New Zealand Applied Business Journal
Volume 1, Number 1, 2002
COMPETENCY BASED PROFESSIONAL ACCOUNTING CERTIFICATION IN
NEW ZEALAND
William D. J. Cotton
School of Business
SUNY Geneseo, USA
Gregory W. Scott
School of Business, Christchurch College of Education
Christchurch, New Zealand
Elizabeth Rainsbury
Department of Accountancy, Law and Finance
Unitec, Auckland, New Zealand
Abstract: In New Zealand, a unique and totally new competency based accounting
certification program was installed effective in 1998. It is titled Professional
Accounting School and Professional Competence Examination 2 (PAS/PCE2). This
program seeks to develop eight higher level competencies required of a candidate for
admission to the profession by building on a candidate’s existing knowledge and
workplace experience within the fields of accounting and business.
This study reports the results of a mail questionnaire survey of program graduates
and their supervisors to assess the degree of success of the New Zealand program in
enhancing these higher-level competencies. The study addressed the question, “Does
PAS/PCE2 improve demonstration in the workplace of the eight specified
competencies at a level expected of a recently qualified chartered accountant?”
The results suggest that the program has achieved a considerable degree of success.
A majority of graduate respondents perceived that the program had caused a
moderate to significant improvement in their demonstration of all eight
competencies. The perceptions of success in responses from supervisors were
marginally lower than for graduates, but were still strong.
While the strongest influence on competency development reported by graduates and
supervisors was on-the-job training, PAS/PCE2 ranked quite highly, especially on the
dimensions of integrating accounting sub-discipline and general business discipline
knowledge.
Key words: Competency based education; Professional accounting certification;
Survey Introduction
INTRODUCTION
Since the mid 1980s there has been increasing disquiet among accounting educators and
professional bodies in many Western countries as to the adequacy and relevance of
educational programs and admission requirements designed to prepare candidates for entry to
the accounting profession.
International professional accounting bodies have responded in different ways to these
criticisms. Although there has been a lot of discussion about the need for competency based
approaches to accounting education in the USA and elsewhere, there has been minimal
evidence of changes in the way candidates are prepared or assessed for entrance into the
accounting profession. Professional accounting bodies in many countries have paid lip
service to this need while still maintaining entrance requirements that focus largely on
technical knowledge. However, in New Zealand a competency-based program – Professional
Accounting School and Professional Competence Examination 2 (PAS/PCE2) – was
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New Zealand Applied Business Journal
introduced in 1998. The program seeks to develop eight competencies. There has been very
little work done to evaluate the success or otherwise of the PAS/PCE2 model or of similar
approaches.
This study examines the results of a mail questionnaire of graduates and their supervisors for
three years 1998-2000 to assess the degree of success of the New Zealand program in
developing the eight competencies.
The contribution of this study will be to provide evidence on perceptions of the success of the
New Zealand competency based initiative. This should inform the future development of the
program in New Zealand and the initiatives underway in other countries to install similar
programs.
INTERNATIONAL DEVELOPMENTS IN PRE-ENTRY ACCOUNTING EDUCATION
United States
Disquiet about pre-entry accounting education was first articulated in the United States in the
Bedford Report (1986). It was observed that many accounting educators questioned
university accounting teaching and learning processes on two counts: they believed the
material taught and learned was inadequate and they questioned the effectiveness of
traditional teaching and learning methods. They argued that many accounting graduates did
not know how to communicate could not reason logically and had limited problem solving
ability.
Three years after the Bedford Report the then “Big 8” accounting firm published a White
Paper (1989) on the topic that dealt with the attributes necessary for success in the accounting
profession. The White Paper acknowledged the work of the Bedford Committee and used its
conclusions as a basis for its own recommendations. Among the necessary knowledge and
skills identified by the white paper were; communication skills, intellectual skills,
interpersonal skills general knowledge, organisational and business knowledge, and
accounting and auditing knowledge.
In response to the call for change by both the Bedford Committee and the Big 8 White Paper,
the American Accounting Association (AAA) entered into a memorandum of agreement with
the firms on June 30 1989, and this provided for the creation of the Accounting Education
Change Commission (AECC). The Commission’s role was outlined in their “Position
Statement Number One” (1990). Their objective was to foster changes in the academic
preparation of accountants consistent with the goals of improving their capabilities for
successful professional careers in practice. Since 1990 the AECC has promulgated “Issue”
and “Position” statements and provided significant grants to educators with the objective of
fostering change from a procedural to a user emphasis and increased attention to
communication skills. The activities of the AECC are generally believed to have commenced
a change process in the US, which is still continuing to this day.
Other developments in the US include pronouncements on the issue by: the Institute of
Management Accountants (IMA), the Financial Executives Institute (FEI) (What Corporate
America Wants in Entry-Level Accountants, 1994), the IMA alone (Counting More,
Counting Less, 1999), and the American Institute of Certified Public Accountants (AICPA)
Vision Project (1998). This latter project is multi-faceted and aimed at a comprehensive and
integrated vision of the profession’s future in the US.
Competencies have been grouped into three proficiency levels, (Basic, Intermediate and
Advanced), and four areas of competency: Personal Competencies (e.g. professional attitude
and demeanor, decision-making, communication), Functional Competencies (e.g. risk
analysis, reporting and measurement), Broad-Based Competencies (e.g. resource
management, marketing, client focus) and Leadership Competencies (e.g. facilitating,
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New Zealand Applied Business Journal
Volume 1, Number 1, 2002
teamwork and problem solving). The top five core competencies identified in this project
were: communication and leadership skills, strategic and critical thinking skills, focus on the
customer, client and market, and interpretation of converging information; and technological
adeptness. The competency model is described as applicable for the “New Finance
Professional” and is intended for use by: individual CPAs for career development, employers
for identifying professional development needs, professional bodies in developing continuing
professional education needs and academics in designing programs. The vision project
continues to refine these competencies, including some initiatives with the AAA, and latest
developments can be accessed from the AICPA web-site, www.aicpa.org.
