|
| Meeting
of the Minds The different “sides” of the profession—typically taken to be the educator and practitioner communities—have been at odds concerning what accounting students should know, what educators should teach, and whether accounting graduates are adequately prepared for the business world. The CPA Journal editors convened a forum, “Preparing Future Accounting Professionals,” moderated by Editor-in-Chief Mary-Jo Kranacher, in November 2007 to bring individuals representing all areas of the profession together to discuss these issues. The first panel, “How the 150-Hour Requirement Is Affecting the Profession,” discussed issues presented by the new requirement. The second panel, “How Academics and Practitioners Can Work Together,” discussed how to bridge the gap that has traditionally separated accounting education from accounting practice. Each of the panelists represented a specific perspective and was selected for their individual expertise. The following article represents the highlights of the second panel discussion, including the panelists’ prepared remarks and a reaction written by an attendee of the event. The March 2008 issue (online at www.cpajournal.com) included an article on the first panel discussion. Panel Discussion: How Academics and Practitioners Can Work Together Charles A.
Barragato I’ve had discussions with students at the C.W. Post School of Professional Accountancy at Long Island University, as well as at NYSSCPA events, student nights, mixers, and other functions. Through my involvement in the NYSSCPA and during our campus recruitment events, I’ve also listened to practitioners about what’s going on in the profession, particularly in this transition period. Students are very concerned about the costs and benefits of the 150-hour requirement. Practitioners are apprehensive about how many students will be coming out of the pipeline after August 1, 2009. Many firms are concerned about the pipeline drying up, in the short term. Some firms are considering ramping up their recruitment efforts—preparing themselves to hire more people to make sure they can service their clients during the transition period. Some students are considering whether to accelerate their coursework so they can earn their bachelor’s degree and apply for the CPA exam before the new requirements become effective. This would help them to eliminate one year’s worth of education as well as the related cost—a cost they may not be able to afford. Christie Dorsa [see Part 1 in the March 2008 CPA Journal] sees great value to having this additional education as well as an advanced degree. Students who opt to earn their bachelor’s degree early and avoid the increased educational requirement may be eligible to sit for the CPA exam, but they’ll always be competing with others who have advanced degrees, and that may limit their careers. So their cost/benefit analysis has to focus on the long-term and consider their skill-set on a competitive basis. As for CPA firms, when they aggressively hire, that provides significant economic incentives to students in the short term. But there will be logistical problems. Educational institutions, for example, will be greatly disadvantaged by their tendency to adapt to change slowly. Because the demand for accounting professionals is already very high, this set of conditions could create a sort of “perfect storm” where the transition period is a real problem. This is documented in states that have already implemented the 150-hour requirement. If students are concerned about the costs of this additional year of education, and firms want educators to keep the pipeline flowing with candidates, then firms and schools need to address these issues creatively. We need to be sensitive to students’ issues, including the costs. That brings us to the structure of an accelerated degree program. Maybe we need to think about fifth-year “bridging” master’s degree programs for students after they complete their fourth year of educational requirements, so they can work full time while they’re completing their last year. That would also provide an opportunity for firms and students to work together to help finance the educational undertaking. Must students have a four-year bachelor’s degree in hand before firms will hire them? This plan needs to include how firms will be affected: Will students who are completing an accelerated program and working part-time or full-time be considered interns, associates, or something else? Perhaps tuition reimbursement programs could be offered for specialty areas. Some firms already have tuition reimbursement programs in place. Maybe these could be formalized to help us through this transition. Also, we should consider other options, such as flexible schedules and a two-tiered hiring system. For example, we could create a part-time, pre-professional category for students who haven’t completed their 150 hours or advanced degree. After they’ve complete their degree, they can convert to full-time employment. Educational institutions have to recognize that they need to help build these bridge programs. Which means we need to creatively address issues such as course format and class schedules; for example, offering weekend classes so students can work during the week while they continue their education. Scholarships might be offered as incentives for advanced degrees. Some firms have already approached C.W. Post about offering scholarships to students who will participate in the 150-hour accelerated program. We also need to rethink the recruitment process. Some firms that recruit on campus use a two-tiered system. One tier includes students on a four-year track, after which they’ll leave and work full time. The second tier is for students who will stay an additional year. Schools