Getting Up To Speed:
The Academic Response to
the Challenge of Change
Belverd E. Needles, Jr.
Vice-President Education-Elect
American Accounting Association
DePaul University
Disclaimer
The views expressed in this presentation are solely those of
the author and do not represent the views of the AAA or any
other organization.
Objective
To summarize efforts of the AAA and
other organizations to address
emerging developments in accounting
To assess the readiness of accounting
educators to address the issues of
International Financial Reporting
Standards (IFRS)
AAA Education Committee
Coordinates various AAA activities that
involve education, including:
Monitor and incorporate education efforts
of outside constituents and organizations
with those of the AAA
Respond and provide input on education
issues
Assess the portfolio of education activities
of the AAA for breath and adequacy
AAA Activities
The AAA has long played a critical role
in transforming accounting curriculum.
Treasury ACAP Committee (Gary Previts, President of AAA)
AACSB-Ethics throughout the curriculum equivalent to a
course
AICPA-The CPA Profession: Opportunities, Responsibilities,
and Services
Fair Value Accounting Education Report
AICPA IFRS Roundtable
Challenges Facing Accounting
Educators
Fair value accounting
Forensic accounting
Ethics and professional responsibilities
International Financial Reporting
Standards (IFRS)
Recommendation Five of Treasury
ACAP Committee
AAA and AICPA will form a commission to
study Accounting and Auditing Higher
Education
A broad-based study
To explore such areas as faculty development, Ph.D supply,
and model curricula
To consider developments in accounting standards, auditing
needs, regulatory framework, globalization, international pool
of candidates, and technology
To study educational structure including long-term market
consequences, academic governance, operations,
programs, funding and resources, role of accreditation, and
experimental learning processes
Accounting Educator Response
Accounting Educators have shown an
ability to respond quickly to important
changes in the profession
Sarbanes-Oxley was passed in 2002
By 2004-2005 the effects of this law were
fully incorporated into the textbooks and
the curriculum
Who Should Teach Ethics Courses?
Hurtt and Thomas (2008) report a mixed model in Texas:
57% say the course should be housed in Accounting Dept.
(48% are currently outside of Accounting Dept.)
60% favor both a separate and an integrated approach
No school used an instrument such as DIT to measure effects
of teaching ethics
Faculty teaching the courses have little training in ethics
(39% either did not answer or selected the option that they
had zero hours of training)
9
Who Should Teach Ethics Courses?
The preference seems to be toward joint teaching:
Accounting faculty in Blanthorne, et al. (2007) rated
themselves as the most appropriate faculty to teach ethics
Over 72% of faculty, students and professionals in
Abdolmohammadi (2008) indicated that ethics courses should
be taught jointly by accounting and philosophy professors
• Only 3.5% said philosophy professors only
• Only 24.2% said accounting professors only :
– This indicates a staffing problem: “Few, if any [faculty],
are trained for this in our doctoral programs. (AAA
Education Committee response to NASBA, 2006
proposal).
What Should Be The Content Of Ethics
Courses?
Jennings (2004) provides a reading list and a
discussion of seminal and other important works.
Thomas (2004) presents a list of texts and reference
works, commercial books, academic and professional
articles, and electronic resources such as film and
Internet Web sites for teaching ethics in a stand-alone
or an integrated ethics training program.
In addition to covering integrity, objectivity, and
independence, NASBA proposes ethical reasoning.
What Should Be The Content Of Ethics
Courses?
Hurtt and Thomas (2008) report that in Texas:
85% incorporate a mixed-model approach
(ethical theory, decision making, codes of
conduct)
Top content issues are:
• Components of codes of conduct [of AICPA and TSBPA]
such as integrity, honesty, independence, objectivity,
impartiality, confidentiality
• Ethical reasoning
• Making correct choices under pressure
• Moral exemplars
What Should Be The Content Of Ethics
Courses?
–
In a survey of a large number of professional accountants,
Abdolmohammadi & Reinstein (2008) find the subjects to
somewhat agree or strongly agree to the following issues
as content of ethics courses:
1.
2.
3.
4.
5.
6.
7.
8.
Current ethical issues
Professional codes of conduct (not just AICPA)
Ethical judgment and decision making process/models
Corporate codes of ethics
Whistle blower protection
Record retention
Philosophical theories of ethics, such as theories of justice and
human rights
Theories of ethics, such as developmental theories from psychology
What Can Be Done Outside the
Classroom?