Other Countries
Concurrent with these activities in the US, there have been a number of developments in
other countries. Some of these developments have occurred under the banner of the
International Federation of Accountants (IFAC). In their publication IEG-9 (1996) the IFAC
concluded that a program of accounting education and experience must go beyond mere
transfer of knowledge. They argued that learning should be defined as principles, standards,
concepts, facts and procedures at a point in time. Beyond that, emphasis must be placed on a
set of knowledge, skills and professional values broad enough to enable new entrants to the
profession to adapt to change.
The Education Committee of IFAC published a discussion paper (1998), which addressed
competence-based approaches to the preparation of accountants. This paper discussed the
challenge posed to member bodies by new approaches to the definition and assessment of
competence and their application to the development of future professional accountants. This
discussion paper concluded that competence-based approaches offer a systematic and
effective way of ensuring that the expectations of employers and the public are met, however
their development and implementation would require close cooperation between associations,
higher education and employers. The paper concluded with a range of policy options for
national associations in implementing a competence-based qualification system.
More recently the IFAC has issued a more comprehensive discussion paper (2001), which
updated the 1998 paper with the objective of offering general guidance to member bodies on
how to implement competence-based approaches. It drew upon responses to the first paper
and changes in the field of competence-based approaches since that time.
Professional accounting bodies have not been silent on the issue, particularly those from the
English-speaking world. This group meets on an ad hoc basis and is known collectively as
“CAGE ”. This is an acronym for “Chartered Accountants Group Executives” from England
and Wales, Scotland, Ireland, Canada, South Africa, Australia and New Zealand. In recent
years, meetings of the group have been dominated by concerns about the need for more
competency-based education for accountants, and jurisdictions in these countries have
produced papers on the issue.
In Canada a task force created in 1998 by the Certified General Accountants Association
(CGA) identified 24 competencies required of accountants. Only seven of these pertained to
functional accounting competencies, with the remainder relating to applied
business/management skills, personal management skills and leadership skills. The Canadian
Institute of Chartered Accountants (CICA) is changing their qualification process to ensure a
broader range of competencies for a rapidly changing marketplace. The new competencies
are described as the “Canadian CA Competency Map” These will be applied within tertiary
institutions as well as professional accountancy programs. This new system was installed in
the Western Canadian Provinces in 2001.
The Institute of Chartered Accountants in England and Wales require the completion of a
training contract undertaken within mentor organisations, which includes assessment while
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New Zealand Applied Business Journal
completing work experience in communication skills, information technology, commercial
awareness and professional ethics.
In Australia a competency based program of professional education for admission to the
Institute of Chartered Accountants of Australia (ICAA) was established in 2001. It includes
three technical modules (Financial Reporting and Assurance, Taxation and Financial
Reporting, Strategic Business Management), which are completed while gaining mentored
work experience, plus a Final Integrative module. This final module is designed to assess in a
variety of ways the knowledge, skills and values gained from the overall program using a
case-study approach.
All of these pronouncements, statements and studies have resulted in very little change in
teaching and assessment in many countries. The only countries to have installed new
competency based approaches to professional accounting certification are Australia (2001),
Canada – Western Provinces (2001) and New Zealand (1998).
New Zealand
In the early 1990s the entry process for admission to membership of the Institute of Chartered
Accountants of New Zealand (ICANZ) was based on studies at approved tertiary institutions
and a final qualifying examination (FQE) administered by the ICANZ. This came under
scrutiny from other international professional accounting bodies. There was a perception that
these qualifications were not sufficiently rigorous for the demands of the modern profession.
One consequence of this scrutiny was a decision by the Institute of Chartered Accountants of
Australia (ICAA) to suspend reciprocity of qualifications until changes were made in New
Zealand and were seen to be effective.
Around the time this review was carried out, ICAA and ICANZ (then known as the New
Zealand Society of Accountants) commissioned a research study (Birkett, 1993) to outline the
competencies expected of an effective chartered accountant. This study recommended
competency standards for six fields of practice, applicable to three types of work location, for
six key accounting roles.
The international review and the Birkett study triggered a separate ICANZ review of their
membership structure. This resulted in the formation of a new three-tier membership
structure effective January 1 1996:
Accounting Technician (AT)
For those who provide para-professional accounting services (middle-level and assistant
accountants or office and administration managers).
Associate Chartered Accountant (ACA)
For those accountants who are not actively involved in providing core accounting services or
do not require international recognition.
Chartered Accountant (CA)
For those who are actively involved in providing core accounting services or require
international recognition of their status. Members seeking to offer their services to the public
must be members of this group.
The framework for admission to each of these categories is similar and comprises three basic
components: academic study, practical experience under the supervision of an officially
sanctioned ICANZ mentor and the development and assessment of professional competence.
Candidates for admission to the CA designation require three year’s practical experience.
In 1996 ICANZ established a wholly owned subsidiary to address this professional
competence dimension. This organisation is a company named Advanced Business Education
Limited (ABEL), and during 1997 considerable work went into the organisation of ABEL
and into the development of its programs. The first professional competency programs were
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New Zealand Applied Business Journal
Volume 1, Number 1, 2002
delivered for the calendar year 1998. These professional competency programs consist of two
stages. The first is called Professional Competence Examination 1 (PCE1) and is a
prerequisite for admission to all three professional designations. The second encompasses the
Professional Accounting School (PAS) and the Professional Competence Examination 2
(PCE2), and is required of all those seeking to become Chartered Accountants (CAs).