and firms need better coordination and communication. Regional and local firms need to be more proactive in recruitment. Most recruitment activity is done by national firms and the larger regional firms. Educators should help students understand the recruitment process and the differences between different types of potential employers. Finally, the recruitment process for industry and government is another area that needs to be addressed, including the compensation differential. Charles A. Barragato, PhD, CPA, CFE, is a professor of accounting and director of the C.W. Post School of Professional Accountancy at Long Island University. He is the founding partner of Charles A. Barragato & Co., LLP. Barragato has received the Foundation for Accounting Education (FAE)’s outstanding discussion leader award, as well as the NYSSCPA’s 1996–97 Dr. Emanuel Saxe “Outstanding CPA in Education” Award. Joyce
Bastoli By way of background, Ajilon Finance Solutions is a national consulting practice that specializes in finance, accounting, and operations. It’s part of Ajilon Consulting, a wholly owned subsidiary of Adecco, a Forbes 500 company and the largest human capital organization in the world. Because we see both candidates and employers as our clients, we’re very familiar with the gap between the groups. As Charles Barragato said, there is a shortage of accounting professionals, and client demands are continuing to grow, so the gap is widening. Increased regulation and legislation of accounting is increasing the costs of compliance, and the demand isn’t being met by the candidates that we are providing to our clients. Interestingly, not only do clients want the technical skills, they also want soft skills, including communication skills and the ability to fit into the organizational culture. So the criteria list continues to grow. Not only are we dealing with the short-term situation, we’re also dealing with unrealistic demands from the market. At some level, we are also educating the market about what’s realistic and what isn’t, and that education process is difficult and time-consuming. Corporations tell us their expectations—what they’re looking for in an ideal candidate—and we have to tell them that the ideal candidate does not exist. Ajilon is rolling out several initiates in 2008 to bridge the gap—to help accounting candidates find opportunities, and to help clients find candidates. One excellent example is a mentorship program. By the year 2012, 80% of CPAs will be eligible to retire, so succession planning is an issue that needs to be addressed. We’re developing a formal and an informal mentoring program. We have an advantage, because we have more than 5,000 clients. Another thing we’re doing to bridge this gap is to develop an internship program. This includes internships in private industry in addition to CPA firms, to give students real-world-experience with tax, audit, and financial reporting work in private industry. Our goal is to develop students into strong, well-rounded accounting professionals. Our clients are open to this because they know by the year 2010, 25% of the workforce will be contingent, which will eventually be the only way to access talented, knowledgeable professionals. Ajilon is also launching a university on the West Coast, with participation from academia, students, and private industry. The objective is to give students access to state-of-the-art accounting-related technology. CPAs not only need to have technical knowledge and be a good cultural fit within an organization, they also need to understand systems, the backbone of any business. One more thought about training programs: The Big Four have incredible training for their staff. Ajilon has suggested that academia participate in those programs, to give firms the benefit of their technical knowledge, research, and teaching ability. Joyce Bastoli, MBA, is the first national vice president at Ajilon Finance Solutions, responsible for launching and managing the expansion of Ajilon’s operations in North America. After joining Ajilon Finance in 2003 as a branch manager focusing on financial services, she quickly advanced to branch vice president, where she piloted Ajilon Finance Solutions in 2004. Prior to working at Ajilon, Bastoli was a senior financial analyst at Automatic Data Processing, Inc. (ADP). She has also worked as a financial consultant at Solomon Smith Barney, and has held positions in mergers and acquisitions, marketing, and accounting. Steven
B. Lilien Let me start by asking, “What is accounting education for tomorrow?” Because I don’t think it is simply an issue of dealing with the 150-hour requirement. My first point is that a “one-shoe-fits-all” curriculum no longer meets the needs of practice, and evidence of this is everywhere. Baruch College is dealing with the same issues that Sue Hamlen of the University at Buffalo spoke of in the first panel discussion, including the role of the MBA program. From my perspective, we should adopt a different outlook and marry accounting with other functional areas. For example, a specialization in risk analysis/finance meets today’s needs in the practice of accounting and auditing. You can marry accounting with information technology; you can marry accounting with international business; you can marry accounting with operations management, and also taxation. Viewed that way, such an interdisciplinary focus of accounting and the other functional areas reflects what is happening within organizations, and further satisfies a need for increased specialization. So I think part of what we should do in adopting a different outlook is to look very hard at the structure of accounting practices of all sizes and types. Baruch did some of this when we first adopted the 150-hour curriculum seven years ago. We