The Development of Accounting Education

The Development of Accounting Education

July 21, 2009 Page 1

Introduction

As part of the full Committee’s document, the Human Capital Subcommittee of the U.S. Department of the Treasury’s Advisory Committee on the Auditing Profession issued a report in the fall of 2008 which included a number of recommendations concerning possible future directions for the education of accountants and auditors. The Committee recommended that the American Institute of CPAs and the American Accounting Association jointly form a body to provide a timely study of the possible future of the higher education structure for the accounting profession. (VI:26)

Thisproject is a direct consequence of that recommendation, and is provided to assist in the deliberations which will enable such a body to act effectively and be informed as to important literature relevant to the topics which would be of importance to the study. The particular language supporting the recommendation states in full:

The Committee heard testimony regarding the feasibility of establishing a free-standing, post-graduate professional educational structure. Currently, there is no post-graduate institutional arrangement dedicated to accounting and auditing. Graduate programs in accounting are generally housed within business schools and linked with undergraduate accounting programs. The history of the development of U.S. educational programs and preparation for accounting careers reveals a pattern of evolution of increasing formal higher education, with accreditation standards following and reinforcing this evolution, and with market needs providing the impetus and context. Today, accrediting agencies have recognized over 150 accounting programs as the result of these programs’ improving accounting education as envisioned by prior studies and reports.

In a November 2006 Vision Statement, the chief executive officers of the principal international auditing networks noted the challenges in educating future auditing professionals, including the sheer quantity and complexity of accounting and auditing standards, rapid technological advancements, and the need for specialized industry knowledge. This development in the market leads to a clear need to anticipate and enhance the human capital elements of the auditing profession. As such, this vision statement provides the impetus to commission a group to study and propose a long-term institutional arrangement for accounting and auditing education.

As in the past, in the face of challenges of the changing environment for the profession, the Committee believes that the educational system should thoughtfully consider the feasibility of a visionary educational model. Therefore, the Committee recommends that the AICPA and the AAA jointly form a body to provide a timely study of the possible future of the higher education structure for the accounting profession. This commission may include representation from higher education, practitioners from the wide spectrum of the accounting and auditing profession, regulators, preparers, users of the profession’s services, and others. The commission would consider the potential role of a postgraduate professional school model to enhance the quality and sustainability of a vibrant accounting and auditing profession. The commission should consider developments in accounting standards and their application, auditing needs, regulatory framework, globalization, the international pool of candidates, and technology. Finally, a blueprint for this sort of enhanced professional educational structure would also require the consideration of long-term market circumstances, academic governance, operations, programs, funding and resources, the role of accreditation, and experiential learning processes.

The following document identifies key sources of guidance, regarding professional schools of accountancy found in the professional literature since the mid-1950s, provides highlights of the material covered by each reference (including major recommendations and suggestions, if applicable), and gives sufficient bibliographic detail for those who are interested to obtain the reference for further reading. The work product is not intended to guide or direct discussions, but to summarize the background material so that all parties to the discussions can work from a common body of references. Productive discussion will be facilitated if all participants have access to the historical context of where we are in accounting education and how we got here.

The publication of Horizons for a Profession, by Robert H. Roy and James H. MacNeill in 1967, is used as the starting point for the discussion. A summary of Horizons is included as the first section in this document. Other relevant major publications summarized in this document include the Perry report (1956), the Beamer report (1969), the Bedford report (1986), and the activities and recommendations of the Accounting Education Change Committee (1990). Following those summaries, selected additional comments are presented (in chronological order) to provide additional background and context for the debate concerning professional accounting education.

This document is intended to provide a basis for discussion, and to assist participants in understanding the historical context of significant developments in accounting education over approximately the last half-century. Sidney Davidson, in a 1977 presentation at the Arthur Young Professors’ Roundtable entitled “Roy and MacNeill Plus 10”, categorized the Horizons recommendations as Conceptual, Practical, Professional School, Humanities, and Mathematics. The basic Davidson framework is used to structure the summaries of the observations and comments in the other articles and publications reviewed for this project, and is the inspiration for the subtitles used in the summaries presented below.

While a diligent search was made for relevant publications, there can be no guarantee that all such publications were identified or that the summary comments presented herein reflect all the information necessary to capture all the relevant insights from the various authors. A full bibliography is also included to assist readers who would like to appreciate the references in their entirety.