The PCE1 program deals with the legislation and rules governing the structure of the
accounting profession in New Zealand and overseas, ethics and ethical behavior, and selected
current professional issues of a non-technical nature. The PAS/PCE2 program incorporates a
competency-based approach to educating candidates for entry to the accounting profession
and is the major focus of this research study.
EDUCATING FOR AND MEASURING PROFESSIONAL COMPETENCY
The field of competency education and measurement has been widely canvassed and
researched in a variety of professional contexts, most notably in the education literature. For
example some define competency in relation to characteristics possessed by an individual,
which should result in an acceptable or superior job performance (Spencer and Spencer,
1993). Others take a behaviorist approach and view competency as any aspect of the inner
person normally displayed as behaviours, which enable individuals to perform “competently”
(Boam and Sparrow, 1992).
Another view is that a competency-based assessment strategy should be aimed at assessing
whether an individual has the capacity to exercise “intelligent skill knowledge” (Gonzci,
1993; Elliott, 1990). This means the capacity for individuals to discriminate, discern and
apply a knowledge base, technical skills and appropriate attitudes to situations in which they
find themselves. This approach suggests that assessment methods will do this best if they are
as integrated and direct as possible and gathered from real life work situations or simulations
of this.
Of more interest are the competencies expected of the effective professional accountant.
Many of these have been discussed in depth by the professional accounting bodies referred to
earlier in this paper. It might be argued that to demonstrate “competence”, professional
accountants require a broad range of skill areas in addition to the technical knowledge of
accounting disciplines.
Within this broad definition of competence, three views are possible (Brown, 2001). One
view emphasizes the demonstration of satisfactory performance against sets of standards
(functionalist approach). A second view (sometimes called the holistic approach (Birkett,
1993)) proposes that the accounting professional must also apply and adapt skills in a wide
range of contexts in which they will be applied (Heaton, 1996; Gonzci, 1994). This view
incorporates the necessity to possess skills required to exercise professional judgment (such
as listening, inquiry) as well as technical knowledge. The third view (integrated), adopted by
ABEL in developing PAS/PCE2, recognizes that professionals will have different ways of
achieving desired outcomes and that what is required is for outcomes to be defined against
which competence can be measured. These are both behavioral (communication/interpersonal
skills) and cognitive (accounting and business knowledge, critical thinking, problem solving).
A broad range of learner-centered teaching and assessment processes may then used to
evaluate competency in the outcome areas defined.
Although there has been a lot of discussion of the need for competency based approaches to
accounting education in the USA and elsewhere, there has been little evidence of changes in
the way candidates are prepared or assessed for entrance to the accounting profession.
Professional accounting bodies in many countries have paid lip service to this need while still
maintaining entrance requirements, which focus largely on technical knowledge. There has
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New Zealand Applied Business Journal
also been very little work done to evaluate the success or otherwise of the PAS/PCE2 model
or of similar approaches. This study will provide valuable evidence on perceptions of the
success of the New Zealand competency based initiative. The conclusions of the study are
derived from program graduates and workplace supervisors of program graduates for the
three years 1998 - 2000.
Structure of the PAS/PCE2 Competency-Based Program
The PAS/PCE2 program is the focus of this research study. This is a competency-based
program for educating and assessing potential entrants to the chartered accounting profession
in New Zealand. Since it was the first competency-based program installed by a professional
accountancy body anywhere in the world it has attracted considerable interest from other
professional accounting bodies. Among the innovative features are self-study modules and
hands-on workshops focussed not only on contemporary and strategic issues but also such
cognitive and behavioral skills as good verbal and written communication, information
synthesis, problem solving, negotiation and team management. The eight specific
competencies addressed by the program are the ability for candidates to:
 Identify and solve business problems in the unstructured business environment,
 Communicate in writing and verbally,
 Demonstrate an ethical awareness,
 Research, analyse and synthesise Information,
 Work in a team and where necessary take a leadership role,
 Organize themselves, peers and subordinates to achieve goals within deadlines,
 Integrate accounting sub-discipline knowledge to arrive at an informed accounting
judgement in a range of business contexts, and
 Understand and work with a range of other business disciplines within an organisational
context.
These competencies provide the underpinning for all the study plans, workshops, assessments
and examination methods used in the ABEL program. The structure of this program for the
three years 1998 – 2000 is diagrammed in Appendix I. From this it can be seen that the PAS
segment consisted of three modules; Business Environment, Compliance and Financial
Management, and that each module comprised self-study material and two workshops. Each
workshop consisted of twenty-five candidates split into teams with five people in each team.
A considerable amount of the activity in the workshops was conducted in teams and the team
members were encouraged to communicate with each other between workshops as they
worked on their self-study material. The final PCE2 examination consisted of two four-hour
open book case study examinations.1
Among the strong features of each of the three modules were the linkages with the
competencies being addressed. Each study plan segment outlined the nature of the
competencies addressed by that segment and each workshop activity was related to specific
competencies. The latter was achieved through the use of a “Development and Assessment
Matrix” for each workshop in each module. This was complemented by an over-arching
“Competencies Matrix”, which indicated how the study plans, the informal group work, the
workshops, the assessment methods, and the final examinations, contributed to the various
competencies. Further details about the PAS/PCE2 programme are available from the ICANZ
web site: http://www.icanz.co.nz.
1
In 2001 the PAS program was modified by condensing the first module and adding a final capstone module on
Business Strategy. In addition PCE2 was modified by replacing the two four-hour case study final exams with
one six-hour case study final exam.