married the 150-hour program with different functional areas and determined how to implement or operationalize such changes. Second, we need to do more to bring the various stakeholders together—faculty, students, business, and regulators. Baruch is partnering with NASBA, and we regularly invite speakers from the AICPA, the SEC, the PCAOB, and thought leaders from practice, including but not limited to the Big Four. Ten different firms have already committed to come in, and our goal is to identify and discuss the issues confronting the auditing profession. Third, we need a better understanding of career opportunities within CPA firms. When I started in accounting, rarely would a candidate speak to anyone in a firm beyond the recruiting representative. Today, the process is much more open. For example, the leadership within a firm’s internal audit division may be directly involved in hiring new people for that group. In a way, that reflects my first comment about marrying different functional areas. And because that’s different from the recruiting model schools are used to, our business programs must adapt their programs as well as their career placement services. My fourth point is about sharing knowledge, and bringing business to the college campus. Huge investments are being made in knowledge systems in various organizations, including the Big Four; however, some of our professional associations aren’t playing as large a role as they used to in the dissemination of knowledge. For example, when the AICPA moved its library to the University of Tennessee, this weakened the AICPA’s important responsibility of serving as a source of knowledge for the practitioner. My last point is about teaching auditing. Knowledge is a two-way system. There is knowledge in practice, much of which begins in formal education, and we need to get better at bringing that real-world–based knowledge to colleges and universities. Steven B. Lilien, PhD, CPA, is the Weinstein Professor of Accountancy at the Zicklin School of Business of Baruch College of the City University of New York (CUNY). He is on the Board of Governors of both the New York City Chapter of Financial Executives International (FEI) and the New York City Chapter of the Institute of Internal Auditors. He specializes in financial accounting and auditing and the discovery of accounting information in litigation actions, as well as corporate governance and executive compensation. Lilien is also a member of The CPA Journal Editorial Board. David
Lin I’m going to discuss faculty programs and students initiatives that KPMG currently has across the country. The firm has increased its hiring numbers year after year, and I think these programs have helped. Baruch College is the main school that I work with, and I spend a lot of time here. KPMG’s faculty
web portal program Another program is the PhD project, which supports minority professors so they can help KPMG effectively support minority students in the future. When the PhD project began 12 years ago, there were 294 minority business school faculty members. Today there are more than 833, with 380 doctoral students in the process of becoming business school professors. We also held a faculty symposium this past summer, a seminar for professors to gain up-to-date information about everything going on in the accounting world. We offer students the future diversity leadership program. Each year the firm offers scholarship and internship opportunities to freshmen students identified by professors in the PhD project. They can do an internship in their freshman year, another in their sophomore year, and another in their junior year, with the opportunity to join the firm full-time depending on their performance. One new program is our China roundtrip program. Last year the chairman and CEO of KPMG China made a presentation to students in this very room. Our northeast managing partner and New York office managing partner returned the favor, making a presentation at a university in Beijing. Another part of the China roundtrip program is for students to spend two years in the U.S. and two years in China, with the option of staying in either country. We plan to accept more international applicants to increase diversity within the firm. The program’s drawbacks include vastly differing language skills. We can teach technical skills, but not soft skills, such as language. I recommend that schools develop more group projects and other things that make the classroom more interactive, giving students opportunities to interact with each other as team members and to develop public-speaking and other communication skills. David Lin is the campus development manager at KPMG for Baruch College. Before joining the campus recruiting team at KPMG, he had worked in resource management and human resources. Prior to joining KPMG in June 2002, he worked at Arthur Andersen as a training coordinator. George Victor The Expectation Gap in Accounting Professionals Holtz Rubenstein Reminick (HRR) is a regional firm that serves the New York metropolitan market. Although we do not audit the largest public companies, our firm competes with the largest firms for the same accounting students, and we face the same problems. In addition to the growing shortage of accounting professionals, we have what I call the expectation gap: the difference between the skill set and technical knowledge that an accounting graduate entering the workforce thinks is adequate, versus what the employer thinks is adequate for an entry-level associate. Accounting firms and academia need to step back, reassess our assumptions, and decide how to address that gap. For example, colleges and universities are traditionally excellent at teaching theory; however, a greater emphasis should be placed on