Create an ethical culture in the business school and
Department/School of Accounting
Develop Student Honor Codes and/or Codes of Ethics
Teach students about plagiarism and classroom
cheating; enforce rules
Invite college/school-wide guest speakers to talk
about ethical leadership
Help faculty learn to teach ethics (e.g., AACSB holds
ethics seminars)
IFRS Timetable
2005 European Union Adopted IFRS followed
by Japan, Canada, Israel, and Australia
2007 SEC allows foreign registrants in the
U.S. use IFRS
2008 SEC issues a Roadmap for public
comment
2011 Decision as to go forward
It’s not a done deal.
SEC Proposal
Part I allows a small number of U.S. public
companies to early adopt IFRS (110
companies-14% of U.S. capitalization) in
2009: Must reconcile to U.S. GAAP
Part II identifies four milestones to be
evaluated in 2011, at which time a further
time table will be set
Milestones
Continued development of IFRS and
convergence with U.S. GAAP
Revenue recognition
Financial statement presentation
Lessee accounting
Post-retirement benefits
Consolidation
De-recognition
Fair value
Milestones
Progress on accountability and stability
including (regulatory) oversight body
and stable funding
Continued development of IFRS XBRL
consistent with SEC Taxonomy
Progress on IFRS related education,
including integration of IFRS into
accounting curriculum
KPMG/AAA Education Committee
Faculty Survey
530 faculty responses
Summary conclusion: Overall faculty
expectations are quite encouraging and
very much in line with the SEC
timetable.
Some Faculty Expectations
55 percent believe IFRS will be integrated
into the curriculum by 2010
48 percent believe IFRS will be incorporated
into the CPA exam by 2011 and 77 percent by
2012
54 percent believe graduates will having a
working knowledge of IFRS by 2011 and 78
percent by 2012
How Will IFRS Be Incorporated
in the Curriculum?
89 percent believe textbooks will be the
main source of IFRS in the curriculum
74 percent believe this will be
accomplished by 2011 and 94 percent
by 2012
Most believe IFRS will be taught with a
compare and contrast approach with
U.S. GAAP
How Will Faculty Come Up to Speed?
Most believe it is the existing individual faculty
members’ responsibility to come up to speed
on IFRS
Accounting faculty have met these challenges
before:
Sarbanes-Oxley and the PCAOB
Modern managerial accounting topics such as
balanced scorecard, value chain, activity-based
costing, etc.
Textbooks will play a major role in changing
the curriculum
Role of AAA in Incorporating IFRS
into the Accounting Curriculum
A special issue of Issues in Accounting
Education prepared in conjunction with the
International Accounting Section of the AAA
(November, 2007) addressed the issue of
IFRS education
Joint Project with Grant Thornton developing
IFRS cases
At its Annual Meeting in August, which had
the highest attendance in its history, more
than 20 sessions were devoted to IFRS
AAA IFRS CPE Sessions
IFRS – U.S. GAAP Comparison
FASB/IASB Update – Part 1
FASB/IASB Update – Part 2
Incorporating International Financial
Reporting Standards (IFRS) in Intermediate
Financial Accounting — How to Proceed
IFRS Main Sessions and Panels
IFRS Is Here, and What To Do About It
The IFRS of the Academic World
Academic Open Forum: The FASB-IASB Conceptual
Framework Project
Incorporating IFRS in Intermediate Accounting
Challenges of Regulators and Practitioners if IFRS is
Adopted for Domestic Issuers
How to Successfully Integrate IFRS into the UG
Accounting Curriculum
A Globally Converged Conceptual Framework
More IFRS Sessions
SEC Update--Regulators Discussion of IFRS Issues
The Expanding Role of IFRS--Research Issues
IFRS I
IFRS II
IFRS III
IFRS IV
Incorporating IFRS in the Financial Accounting
Curriculum
Integrating an IFRS Module into the Master’s
Curriculum
FASB-IASB Update
SEC IFRS Reporting ISSUES
IAAER Role
Promotes Excellence in accounting
education
Maximize the contribution of academics
to the development and maintenance of
high quality, globally recognized
standards of accounting practice
IAAER Promotes IFRS
IAAER Members (including students)
receive access to eIFRS
University members enable access by
all faculty: forty universities currently
Fifty-one academic and professional
association members around the world
Congresses, conferences, and
globalization roundtables
Other Organizations
Other organizations are making extensive
efforts to bring faculty up to speed, including
The major accounting firms
AICPA
IASB
SEC
IMA
Other professional organizations
Conclusion
Accounting educators will meet the
challenge of change
They will do this in multiple ways
Many organizations, including the AAA,
will work together to achieve this
objective