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New Zealand Applied Business Journal
Volume 1, Number 1, 2002
Technical accounting education is not ignored in the New Zealand model. Underlying the
PAS/PCE2 programme is a required level of technical knowledge gained from a four-year
undergraduate accounting degree accredited by ICANZ. These degree programs are reviewed
regularly by the Admissions Department of ICANZ.
It is clear that this program is innovative in character and is a significant departure from the
qualification and assessment models employed by many professional accounting bodies. As
such it is attracting interest and scrutiny from overseas bodies. A major aim of this research
project is to assess the success of the PAS/PCE2 program in meeting its stated aims.
THE RESEARCH QUESTION
Given the issues related the difficulty of identifying a control group and the existence of
intervening variables, the research question needed to address perceptions rather than hard
measurements. These perceptions needed to relate to the extent to which the eight PAS/PCE2
competencies were demonstrated in the workplace after graduation from the program.
Thus the final form of the question to be researched was:
Does PAS/PCE2 improve demonstration in the workplace of the eight specified competencies
at a level expected of a recently qualified chartered accountant?
THE STUDY
The study consisted of a mail questionnaire survey of 1998, 1999 and 2000 graduates from
the program and their supervisors in the workplace. This method of research was chosen after
considering and rejecting such other methodologies as focus groups, individual interviews
and observation of graduates in the workplace. All three of these possible alternatives would
have been expensive and suffered from lack of generalisability.
A draft of the graduate questionnaire was tested on a focus group of seven graduates drawn
from a spectrum of firms, age groups, gender and graduation dates. The supervisor
questionnaire was similarly tested with representatives from a variety of employing
organisations. This provided valuable feedback on the questionnaire design and wording. The
final version of the instrument2 was divided into four sections: personal profile, work profile,
appraisal of competencies and key influences on competency development.
In the appraisal of competencies section, graduates were asked their opinion of the
effectiveness of PAS/PCE2 in developing their ability to demonstrate particular competencies
in the workplace. In the key influence on competency development section they were required
to rank PAS/PCE2 against other forms of competency development. Supervisors were asked
a similar set of questions and there was also space for open-ended narrative answers in both
questionnaires.
It was desired to survey both program graduates and their supervisors. Accessing graduates
from the program did not prove to be a problem since their names were taken from the
ICANZ database, although up-to-date addresses were not always available, especially for
graduates who were working overseas. Defining and accessing a database for workplace
supervisors of program graduates proved difficult. The views of supervisors of graduates
were sought, but it was difficult to identify who those people would be, especially in large
firms. Initially a two-pronged approach to accessing supervisors was adopted. First, the HR
departments of the Big 5 and Audit New Zealand (the government auditor) distributed the
questionnaire to supervisors of graduates. Second, graduates employed at other organisations
were sent a questionnaire to give to their supervisor.
2
A copy of each questionnaire is available from the authors on request.
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New Zealand Applied Business Journal
This second approach resulted in relatively few responses and was supplemented by sending
the supervisor’s questionnaire to all ICANZ candidate mentors. The official mentors were
chosen because they would be in regular contact with their candidates, overseeing their work,
checking their logbook and discussing their progress. The mailing to mentors generated a
satisfactory response.
To summarise, the graduate population consisted of 1129 individuals, 147 of whom were
initially identified as being domiciled overseas. The supervisor population consisted of 140
supervisors in Big 5 firms and Audit New Zealand, 753 candidate mentors spread across a
variety of firms, and an unknown number of supervisors to whom questionnaires were given
by graduates.
THE RESULTS
Usable responses were received from 390 graduates and 322 supervisors. These may be
summarised as follows:
Graduates
Population
Responses % Response
New Zealand Domiciled
982
335
34.1%
Overseas Domiciled
147
55
37.4%
Total
1129
390
34.5%
Supervisors
Big 5 + Audit NZ
140
80
57.1%
Candidate Mentors
753
197
26.2%
Sub-Total
893
277
31.0%
Graduate Hand-out
NA
45
NA
Total
322
Although the response rate of over 30% was encouraging, non-response bias is always likely
in survey research of the type reported in this paper. Non-response bias tests were carried out
in respect of the responses from graduates and supervisors. The first test suggested by Moore
and Reichert (1983) checks for differences between the characteristics of respondents and the
characteristics of the population at large. There were no population demographics available
for supervisors, but for graduates data for the year of graduation and for gender were
available. In respect of graduates there was no statistically significant difference observed
between the responses and the population characteristics in respect of gender, but there was a
difference for the year of graduation. There were relatively more responses from year 2000
graduates. This suggests that the graduate responses reported in this paper tend to reflect less
the views of 1998 and 1999 graduates and more the views of those from the year 2000.
Second an analysis was performed of early and late responses, as suggested by Wallace and
Mellor (1988). The rationale for this is that the late respondents are more likely to reflect the
characteristics of the non-respondents. In respect of graduates and supervisors statistical tests
were performed on the responses to Part 3 of the questionnaire, which related to the eight
competencies. Statistically significant differences were observed at the 5% level in respect of
four of the eight competencies when comparing responses from the first 25% and the last
25% of graduates.3 However a similar test for supervisor responses revealed a statistically
3
The authors take some comfort from the fact that higher ratings were assigned to these four competencies by
the last 25% of graduates, suggesting a positive rather than a negative bias.
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New Zealand Applied Business Journal
Volume 1, Number 1, 2002
significant difference for only one competency. It may be concluded that the existence of
some non-response bias has to be recognised, in spite of the relatively high response rate.
The profile of the respondents is summarised in Table 1.