Contents

Introduction 1

Roy, Robert H. and James H. MacNeill (1967), Horizons for a Profession 13

Introduction to Horizons 13

Definition of the Beginning CPA 14

Criteria for a profession 14

Evolution of Professional Schools 15

Research 15

Perspectives 16

The Common Body of Knowledge 16

Accounting 16

Computer 17

Humanities 17

Economics 17

Behavioral Science 18

Law 18

Mathematics, Statistics, Probability 18

Functional Fields of Business 18

Commission on Standards “Perry Report” (1956), Standards of Education and Experience for Certified Public Accountants 19

Purpose 19

Need for Graduate Education 20

AICPA Committee on Education and Experience Requirements “Beamer Report” (1969), Report of the Committee on Education and Experience Requirements for CPAs 20

Objectives 20

Education vs. Experience 21

Resolutions of Council 21

AAA Future Committee “Bedford Report” (1986), Future Accounting Education: Preparing for the Expanding Profession 21

Introduction to Bedford Report 22

Core Recommendations 22

Background and Context 22

Features of the Expanding Profession 22

Current State of Accounting Education 23

Accounting and the University at Large 23

The Future Scope, Content, and Structure of Accounting Education 23

General Education 24

General Professional Accounting Education 24

Specialized Professional Accounting Education 24

Research and Doctoral Education 25

Educational Recommendations 25

Scope and Content 25

Structure 25

Administration 26

Accreditation 26

Professional examinations 26

Accounting Education Change Commission (1990) 27

Introduction to AECC 27

Background 27

Initial Direction 28

AECC Task Forces 29

Position Statement No. One. Objectives of Education for Accountants 32

Issues Statement No. Five, Evaluating and Rewarding Effective Teaching 33

Learning to Learn 34

Resistance to Change 35

Overcoming Resistance to Change 36

Grant Program Limitations 37

Licensing Requirements 38

NASBA (2008) DRAFT Education and Licensure Requirements for Certified Public Accountants 38

Allen, Bruce C. and Jeannie Tindel (2009) California150-Hour Legislation moves through the Process 38

Demographic Concerns: Supply and Demand for Accounting Students and Accounting Faculty 39

Reigle, Dennis R, Heather L. Bunning and Danielle Grant (2008) Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits 39

Supply – Enrollment 39

Supply – Graduates 39

Demand – Hiring 40

CPA Exam 41

Plumlee, R. David, Steven J. Kachelmeier, Silvia A. Madeo, Jamie H. Pratt, and George Krull (2006) Assessing the Shortage of Accounting Faculty 41

Leslie, David W. (2008) Accounting Faculty in U.S. Colleges and Universities: Status and Trends, 1993 – 2004 41

Comments and Observations from the Professional Literature – Chronological Selection 43

1956 43

Smith, C. Aubrey (1956) The Next Step -- A Professional School of Accounting, The Accounting Review 43

1961 43

Anderson, Wilton T. (1961) Education & Professional Training, Journal of Accountancy 43

Trueblood, Robert M. (1961) Education for a changing profession - a challenge, Speech given to the Pennsylvania Institute of CPAs 44

1963 45

Roy, Robert H. and James H. MacNeill (1963) A Report of Plans and Progress: Study of the Common Body of Knowledge for CPAs, Journal of Accountancy 45

1964 46

Trueblood, Robert M., Norton M. Bedford, Malcolm M. Devore and David F. Linowes (1964) Profile of the Profession: 1975 From the Viewpoint of Three Practitioners, Long-Range Objectives Committee, AICPA 46

1965 46

Lynn, Edward S. (1965) Professional School of Accountancy, Journal of Accountancy 46

Most, Kenneth (1965) Education & Professional Training, Journal of Accountancy 46

1966 47

Carey, John L. and William O. Doherty (1966), Ethical Standards of the Accounting Profession 47

1967 48

Trueblood, Robert M. (1967) After 20 Years, Talk given at the Touche Ross Partners Meeting 48

1968 48

Beamer, Elmer G. (Chairman) (1968) Academic Preparation for Professional Accounting Careers, Journal of Accountancy 48

Ford, Gordon, Walter F. Beran, John C. Burton, et al. (AICPA Planning Committee) (1968) Education of Certified Public Accountants, Journal of Accountancy 49

Madden, Donald L. and Lawrence C. Phillips (1968) An Evaluation of the Common Body of Knowledge Study and Its Probable Impact Upon the Accounting Profession, Journal of Accountancy 49

1969 50

Bruschi, William C. (1969) Issues Surrounding Qualifying Experience Requirements, Journal of Accountancy 50

Hart, Donald J. (1969) An Outsider Looks at the Accounting Curriculum, Journal of Accountancy 50

Williams, Doyle Z. (1969) Reactions to "Horizons for a Profession", Journal of Accountancy 50

1970 51

Buckley, John W. (1970) A Perspective on Professional Accounting Education, Journal of Accountancy 51

MacNeill, James H. (1970) A Readback on 'Horizons for a Profession', Journal of Accountancy 51

