The Future of Accounting Education:
Assessing the Competency Crisis
James E. Sorensen, Ph.D., CPA, CGMAS
School of Accountancy, University of Denver
Colorado Society of CPAs
Accounting Faculty Symposium
October 18, 2014
Development & Vetting of Proposed Framework
• Development:
– First meeting of Task Force on September 10, 2010
– Have had virtual meetings nearly every other week since then
– Numerous “side” meetings to focus on specific aspects of the
framework
• Conference Presentations:
– 2011, 2012 and 2013 AAA annual meetings
– 2012 and 2013 IMA Annual Conference & Exhibition
– 2012 and 2013 AAA Management Accounting Section mid-year
meeting
• Input from numerous colleagues and members of the
Pathways Commission’s Common Body of Knowledge
task force
.2
Publications and Manuscripts Under Review
• Lawson, et al. 2014. “Focusing Accounting Curricula on
Students’ Long-Run Careers: Recommendations for an
Integrated Competency-Based Framework for
Accounting Education.” Issues in Accounting Education,
29 (2): 295-317.
• Lawson, et al. (2015) “Thoughts on Competency
Integration in Accounting Education,” Issues in
Accounting Education, 30 (3): 149-171.
• P. Brewer, J.E. Sorensen, D.E. Stout. (2014). “The
Future of Accounting Education: Addressing the
Competency Crisis.” Strategic Finance, XCVI (2): 28-37.
3
Motivation for Development of Framework
Accountants’ responsibilities are expanding…
But, our extensive review of the literature shows that
these responsibilities are not being met…
4
Pathways Commission Report
• On the education of accountants and the need for
change:
– “Accounting education is challenged to keep pace with
opportunities and expectations that students learn to
think in new ways and develop the necessary skills and
knowledge to maintain the profession’s ability to
meet…evolving opportunities. Without innovation and
change, the discipline and profession risk becoming
supplanted by technology or possibly rendered
irrelevant because of mechanical rules and artificial
contrivances.” (p. 22)
5
Pathways Commission Report
• On developing curriculum models…
– “…accounting curricula have evolved with limited
commitment or agreement about core learning
objectives in recent years. Vital accounting programs,
courses, and learning environments need systematic
attention to foundations for curriculum and pedagogy and
opportunities for renewal for accounting educators. …
Accounting educators must bring together the broad
accounting community to develop a shared vision for a
body of knowledge that can serve as the foundation for
varied curriculum models, allowing flexibility across
varied educational institutions and missions.” (p. 36)
6
Pathways Commission Report
• “If the accounting community continues
to concentrate on the financial
accounting system and not
understanding the technology and
dynamic business processes that run
companies of the 21st century, the
accounting profession has the potential
to become obsolete.” (p. 68) (emphasis
added)
7
The TASK FORCE RECOMMENDATIONS
8
TF Recommendation #1
• The perspective of accounting
education should be reoriented to a
greater focus on curricular requirement
for long-term career demands.
– Demski (2007): "... a vast amount of the curriculum is
arguably aimed at preparing the student for the initial
job ... important, but so are the ones that follow."
– Academic and practitioner sources have cited the
academic need to start building competencies
required for the long-run.
9
TF Recommendation #2
The focus of accounting education
should be broadened to move beyond a
narrow focus on public accounting.
– over 80% of accounting graduates ultimately choose
careers outside of public accounting
– accounting curricula should establish the base of
knowledge and skills needed for career requirements
across a variety of organizations.
10
TF Recommendation #3
• The educational objectives of accounting
curricula today should reflect how
accountants add organizational value
– The way accountants add value within organizations has
evolved and continues to evolve.
– Numerous surveys of financial executives confirm that
accountants today are being asked increasingly to
complement traditional accounting competencies with
broad management competencies that enable them to
collaborate with other managers to improve
organizational performance.
11
Workplace Reality Underlying Expected Competencies
Overarching responsibility of ALL professional accountants is to
ADD values to clients and organizations by all accounting
disciplines:
– Audit
– Tax
– Financial accounting
– Management accounting
– Accounting information systems
– Others
Ways to Add Value
– Have evolved
– Continue to evolve
12
TF Recommendation #4
• The competencies (KSAs) of an
accounting education should emerge
and be developed within the curriculum
as integrated competencies.
– There are many ways to deliver the content;
competencies go beyond traditional "silos."
– The challenge is achieving integration within
and among competencies; we have work to
do.
13
Conceptual Framework of Accounting Education
• These collective recommendations
lead to a plausible proposed
conceptual framework that identifies
the integrated professional
competencies necessary to create
value in the long-run careers for all
accountants.
