in designing degree programs to meet the needs of public and nonpublic accounting.

The Survey

A modified version of a questionnaire used in an earlier study of attitudes of public accountants was mailed to representatives in a variety of industries. A total of 155 usable responses was received. Table 1 indicates the number of responses by category of industry and the response rate. Table 2 presents the percentage of respondents answering "yes" to each of the 19 survey questions. Because of space limitations, Table 2 shows the overall response and those in four of the ten industry groups. The results for all industry groups are available by writing The CPA Journal, 200 Park Avenue, New York NY 10166-0096.


The need for increased education in accounting has gone beyond the discussion stage. This is evident by the actions of the AICPA, fourteen states, and the recommendations of the IMA. These changes in accounting education will have an impact on all aspects of the accounting profession--public, nonpublic, and education. It would appear that a prudent approach would be to consider the views of the various constituencies affected by this change before these programs are fully implemented. To date, the opinions of public accounting have been well addressed. However, other segments of the accounting profession have not received equal attention.




















On the fundamental question concerning a need for a fifth year of education, this study indicates that nearly 90% of respondents believe that four years of college adequately prepares a student for an entry- level staff accounting position. In related issues, this perspective is supported. There is an overall perception that a fifth year of education would not make a graduate more valuable to the organization. However, this view is not universal among all industry segments studied.

To further support the lack of the need for additional education, only 31% of the respondents believe that individuals with a master's degree in accounting performed at a higher level than an individual with a bachelor's degree. Again, the views varied between industry segments. The opinions of the individual industrial respondents would appear to be inconsistent with the recommendations of the IMA, and the policies of the AICPA, and the fourteen states. The implications for industry appear to be that the rank and file and are resistant to change in the status quo of accounting education. This resistance may be the result of the fact that most industrial accountants received a traditional four-year degree and consider this to be sufficient even in the current business environment. The implications of this finding for university accounting curricula are that there appears to be a continuing need for both four- year and five-year programs, at least during the transitional period. Other significant conclusions found in this study are:

* Current graduates need more polishing in other areas, such as liberal arts.

* If there is a fifth year, it should be directed toward specific accounting subjects.

* The fifth year will cause a decrease in the number of students selecting accounting as a major.

* The fifth year will have little impact on starting salaries.

* The majority of industrial respondents still want accounting majors, instead of non-accounting majors, to fill accounting positions. They do not believe that the fifth year is needed for certification.

Several implications can be drawn from these findings. First, industrial respondents appear to believe that current four-year graduates have adequate technical competence in accounting for entry-level positions. This finding appears to create additional problems for accounting curricula because it would be difficult to maintain the same number of hours in accounting, while increasing the emphasis in other areas without increasing the total number of hours required for a degree. However, there appears to be a major inconsistency in curriculum design because the respondents indicated that they believe that the fifth year should be in accounting subjects.

Furthermore, respondents still want accounting majors to fill entry- level positions, but they are concerned that there will be a decrease in the number of students selecting accounting as a major. Today respondents appear to be reluctant to fill staff positions with non- accounting majors. This finding appears to be consistent with the suggestion that a fifth year of education would cause potential accounting majors to shift to other majors with a minimum of accounting hours. To overcome this potential problem, it may be prudent for accounting programs to maintain their four-year degree. Also, there should be increased efforts to recruit the "best" students for accounting and to inform the students of their potential options in the profession.

In the areas of certification--CPA, CMA, CIA--the majority of respondents feel that the fifth year is unnecessary. This finding seems to imply that the level of the exams should remain the same and that four-years of education is adequate for initial entrance into the profession. However, this does not necessarily imply that additional education may not be needed to be "successful" and advance in the profession.

There is no doubt that an increasingly complex society will demand additional education in specific aspects of the accounting profession. However, it appears that the increased educational need may not be universally needed in all areas of the profession. Therefore, the views of all participants should be considered by the national associations and academics before a complete move is made to a 150-hour requirement. Finally, this study was based on a limited sample and the results cannot be generalized to the entire population. Increased accounting education is an evolving situation and should be monitored in future studies.

Jack R. Ethridge, PhD, CPA, and James R. Heminway, PhD, Stephen F. Austin State University.

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