Trueblood, Robert M. (1970) Rising Expectations, Journal of Accountancy 52

1971 52

Burton, John C. (1971) An Educator Views the Accounting Profession, Journal of Accountancy 52

1972 53

AAA Committee Report (1972) Report of the Committee to Examine the 1969 Report of the AICPA Committee on Education and Experience Requirements for CPAs, The Accounting Review 53

Chambers, R. J. (1972) The Anguish of Accountants, Journal of Accountancy 53

1973 53

Sterling, Robert R. (1973) Accounting Research, Education, and Practice, Journal of Accountancy 53

1974 54

Mautz, Robert K. (1974) Where Do We Go From Here?, The Accounting Review 54

Summers, Edward L. (1974) Accounting Education's New Horizons, Journal of Accountancy 54

1975 56

Burton, John C. (1975) The Need for Professional Accounting Education, Schools of Accountancy: A Look at the Issues 56

Cleveland, Gerald L. (1975) The Future of the Accounting Curriculum in a College of Business Administration, Researching the Accounting Curriculum: Strategies for Change 56

Edwards, James Don (1975) The Future of the Accounting Curriculum in a College of Business Administration, Researching the Accounting Curriculum: Strategies for Change 57

Kozmetsky, George (1975) Professional Accounting Education: Implementation Issues, Schools of Accountancy: A Look at the Issues 58

Lamden, Charles W. (1975) The Future of the Accounting Curriculum in a College of Business Administration, Researching the Accounting Curriculum: Strategies for Change 58

Mautz, Robert K. (1975) The Case for Professional Education in Accounting, Schools of Accountancy: A Look at the Issues 59

Sterling, Robert R. (1975) Professional Schools of Accounting: Some Academic Questions, Schools of Accountancy: A Look at the Issues 60

Summers, Edward L. (1975) Comments on "Professional Schools of Accounting: Some Academic Questions", Schools of Accountancy: A Look at the Issues 60

Zimmerman, Vernon K. (1975) The Future of the Accounting Curriculum in a College of Business Administration, Researching the Accounting Curriculum: Strategies for Change 60

1976 61

Cohen, Manuel F. (Chairman) (1976) Defining the Role and Responsibilities of Independent Auditors -- A Progress Report to Council, The "Cohen Commission Report" 61

Larson, Kermit D. (1976) Schools of Accountancy: What Should Be Their Objectives?, Professionalization of the Accountancy Curriculum 62

Metcalf, Lee (Chairman) (1976) The Accounting Establishment -- A Staff Study, The "Metcalf Report" 63

Young, J. Nelson (1976) The Professional Law School Program: Some Perspectives for Professional Accounting Education, Professionalization of the Accountancy Curriculum 63

1977 64

Bedford, Norton M. (1977) Synopsis of Discussion of "Professional Programs and Schools of Accountancy", AY Professors Roundtable 64

Bremser, Wayne G., Vincent C. Brenner, and Paul E. Dascher. (1977) The Feasibility of Professional Schools: An Empirical Study, The Accounting Review 64

Carrington, Athol S. (1977) What We Can Learn from Other Countries and Other Professions, AY Professors Roundtable 65

Cohen, Manuel F. (1977) The Work of the Commission on Auditors' Responsibility , Cohen Commission Report 65

Cohen, Manuel F. (Chairman) (1977) Testimony on Accounting and Auditing Practices and Procedures, Hearings before the Subcommittee on Reports, Accounting and Management of the Committee on Governmental Affairs, United States Senate (the "Metcalf Hearings" 65

Davidson, Sidney (1977) Roy and MacNeill Plus 10, AY Professors Roundtable 67

Gleim, Irvin N. (1977) Letter re: Professional Schools of Accounting, Hearings before the Subcommittee on Reports, Accounting and Management of the Committee on Governmental Affairs, United States Senate (the "Metcalf Hearings") 67

Kanaga, William S. (1977) The Accounting Establishment: Oversight or Overstatement?, AY Professors Roundtable 67

MacNeill, James H. (1977) Discussion of "Roy and MacNeill Plus 10", AY Professors Roundtable 68

Percy, Charles F. (1977) Opening Statement, Hearings before the Subcommittee on Reports, Accounting and Management of the Committee on Governmental Affairs, United States Senate (the "Metcalf Hearings" 68

Skousen, K. Fred (1977) Professional Programs and Schools of Accountancy, AY Professors Roundtable 69

Skousen, K. Fred (1977) Accounting Education: The New Professionalism, Journal of Accountancy 69

Solomons, David (1977) Professional Certification, AY Professors Roundtable 70

Weckstein, Donald T. (1977) Discussion of "What We Can Learn from Other Countries and Other Professions, AY Professors Roundtable 71