accounting practice in the new millennium is accounting education ready to meet the challenge 2003...

7/26/2019 Accounting Practice in the New Millennium is Accounting Education Ready to Meet the Challenge 2003 the British

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Accounting practice in the new millennium: isaccounting education ready to meet the challenge?q

Bryan Howieson*

School of Accounting and Information Systems, University of South Australia, GPO Box 2471,

Adelaide, Australia

Received 1 May 2002; revised 24 January 2003; accepted 24 January 2003

Abstract

As the new century and millennium get underway it is appropriate to reflect upon, and plan for,

expected changes in accounting practice and the implications of these changes for accounting

education. This paper covers three broad topics. These are:

thefuture of business andaccountingpracticea brief reviewof thepredictionsabout howwe will

do businessin thenew century seems a necessaryprecursor to a discussion of changesin education;

in the light of expected changes in business, what skills will be required by the accountants of the

future?; and

what are the implications for accounting education?

Expected trends in business practice and the necessary skill set of accountants are reviewed in the

light of recent literature from the United Kingdom, United States and Australia. These trends suggest

that so-called compliance work will form a diminished portion of accounting firms revenues as

technology means that even small businesses become more empowered with respect to their record-

keeping needs. On the other hand, the main growth areas of accounting practice appear to lie in the

fields of business advisory services. As such, future accountants will take on the role of knowledge

workers. Although a command of technology will be an important component of an accountants skill

set, of more significance will be skills in analysis, innovative problem solving, communication and

client relations.

0890-8389/03/$ - see front matter q 2003 Elsevier Science Ltd. All rights reserved.

doi:10.1016/S0890-8389(03)00004-0

The British Accounting Review 35 (2003) 69103www.elsevier.com/locate/jnlabr/ybare

q Earlier versions of this paper were presented to the 1999 Australasian Conference of PKF Partners (1999) and

to staff at the Universities of Western Australia, Southern Queensland, South Australia, and Aveiro (Portugal) as

well as the 2001 Annual Conference of the British Accounting Association. Bryan Howieson thanks the

participants at these forums for their helpful feedback and suggestions. He also gratefully acknowledge the

insightful comments of two anonymous referees.* Tel.: 61-8-8302-0781; fax: 61-8-8302-0992.

E-mail address:[email protected] (B. Howieson).
http://www.elsevier.com/locate/jnlabr/ybarehttp://www.elsevier.com/locate/jnlabr/ybare


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Accounting educators need to anticipate the expected shift in accountants skills and develop

courses and teaching methods that are far more interdisciplinary and analytical in their orientation.

This paper explores some ways in which this might be achieved andsomeof thechallenges to effectingchange in accounting education that will have to be overcome.

q 2003 Elsevier Science Ltd. All rights reserved.

Keywords: Accounting practice; Accounting education; Knowledge

1. Introduction

The arrival of a new century and millennium is a time for taking stock and reflection.

In the field of accounting education, this desire for introspection is given greater urgency

by the significant changes that technology is already imposing on business practices and

the need to reconsider the role of accounting practitioners as business changes. This paper

seeks to help generate debate between accounting educators as to what might be the

implications of these expected changes for universities and other educational institutions.

As such, the paper covers three broad topics:

the future of business and accounting practicea review of the predictions about how

we will do business in the new century seems a necessary precursor to a discussion of

changes in education;

in the light of expected changes in business, what skills will be required by the

accountant of the 21st century?; and

what are the implications for accounting education?

Before beginning these topics, it should be noted that most serious forecasters of the

future for business have limited their outlook to the next 20 years or so and this paper does

the same. Further, although the primary focus of this paper is a consideration of how the

education of future accountants might respond to the expected restructuring of the

accounting profession, it is not predicated on a view that universities are simply training

grounds for professionals. The exact opposite position is adopted here. Elliott and

Jacobson (2002), for instance, describe how life-skills necessary for success and existence

change over time as environmental and economic conditions change. Universities are

ideally placed, if they are so inclined, to offer the sorts of generic, life-long learning skills

that will be essential for success in a world of rapid change. The sorts of educational

approaches explored later in this paper are designed to leverage the strengths of atraditional university education and simply contextualise these strengths in the type of

environment future accountants are likely to encounter.

2. The future of business and accounting practice

Although the futurist pundits may differ on some of their specific predictions about how

business will be transformed over the next 20 years, there has been general agreement that

B. Howieson / The British Accounting Review 35 (2003) 6910370


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the way we do business is likely to be subject to widespread and significant change. Of

course, change is not a new phenomenon for accountants. Parker (2001), for instance,

describes the restructuring in the accounting profession that has occurred over the last 100years, whileElliott and Jacobson (2002)broadly review historical trends that describe the

emergence of the knowledge professional. However, at the start of this century many

commentators (as described below) expected that the changes would not only be major in a

structural sense, but also that change would occur at a quicker rate than before. Not

surprisingly, the major drivers of these forces of change are the expected growth and

flexibility of communications and business technology and a belief that this will result in a

more globalised business environment.1 Of course, more recent events such as the

September 11 terrorist attack and the major corporate accounting scandals in the US and

elsewhere suggest that such growth will be subject to constraints and setbacks.