the practical application of technical information and writing skills. The same kind of reassessment of assumptions about necessary skill-sets needs to be made in practice, initially at the staff level and then reviewed by someone at the manager level. A staff person who is working on an engagement, should think about what he or she is actually doing and try and develop their own recommendations and conclusions. Simply following the mechanics of a program and waiting to be told what to do next is not a good way to develop judgment or making a contribution to the engagement. We see underperformance in areas beyond technical skills. Even basic things like professional appearance. I see a wide range among young professionals in what they think is appropriate business attire. That’s important because first impresions last for a very long time, so this issue needs to be addressed by both educators and practitioners. Another example is time management. Younger professionals need to recognize the importance of deadlines—not just their own, but other individuals. They need to learn that no one works in a vacuum: Other people are relying on their work—the client, firm management, and the firm’s administration. They need to buy into the concept that someone else is waiting for the product they are working on, and it is not just a homework assignment. This is business, and a timeline needs to be met, with consequences for not meeting that timeline. With regards to time management, we need to emphasize the planning of work, based upon the requirements of the engagement. Although most of my experience has been with public accounting, commercial enterprises, private institutions, and government agencies all have comparable requirements. We need to know how to keep track of our work for each engagement as it reaches different stages of completion. Although that skillset needs to be learned over time, many recent graduates have a difficult time grasping it, and employers did not plan this to be a part of on-the-job training. Another issue is problem-solving skills: Young professionals need to think more like an auditor. Rather than solely having a theoretical basis for their work, they have to learn how to step back, analyze the situation, and then make a decision—which may involve the risk of making the wrong decision. This is why professional standards require close supervision of staff and review of their work. This is also how staff can learn from their experience. Many young accountants’ research skills are lacking. They may know what auditing standards are, but if you describe a situation and ask what auditing standard applies and how, they often have no idea of how to go about reaching a conclusion and developing a solution. They need to learn that they can’t expect the answers to just be provided to them or for the answer to be obvious. They should be able to identify the appropriate resources for finding the information, and form a judgment for making a decision. Writing skills is a big problem, regardless of the size or type of work environment, and an important skill that educators don’t emphasize enough. Writing a clear, concise business letter or memorandum is a learned skill that includes a review of your work product before submitting it to someone else, especially if it’s a client communication. A poorly written letter or memo can leave a lasting impression about the firm as well as the individual. Workpaper documentation is another issue that goes beyond the theoretical and beyond the training. Less-experienced accountants must realize that other people need to understand and follow their work, and hopefully come to the same conclusion. This is similar to time management because people need know that they don’t work in a vacuum. And this is increasingly important: Adequate workpaper documentation is no longer just good business practice: PCAOB Auditing Standard 3 and AICPA SAS 103 specifically cover workpaper documentation requirements, so it’s the law. Another issue entails understanding the purpose of the engagement. Often an assigned staff person will have some idea of what is involved, but they don’t understand the purpose of the assignment—why they are doing it, because it isn’t just busy work. Getting it done in a timely manner, and in accordance with GAAP, is very important. Employers have a responsibility to exercise good judgment. We can’t simply assign work to someone and say, “Just go ahead and do this”; we have to make sure they understand the expectations, including the timeframe. In addition to these soft skills, we also need more emphasis on what I describe as the big-ticket accounting issues, such as fair-value accounting and accounting for stock options. I recognize that it’s a two-way street. Practitioners should help academics understand—and teach—these complicated accounting issues that often develop very suddenly. HRR has an extensive, training program that covers technical topics that a new hire will be working with in their first year. It includes practice cases so they aren’t just reading about bank reconciliation and account receivables cases. We devote significant time in planning meetings and explaining assignments so the staff understand what is expected and know what to do before they go into the field. We offer an internship program as well, to provide students an opportunity to work at our firm, mainly during their junior or senior year. Our interns don’t just sit in the office processing mail or making photocopies. Even though the interns are not yet considered professional staff because they do not have their accounting degrees yet, they will still actually go out in the field with a staff person to assist in the engagement, with appropriate supervision. Practitioners can do more. As I