Graduates
Male
Female
No response
Total
Supervisors
n
203
187
%
52.1
47.9
390
100%
n
238
83
1
322
Graduates
%
73.9
25.8
0.3
100%
Supervisors
Age
20-24
25-29
30-39
More than 39
No response
Total
n
27
284
60
19
%
6.9
72.8
15.4
4.9
390
100
n
0
26
150
144
2
322
Core Business
Big 5 CA
CA other
Corporate
Public Service
Other
No response
Total
n
132
79
140
35
2
2
390
%
34.0
20.4
36.1
9.0
0.5
0.0
100
n
126
111
36
45
3
1
322
Graduates
%
0
8.1
46.6
44.7
0.6
100
Supervisors
Year Graduates Completed PAS/PCE2
1988
1999
2000
Total
%
39.1
34.5
11.2
14.0
0.9
0.3
100
n
%
50
141
194
385
13.0
36.6
50.4
100
Table 1: Graduate and Supervisor Survey Profile of Respondents
The gender of graduate respondents is roughly even, whereas the majority (74%) of
supervisor respondents are male. This most likely reflects the “glass ceiling” effect, which
has been evident of a number of studies of gender differences in the workplace. As might be
expected, the mean age of the graduates is significantly less than that of supervisors, and this
may explain to some extent the apparent “glass ceiling” effect. Of more concern is the fact
that the proportion of responses from graduates in the corporate sector is significantly greater
than the proportion from supervisors in that sector. This will be commented upon further
when evaluating the perceptions of these groups.
Appraisal of Competencies
Section three of the survey instrument asked graduates and supervisors the extent to which
PAS/PCE2 had improved the ability to demonstrate the eight competencies in the workplace
at a level expected of a recently qualified chartered accountant. Respondents were required to
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New Zealand Applied Business Journal
answer using a five-point scale where 1 = significant improvement, 3 = moderate
improvement and 5 = no improvement. The results are summarised in Table 2.
To what extent has PAS/PCE2 improved your ability to demonstrate the specified
competency in the workplace at a level expected of a recently qualified chartered accountant?
1= significant improvement, 5 = no improvement
Competencies
Mean
Graduate
2.82
Mean
Supervisor
3.02
Mean
diff
-0.20
t statistic
p value
3.06
0.002*
Communicate in writing and verbally
2.90
3.27
-0.37
2.024
0.000**
Demonstrate ethical behaviour
3.24
2.96
0.28
2.132
0.0333*
Research, analyse and
synthesise information
2.93
2.94
-0.01
0.125
0.900
Work in a team and where necessary
take a leadership role
2.69
3.11
-0.42
5.347
0.000**
Organise yourself, peers and subordinates
to achieve goals within deadlines
2.89
3.20
-0.31
4.025
0.000**
Integrate knowledge in accounting
sub-disciplines to arrive at informed
judgements in a range of business
contexts
Understand and work with a range of
other business disciplines within and
organisational context
2.64
2.92
-0.28
3.811
0.000**
2.78
3.16
-0.38
5.103
0.000**
Identify and solve business problems
in the unstructured business environment
Table 2: Competency Appraisal: Graduates versus Supervisors
* = statistically significant at 5% level
** = statistically significant at 1% level
From this it was observed that only in the case of the ethical behavior competency was the
mean response from graduates worse than 3. This suggests a good level of satisfaction among
graduates regarding the competencies that the programme addresses. Further analysis, not
reported in a formal table, showed the following percentages of graduates and supervisors
perceiving a moderate to significant improvement in their competencies:
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New Zealand Applied Business Journal
Volume 1, Number 1, 2002
Competency
Moderate - Significant Improvement
Graduates
Supervisors
79%
74%
74%
62%
62%
74%
73%
76%
77%
67%
71%
63%
82%
76%
76%
66%
Problem solving
Communication
Ethical behavior
Research, analyse and synthesise
Teamwork and leadership
Organisation and time management
Integrate accounting sub-disciplines
Integrate other business disciplines
Perusal of Table 2 shows that graduates perceived that PAS/PCE2 was most beneficial in
developing the ability to integrate accounting sub-discipline knowledge, followed by
teamwork and leadership. Also scoring well were integrating other business disciplines and
problem solving in the unstructured business environment. These are very encouraging
results and tend to support a conclusion that the ABEL program has been successful in
achieving its stated aims, at least from the viewpoint of its graduates.
The mean scores from supervisor respondents were also encouraging. However inspection of
Table 2 reveals that although quite high, these scores were statistically significantly less
favorable than those from graduates in respect of six of the eight competency dimensions. In
one case they were significantly better (demonstrate ethical behavior) and in another case
they were virtually the same (research, analyse and synthesise information). Nevertheless the
mean scores from supervisors still reflected an overall favorable impression of the
programme, due largely to clustering around the “moderate improvement” level (3 on the 5point scale).
DIFFERENCES IN APPRAISALS
Other than tests of the differences in perceptions between graduates and supervisors,
statistical tests were conducted for other potential differences. Table 3 reveals no statistically
significant differences between perceptions of graduates working in CA firms versus those
working in a non-CA firm environment. Likewise Table 4 shows that, other than in the
perceived ability to research, analyse and synthesise information, there were no significant
differences among graduates working in Big 5 versus Non-Big 5 CA firms. Graduates from
Non-Big 5 CA firms found greater improvement in this competency. Tests were conducted
also for differences among graduates by gender and by age and no statistically significant
differences were found.4
Tests for differences among responses from supervisors from different backgrounds were
carried out. The only instance where significant differences were found was in perceptions of
supervisors from CA versus Non CA firms. Perusal of Table 5 shows that supervisors from a
Non CA firm environment believed that PAS/PCE2 had improved two of the competencies to
a greater degree. The two competencies were the ability to research, analyse and synthesise
information, and to organize and achieve goals within deadlines. These results must be
viewed with caution since the proportion of responding Non CA firm supervisors is
significantly less than the proportion of graduates responding from Non CA firms.