14
Competency Integration Framework
15
Integration: How Accountants Add Value
Foundational
Broad
Management
Accounting
16
Continuum of Entry-Level and Long-Term Competency
Development and Integration
Examples of
Competency Areas
Preparation for Initial Job
Undergraduate Education
Further Development of Life-Long Competencies
Early Career and/or Additional
Education
Long-Term Career
Integration of Formal
Coursework and
Professional
Development
Grounding in accounting and
business knowledge and
foundational skills
Deeper expertise in area of
chosen career path; increasing
integration across subject matters
and focus on organizational value
Deeper integration across subject
matters; greater focus on ability to
gain new knowledge and skills
over time to enhance
organizational value
Integration of
Accounting and
Broad Business
Knowledge
Limited integration across
accounting and broad business
knowledge
Considerable integration of
accounting and broad business
knowledge
Integrate accounting and broad
business knowledge in highly
uncertain and evolving situations;
develop new ways to apply
business knowledge as an
accounting professional
Integration of
Foundational
Competencies
Develop foundational
competencies for a business
major
Use foundational competencies
to enhance cross-functional work
Use foundational competencies
effectively to anticipate and adapt
to more complex business
situations
17
Levels of Competency Must Be Achieved Sequentially
Knowing
Deeper Knowledge and
More Contextual Complexity
Demonstrate
knowledge in
unambiguous
situations
Identifying Analyzing Prioritizing Anticipating
Identify
ambiguous
problems and
relevant
information
Analyze relevant
information,
viewpoints, and
alternatives
Establish and
apply priorities
for reaching
conclusions
Anticipate and
adapt to changing
conditions
Achieve First
Achieve Second
Achieve Third
Achieve Last
18
Level of Competency Integration
(partial representation of Accounting Competencies)
Accounting Competencies
Accounting
Competency 3
Foundational
Accounting
Competency 2
Competencies
Accounting
Competency 1
Topic A
Topic C
Topic E
Topic F
Topic D
Topic B
Broad Management Competencies
19
Capital Investment Decision-Analysis Example
Accounting Competencies
Foundational
Competencies
Assurance & Internal
Control:
Internal and external
audit implications
Planning, Analysis & Control
Communication
Quantitative
Methods
External Reporting &
Analysis:
Financial statement
preparation & analysis
Screening and
preference decisions
Behavioral issues
Taxation: Compliance
and Planning:
Tax implications
Analytical Thinking
& Problem Solving
Broad Management Competencies
Interpersonal
Technology
Leadership:
Organizational
change
management
Ethics & Social
Responsibility:
Corporate social
responsibilities
Governance, Risk
& Compliance:
Risk assessment
Additional Core
Management
Competencies:
Cost of capital,
Capital structure,
Real-options
analysis
20
Inventory Management Example
Accounting Competencies
Foundational
Competencies
Communication
Communication
Quantitative
Methods
Quantitative
Methods
External Reporting & Analysis:
Inventory
accounting methods
Ratio analysis
Planning, Analysis &
Control:
Strategic performance
measurement
Analytical Thinking
& ProblemThinking
Solving
Analytical
& Problem Solving
Interpersonal
Interpersonal
Technology
Technology
Assurance & Internal
Control:
Internal and external
audit implications
Information Systems:
Documents and data
Flows for inventories
Broad Management Competencies
Ethics & Social
Responsibility:
Global sourcing
decisions
Process
Management &
Improvement:
Lean Production
Governance, Risk
& Compliance:
Managing
inventory risks
Additional Core
Management
Competencies:
Collaborative
supply chain
management
21
Framework for Including Integrated Competency-Based
Learning Objectives with Accounting Curricula
Enterprise Performance Management (EPM)
(Strategy Formulation and Analysis, Planning, and Execution)
A Life -Cycle
Management
Approach
A Value Chain
Management
Approach
A Stakeholder
Management
Approach
A Resource
Management
Approach
A Technology
Management
Approach
Inventory Management
External Reporting & Analysis
LO1
LO2
Other Accounting
Competencies
LO3
LO4
Broad Management
Competencies
LO5
LO6
22
What Can Practitioners Do?
• Practice Partner Action List: How Can I
Help as a Practitioner?
– Obtain and maintain professional
credentials
– Utilize IMA resources
– Participate in IMA activities
– Integrate EPM into your company
23
What Can Practitioners Do?
• Academic Partner Action List: How
Can I Help as an Academic Partner?
– Obtain and maintain professional
credentials
– Involvement in and use of IMA
resources
– Develop a CMA focus on campus
– Participate in national activities
24
Moving Forward
What do you think?
Comments or suggestions are
welcome now.
If you like, please drop a line to:
James Sorensen
jsorense@du.edu
or to
Raef Lawson, Chair of the Task Force
IMA VP-Research & Professor-in-Residence
Rlawson@imanet.org
25