said, it’s a two-way street. For example, practitioners should visit schools and be more accessible to professors and students, and it would also be helpful for the firms to have professors come and make presentations. Perhaps educators could spend a few days working on a pre-arranged, planned basis, or go into the field to experience the client services work environment. q George I. Victor, CPA, is the quality control partner at Holtz Rubenstein Reminick LLP, a regional public accounting firm with offices in New York City and on Long Island. He chairs the firm’s education committee and oversees the firm’s professional development program. Victor frequently lectures on SEC, accounting, and auditing topics, and is often quoted in professional journals and business publications. He is chair of the NYSSCPA’s Accounting and Auditing Oversight Committee, a member of its SEC Practice Committee, and serves on The CPA Journal Editorial Board. Open Discussion After the panel discussion, Mary-Jo Kranacher summarized the key points raised during both panel discussions and opened the floor for presenters and attendees to share additional perspectives on the issues raised. The following section captures observations and responses that added significant new information and insight to the panel discussions. Kranacher noted that several presenters indicated that the best way to get a good blend of theory and application in the classroom is for colleges to have a mix of both professors with scholarly backgrounds and those with practical experience. Some advocated getting more practitioners into the classroom. However, the Association for the Advancement of Collegiate Schools of Business (AACSB), currently the sole accrediting agency for accounting programs, stipulates a minimum quota of 50% “academically qualified” (AQ) faculty for accreditation eligibility for a baccalaureate accounting program. Graduate-level programs require an even greater percentage of AQ faculty. As a result of the 150-hour requirement, this percentage has effectively increased. AQ faculty must have a PhD in accounting, and the number of such individuals has declined significantly, resulting in an impending shortage. At the same time, many people question whether PhDs in accounting have sufficient practical experience to bring useful examples and case studies into the classroom. Joyce Bastoli commented that we need to mentor students and show them the various possibilities an accounting degree opens, so that they can create a vision and career path for their future. The role of the CFO, she said, has become that of a change agent, so exposing students to CFOs who are leading organizations could be illuminating for students who aren’t aware of all the options available. George Victor noted that his firm’s internship program includes a component to develop speaking skills, which all in attendance agreed were essential for a successful career. Victor’s firm also encourages participation in state CPA society committees, which provide public-speaking opportunities that benefit the individuals and the firm. Kranacher asked the attendees whether any firms offer programs for educators to work during their sabbatical as a way to get current practice experience. David Lin noted that KPMG has more than 60 professors from across the country participating in its national training programs. The firm also sponsors a national faculty internship program whereby professors on sabbatical can work for the firm for three to six months. About 18 faculty members per year are eligible for inclusion in this program. Many attendees and presenters raised concerns about accounting students having inadequate communication skills and wondered why firms don’t speak out about the problems with writing, speaking, and reading comprehension at the high school and elementary school levels. By the time the students get to college, it may be too late to develop these fundamentals. Susan Hamlen, from the first panel, reiterated that learning those skills is best done before college. George Victor added that many firms are reticent to tell colleges that their graduates are deficient in certain areas. PCAOB Board Member Bill Gradison noted that the concern about accountants’ writing skills has surfaced in the area of PCAOB inspection reports. He said that the PCAOB has several staff members with writing responsibilities and their skill in this area is neither underestimated nor taken for granted. He suggested a process of giving accounting students or staff writing tests that would be graded by two people—first on technical merits, and then on the quality of the writing. Christie Dorsa, from the first panel, stressed that her graduate-school experience was very important in helping her to develop communication, critical-thinking, and other skills. That, she said, is a major benefit of the 150-hour requirement. Although there is no standard for what colleges and universities include in those additional courses, and there will undoubtedly be differences among schools, she believes educators and employers will start to see improvement in those skill sets over time. How Academics and Practitioners Can Work Together A Perspective from an Educator with Private Industry Experience By Stephen Scarpati Although I began my professional life in public accounting, I spent most of my career as an executive in industry, and for the past three years I’ve been a professor of accounting. In that context, I’ve observed that the profession’s academic side is sometimes separated from its other constituencies. Yet in a rare assemblage, The CPA Journal Forum on Education brought together participants from large, medium, and small CPA firms; business and industry; higher education; regulatory agencies; professional associations; and recruiting firms. In short, the broad spectrum of the profession was represented in one room. Discussions were open, vigorous, relevant, and meaningful. Topics were debated with multiple points of view. In the context of diversity, I offer some personal perspectives on five topics discussed at the forum: Shortage of accounting professionals. Notwithstanding rising enrollments of accounting majors in most business schools, CPA firms are concerned about demand exceeding supply. I can corroborate certain experiences at our university with those presented by both practitioners and other professors at the forum. For example, the following trends were noted with respect to accounting majors:
CPA firms of all sizes are responding in a variety of ways, including as follows:
No one at the forum appeared to believe that the shortage of accounting professionals will abate any time soon. Advising students. While my primary role as a college professor is teaching, an important secondary role is advising students. In this capacity, I found the forum particularly helpful. At the school where I teach, each student is assigned an academic advisor to assist in course planning and career counseling. The advisor is a full-time professor in the field of the student’s major. For me, encouraging students in the accounting profession is very rewarding. It is particularly pleasing to see a student’s excitement upon receiving an accounting internship acceptance, or the exhilaration when a student gets that first job offer. One daunting issue facing accounting graduates today is the time and cost of the extra 30 credits needed to obtain the CPA license. Some undergraduate students want to “get it over with” right after they graduate. Others prefer to begin their career first. Advising students on which is the better course of action depends upon their personal preferences, their financial situation, and the state in which they expect to be employed. The one universal piece of advice that I give students is this: If you’re going to take an additional 30 credits over and above what’s required for your baccalaureate degree, you might as well earn a graduate degree. Regarding advice to students on CPA licensing and the 150-hour requirement, the comments from Dan Dustin, Executive Secretary of the New York State Board for Public Accountancy, were particularly helpful:
Dustin also said that the only specific course requirements stated in the New York State regulations are 33 hours for accounting, 36 hours for general business, and whatever liberal arts and sciences hours are required according to the type of degree conferred. He offered that this was done purposely to allow universities flexibility with their curricula for the content of business courses to meet the 150-hour requirement. State regulatory differences are crucial when advising students. At our university, the highest percentage of students come from New York, followed by Connecticut, New Jersey, Massachusetts, and other Northeast states. Students from across the country and international students compose the balance. Nick Mastracchio of the National Association of State Boards of Accountancy (NASBA) listed some state differences regarding the 150-hour requirement and CPA exam eligibility. From his presentation, I extracted the following list for states in the Northeast:
The cost to students for obtaining the MBA degree was also thoroughly discussed. Key issues include the following:
International Financial Reporting Standards. The opening remarks from PCAOB Board Member Bill Gradison concerning International Financial Reporting Standards were particularly important for both academics and practitioners. While the multiyear negotiations over GAAP/IFRS convergence may have given many in the profession the sense that they could safely put off confronting the issue, Gradison’s comments served as a wake-up call. He strongly urged universities to integrate IFRS into their accounting curricula. Recognizing that there are few currently available textbooks on the topic, he prodded business schools to locate other resources and noted that many accounting firms in Europe are well-versed in IFRS. He advised college professors to obtain training materials from those accountants who have been using it. At universities, accounting curriculum decisions need to be made regarding whether IFRS should be a separate course, or integrated with existing GAAP instruction. College graduates’ lack of writing skills. Although writing skills was not a scheduled topic at the forum, when George Victor observed that his firm’s young accountants lacked business-writing skills, a surprising groundswell of agreement emerged. Viewed as a societal problem, there was no shortage of opinions as to its cause, including: over-reliance on, or misuse of, technology; what is (or isn’t) taught in elementary and high schools; or insufficient reading assignments. Some CPA firms are trying to cope by providing in-house training. With no universal solution at hand, clearly this issue needs to be addressed at many levels in the education system. A common theme. Despite the diversity of representation at the forum, I sensed a common theme: We all care about our profession. We care about licensing credentials and ethics, professional standards and accounting education, public confidence in our services and what it means to be a CPA. I came away with a sense of confidence that despite all the substantive issues facing the profession, future accountants will find being a Certified Public Accountant as rewarding a career as ever. Stephen Scarpati, CPA, CLU, ChFC, is a professor of accounting at the John F. Welch College of Business at Sacred Heart University, Fairfield, Conn. He is a member of the NYSSCPA’s SEC Practice Committee. |
Print