4
In some cases the total sample did not equal 390 because some respondents did not evaluate each competency.
Non-parametric tests were conducted since the Jarque Bera statistic indicated that not all distributions were
normal. Non of the Mann-Whitney non-parametric tests were significant.
11
Volume 1, Number 1, 2002
New Zealand Applied Business Journal
The fact that very few significant differences were found in responses from graduates and
supervisors working in different types of firms is notable. This suggests that the programme
is equally beneficial to graduates in Big 5 CA firms, smaller CA firms, corporations and other
organisations.
Mean
CA
2.78
Mean
Non-CA
2.84
Mean
diff
-0.06
t test
p value
0.688
0.492
2.96
2.82
0.14
1.430
0.154
Demonstrate ethical behaviour
3.23
3.01
0.22
2.037
0.423
Research, analyse and synthesise
information
Work in a team and where necessary take a
leadership role
Organise yourself, peers and subordinates
to achieve goals within deadlines
Integrate knowledge in accounting subdisciplines to arrive at informed
judgements in a range of business contexts
Understand and work with a range of other
business disciplines within and
organisational context
3.00
2.84
0.16
1.641
0.102
2.65
2.72
-0.07
0.689
0.491
2.85
2.94
-0.09
0.909
0.364
2.62
2.65
0.03
0.286
0.775
2.79
2.75
0.04
0.340
0.734
Competencies
Identify and solve business problems in the
unstructured business environment
Communicate in writing and verbally
Table 3: Competency Appraisal: Graduates – CA Firm versus Non-CA Firm
To what extent has PAS/PCE2 improved your ability to demonstrate the specified
competency in the workplace at a level expected of a recently qualified chartered
accountant?1= significant improvement, 5 = no improvement
* = statistically significant at 5% level
12
New Zealand Applied Business Journal
Volume 1, Number 1, 2002
To what extent has PAS/PCE2 improved your ability to demonstrate the specified
competency in the workplace at a level expected of a recently qualified chartered accountant?
1= significant improvement, 5 = no improvement
Mean
Big 5 CA
Mean
Other CA
Mean diff
t-test
P value
Identify and solve business problems
in the unstructured business
environment
Communicate in writing and verbally
2.85
2.67
0.18
1.47
0.144
3.03
2.85
0.18
1.29
0.198
Demonstrate ethical behaviour
3.32
3.09
0.23
1.60
0.110
Research, analyse and synthesise
information
3.12
2.80
0.32
2.35
0.0200*
Work in a team and where necessary
take a leadership role
2.68
2.59
0.09
0.59
0.553
Organise yourself, peers and
subordinates to achieve goals within
deadlines
Integrate knowledge in accounting
sub-disciplines to arrive at informed
judgements in a range of business
contexts
Understand and work with a range of
other business disciplines within and
organisational context
2.87
2.81
0.06
0.41
0.680
2.70
2.49
0.21
1.48
0.139
2.85
2.67
0.18
1.33
0.184
Competencies
Table 4: Competency Appraisal: Graduates
Big 5 CA versus Non-Big 5 CA
* = statistically significant at 5% level
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New Zealand Applied Business Journal
To what extent has PAS/PCE2 improved your ability to demonstrate the specified
competency in the workplace at a level expected of a recently qualified chartered accountant?
1= significant improvement, 5 = no improvement
Competencies
Mean
CA
3.05
Mean
Non CA
2.94
Mean
diff
0.11
t
statistic
0.988
p value
Communicate in writing and verbally
3.33
3.10
0.23
1.920
0.055
Demonstrate ethical behaviour
2.96
2.96
0.00
0.019
0.984
Research, analyse and synthesise information
3.00
2.75
0.25
2.105
0.035*
Work in a team and where necessary take a
leadership role
3.17
2.96
0.21
1.554
0.121
Organise yourself, peers and subordinates to
achieve goals within deadlines
3.28
2.99
0.29
2.438
0.015*
Integrate knowledge in accounting subdisciplines to arrive at informed judgements in a
range of business contexts
Understand and work with a range of other
business disciplines within and organisational
context
2.95
2.81
0.14
1.096
0.274
3.18
3.10
0.08
0.653
0.515
Identify and solve business problems in the
unstructured business environment
0.324
Table 5: Competency Appraisal: Supervisors – CA and Non CA
* = statistically significant at 5% level
** = statistically significant at 1% level
Key Influences on Competency Development
Section four of the questionnaire asked respondents to rank the importance of six different
types of training in developing the eight PAS/PCE2 competencies.
The six types of training were listed on the questionnaire in the following random order:
 Life experience
 Tertiary education
 On-the-job experience
 Career mentoring
 PAS/PCE2 program
 Formal training courses
Respondents were requested to rank each of the potential influences in decreasing order of
importance (where 1= most important and 6= least important). The responses to this question
are summarised in tables 6 and 7.
Rank the importance of each type of training in developing the PAS/PCE competencies
1= most important, 6 = least important
14
Formal
Training
courses
PAS/PCE2
program
Career
Mentoring
On the job
experience
Tertiary
education
Volume 1, Number 1, 2002
Life
experience
New Zealand Applied Business Journal
Identify and solve business
problems in the unstructured
business environment
3.24
4.38
1.63
3.71
3.75
4.38
Communicate in writing and
verbally
3.85
2.5
2.52
4.69
3.64
2.50
Demonstrate ethical behaviour
2.18
4.31
2.95
3.48
3.24
4.79
Research, analyse and synthesise
information
Work in a team and where
necessary take a leadership role
Organise themselves, peers and
subordinates to achieve goals within
deadlines
Integrate knowledge in accounting
sub-disciplines to arrive at informed
accounting judgements in a range of
business contexts
Understand and work within a
range of other business disciplines
within an organisational context
4.23
2.13
2.67
4.70
3.16
4.06
2.84
3.78
2.05
4.56
3.05
4.66
3.00
3.74
1.87
4.3
3.36
4.70
4.53
3.66
1.97
3.98
2.69
4.10
3.89
4.14
1.70
3.85
3.03
4.36
Table 6: Key Influences on Competency Development: Graduates
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New Zealand Applied Business Journal
Tertiary
educatio
n
PAS/PC
E2
program
Formal
Training
courses
On the
job
experienc
e
Career
Mentorin
g
Life
experienc
e
Rank the importance of each type of training in developing the PAS/PCE competencies
1= most important, 6 = least important
Identify and solve business
problems in the unstructured
business environment
3.48
4.63
1.65
3.27
4.07
3.92
Communicate in writing and
verbally
3.9
3.20
2.51
4.10
3.99
3.29
Demonstrate ethical behaviour
2.94
4.73
3.00
3.00
2.93
4.38
Research, analyse and synthesise
information
Work in a team and where
necessary take a leadership role
Organise themselves, peers and
subordinates to achieve goals
within deadlines
4.47
2.80
2.26
4.07
3.47
3.86
2.67
4.53
1.90
3.61
3.81
4.45
3.29
4.21
1.90
3.47
3.83
4.28
Integrate knowledge in accounting
sub-disciplines to arrive at
informed accounting judgements
in a range of business contexts
Understand and work within a
range of other business disciplines
within an organisational context
4.86
4.00
1.94
3.58
2.90
3.70
3.88
4.68
1.67
3.18
3.55
4.02
Table 7: Key Influences on Competency Development: Supervisors
Both graduates and supervisors most often ranked on-the-job experience as the largest
influence on competency development. This result is a powerful endorsement of the ICANZ
three-year compulsory practical experience requirement for candidates seeking to become
CAs. The only significant exception to the highest ranking achieved by on-the-job training
was in respect of ethical behavior, where graduates and supervisors ranked life experience
highest and on-the-job experience second.
The mean ranking assigned to the PAS/PCE2 program by graduates, ranged from 2.69 to
3.75. The two competencies for which graduates ranked PAS/PCE2 the highest were the
ability to integrate accounting sub-discipline knowledge (2.69 = second ranking) and the
ability to understand and work within a range of other disciplines within an organisational
context (3.03 = second ranking). The relatively high rankings accorded by graduate
respondents suggest that the program has been a significant influence on their competency
development.
Rankings assigned to PAS/PCE2 by supervisors were in most cases lower than those assigned
by graduates. The one exception to this was demonstration of ethical behavior, where
supervisors gave a higher ranking, and this is consistent with the competency appraisal results
reported in Table 2. All the differences between graduates and supervisors were significant at
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New Zealand Applied Business Journal
Volume 1, Number 1, 2002
the 5% level, except for the ability to integrate accounting sub-discipline knowledge, where
both graduates and supervisors assigned this dimension 2.69 and 2.90 respectively. In no
case was PAS/PCE2 accorded the lowest ranking by graduates and supervisors, and in many
cases it was ranked second or third.
Narrative Comments From Respondents
In addition to numerically rating the program, respondents were asked to provide some openended narrative comments.
Graduates were asked to provide comments on the following questions:
 What positive learning experiences did you obtain from PAS/PCE2?
 In what areas could PAS/PCE2 be improved?
 In your view, what other competencies should the program address?
 What other comments would you like to make about the program?
The most prevalent positive learning experience was the opportunity to work in a team,
followed by enhanced oral presentation skills, networking, exposure to other non-accounting
disciplines and improved understanding of areas of accounting.
Although positive comments outweighed negative by about two to one there were a number
of improvements suggested by some respondents. Issues relating to assessment were most
prevalent and included:
 Lack of time to complete the PCE2 final case study exams.
 Too much assessment using group work
 Inconsistency in grading performed by workshop facilitators
 Not enough weight given to assessments performed as part of PAS during the year as
opposed to the PCE2 final exam.
Other suggestions for improvement included shortening the program and changing the timing
of the workshops, making the program more “technical” and “relevant”, reducing the
workload and cutting back on the readings.
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New Zealand Applied Business Journal
Supervisor respondents were invited to make open-ended comments about additional
competencies that the program should address, and also to provide any other statements about
the program that they wished. 30 supervisors considered that the program should have a
greater technical focus. Further investigation of responses revealed that this meant a greater
emphasis on the application of accounting standards. In contrast another group of respondents
suggested more emphasis on writing and oral communication skills and the development of
interpersonal skills.
The most prevalent “additional comment” was that the program was regarded as being of
benefit. However some supervisors were concerned about the workload demanded of
candidates, particularly in busy times of the year.
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Volume 1, Number 1, 2002
Summary and Conclusions
For over fifteen years accounting educators and professionals have been espousing the need
for radical change in the education and assessment of candidates for entry into the profession.
It has been argued that the material taught in accounting programs at tertiary institutions was
inadequate and too technically based. There was a need not only for technical accounting
skills but also for a range of cognitive and behavioral skills.
Professional accounting bodies in many countries have paid lip service to this need while still
maintaining entrance requirements which focus largely on technical knowledge. A few
jurisdictions have broken the mould. In New Zealand, a totally new competency based
accounting certification program was installed effective in 1998. This PAS/PCE2 program
seeks to develop the higher-level competencies required of a candidate by building on a
candidate’s existing knowledge and workplace experience. Eight such competencies were
identified.
The main aim of this paper was to assess the degree of success of the New Zealand program
in enhancing these higher-level competencies. The study addressed the question, “Does
PAS/PCE2 improve demonstration in the workplace of the eight specified competencies at a
level expected of a recently qualified chartered accountant?”
The results from a mail questionnaire survey of program graduates and their employers
suggest that the program has achieved a considerable degree of success. A majority of
graduate respondents perceived that the program had caused a moderate to significant
improvement in their demonstration of all eight competencies. The perceptions of success in
responses from supervisors were marginally lower than for graduates, but were still strong.
The numerical responses were generally reinforced by open-ended narrative comments
supplied by many of the respondents.
While the greatest influence on competency development reported by graduates and
supervisors was on-the-job training, PAS/PCE2 ranked quite highly, especially on the
dimensions of integrating accounting sub-discipline and general business discipline
knowledge.
This has been an exploratory study, but provides valuable new evidence on the effectiveness
of a competency-based education and certification program for admission to the accounting
profession. Professional accounting bodies in other countries contemplating a similar
approach will take heart from the success of the program in New Zealand. The results of this
study should also be of assistance to ABEL in validating the path-breaking approach that the
organisation embarked on in 1998 and in planning improvements to its program.
There remain opportunities for further research in this area both in New Zealand and
overseas. This research would include some form of longitudinal study to track the career
success of program graduates, and also comparative studies of the New Zealand program and
that adopted in Australia and Western Canada.
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REFERENCES
Accounting Education Change Commission (AECC). 1990. Objectives of education for accountants: Position
statement number one. Issues in Accounting Education (Fall): 307-312.
American Accounting Association, Committee on the Future, Content, and Scope of Accounting Education (The
Bedford Committee). 1986. Future accounting education:
Preparing for the expanding profession. Issues in Accounting Education (Spring): 168-195.
American Institute of Certified Public Accountants. 1998. The AICPA Competency Model for the New Finance
Professional. AICPA Issues briefing, 1/16/98
Birkett, W. P. 1993. Competency based standards for professional accountants in Australia and New Zealand.
Sydney: Institute of Chartered Accountants in Australia and the New Zealand Society of Accountants.
Boam, R., and P. Sparrow. 1992. Designing and achieving competency. London: McGraw-Hill Training Series.
Burchell, N., D. Hodges, and E. Rainsbury. 1999. What competencies do business graduates require –
Perspectives of stakeholders. Paper presented at CAE-WACE World Conference on Cooperative
Education, July 5-8, Washington DC.
Brown, H. 2001. Professional competence: what’s it all about? ABEL: Introduction to PAS professional skills
workshop.
Certified General Accountants Association of Canada. 2000. CGA Canada competency framework. www.cgacanada.org.
Elliott, J. 1991. Action research for educational change. Milton Keynes: Open University Press: Ch. 8.
Gonczi, A., P. Hager, and J. Athanasou. 1993. The development of competency-based assessment strategies for
the professions. Australian Government Publishing Service: National Office of Overseas Skills
Recognition Research Paper No. 8 (June).
Gonczi, A. 1994. An integrated competency approach to professional education and assessment: A
consideration of arguments for and against. Working paper, University of Technology, Sydney.
International Federation of Accountants. 1996. International Education Guidelines Number Nine (IEG-9).
International Federation of Accountants Education Committee. 1998. Competence-based approaches to the
professional preparation of accountants. Discussion paper.
International Federation of Accountants Education Committee. 2001. Competence-based approaches to the
preparation and work of professional accountants. Exposure draft discussion paper.
Moore, J. and A. Reichert. 1983. An analysis of the financial management techniques currently employed by
large U.S. corporations. Journal of Business Finance and Accounting 10, 623-645.
Perspectives on Education: Capabilities for Success in the Accounting Profession (The White Paper). 1989.
Arthur Andersen & Co., Arthur Young, Coopers & Lybrand, Deloitte Haskins & Sells, Ernst & Whinney,
Peat Marwick Main & Co., Price Waterhouse, and Touche Ross, New York, NY.
Siegel, G. ,and J.E. Sorensen. 1994. What Corporate America Wants in Entry-Level Accountants. Montvale, NJ:
Institute of Management Accountants.
Siegel, G. ,and J.E. Sorensen. 1999. Counting More, Counting Less, Transformations in the Management
Accounting Profession. Montvale, NJ: Institute of Management Accountants.
Spencer, L., and Spencer, S. 1993. Competence at work. New York: Wiley.
Wallace, R. and C. Mellor. 1988. Non-response bias in mail accounting surveys: A pedagogical note. British
Accounting Review 20, 131-139.
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Volume 1, Number 1, 2002
APPENDIX 1
STRUCTURE OF PAS/PCE2 1998 - 2000
Institute of Chartered Accountants (NZ)
ABEL
PROFESSIONAL ACCOUNTING SCHOOL (PAS)
MODULE ONE
BUSINESS
ENVIRONMENT
MODULE TWO
COMPLIANCE
STUDY PLANS
(self study)
STUDY PLANS
(self study)
STUDY PLANS
(self study)
+
+
+
2 WORKSHOPS
2 WORKSHOPS
2 WORKSHOPS
MODULE THREE
FINANCIAL
MANAGEMENT
PAS ASSESSMENT
(E.G. Group Presentations, reports,
class critiques, marked assignments)
60% minimum required to be eligible to sit PCE2
PROFESSIONAL COMPETENCY EXAMINATION 2 ( PCE 2)*
CASE STUDY ONE
CAS
* Re-sit available
21
(4 hours duration, open book,