Nevertheless, we might ask what are the implications for accountants of these changes?

A number of relevant surveys and interviews of accounting practitioners and eminent

business people have been conducted in recent years. These include, but are not limited to:

the Institute of Chartered Accountants in England and Wales (ICAEW) (1996) (the

report of the2005 Working Party);

the Institute of Chartered Accountants in Australia (ICAA) (1998a) (a survey of 18

selected Australian business people representing a wide cross-section of expertise);

ICAA (1998b)(a series of interviews with 28 of Australias chief executive officers and

chief financial officers);

theInstitute of Management Accountants (IMA) (1999)(a survey of the changes in the

work and organisational role of American management accountants);

Albrecht and Sack (2000)(a wide ranging review of educators, professionals and others

on the state of accounting education in the US); and ICAA (2001)(a survey of 46 selected Australian business people representing a wide

cross-section of expertise).

Although the findings of this material are bullish in sentiment, they do provide a

useful starting point for our predictions of the future. Each of the documents may

use somewhat different terms but there is considerable commonality between them in

what they identify as the major forces of change. These can be summarised as (ICAA,

1998a, p. 2):

an escalation in the pace and extent of change itself-there will be a need for

employers and employees to be able to anticipate and manage change; demographic changes, population movement and growthaging populations in

industrialised countries and increasing participation by women in the workforce will

change workers expectations about how work is performed. In the non-industrialised

1 In their review of accounting education on behalf of the American Accounting Association and other

interested parties, Albrecht and Sack, (2000, p. 6)also include a third source of change, namely the concentration

of power in certain market investors, primarily large mutual and pension funds. Their argument is that the rise of

powerful investors means that business is now more accountable than ever before. A similar theme is explored

later in this paper.

B. Howieson / The British Accounting Review 35 (2003) 69103 71


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world, it is expected that the issue of the control of the size of the population will need

to be addressed;

developments in technology, particularly communications and ITexpected changeswill allow business and consumers real time access to more and new types of

information. New technologies should improve the ability of small and medium sized

businesses to access global markets;

with the changes in technology, all businesses may face increasing competition due to

the globalisation of businessin its interviews with Chief Financial Officers, theICAA

(1998b, p. 4)notes, Factories and production centres can now be located in the most

advantageous countries. Shared service centres are moving jobs away from some

countries into others. With the ability to communicate instantly, to fly to almost

anywhere in the world within 24 hours and to be able to transport goods quickly and

economically, the actual location of the facilities is almost irrelevant in many cases.

These forces mean that strategic alliances with other organisations may becomeincreasingly prevalent;

the focus on knowledge capital and the growing importance of intellectual property

rapid change and increased competition will mean that innovation in products and

services is likely to confer competitive advantage. The greater access to information

(and the resulting information overload) will increase the demand for effective

methods of sorting and screening information (ICAA, 1998a, p. 21). The growing

importance of knowledge capital is likely to continue the trend away from a focus on

profit towards the maximisation of shareholder value (with more attention being

paid to non-financial measures of performance) (ICAA, 1998b, p. 5). Globalisation is

not limited to the effects of technology. For instance, the announcements by the

European Union and Australia to adopt International Financial Reporting Standards by

1 January 2005 and New Zealands similar adoption by 2007 signal the start of theremoval of one of the frictions to the global flow of finance;

changing expectations of stakeholderschanges in technology and demography are

likely to result in a more informed set of stakeholders who will demand more

accountability from business, both financially and non-financially. The growing

movement towards triple bottom line reporting is one example (see, for instance,

Elkington, 1999). The fallout from Enron and other corporate scandals has also raised

stakeholders expectations about auditor independence which will have implications

for how public accounting firms provide both audit and non-audit services; and

the increasing importance of human resources managementall of the factors listed

above are likely to mean a more mobile and independent workforce. Issues like loyalty

and career development will increasingly be in the hands of the top so-called goldcollar knowledge workers rather than employers.

All of these factors are interrelated and, to a large extent, all are driven by current and

expected advancements in communication and data management technology. However,

more recent events would suggest that these forces of change are likely to be more muted

in the short to medium term than first anticipated in the various surveys. For instance,

globalisation of business has generated resistance from some groups for reasons such as its

impact on low-qualified workers in developed countries, the impact on national trade



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unions, perceived threats to national sovereignty, and environmental sustainability

(Siebert and Klodt, 2001). Further, the events of September 11, 2001 have highlighted

a new level of political risks that restrain the practicality of some aspects of globalisedbusiness such as relocating activities to other countries (ICAA, 2001).2 More recently, the

events surrounding the accounting improprieties of Enron,3 WorldCom, Tyco Inter-

national, and others are currently requiring all accounting firms to reassess the manner and

mechanisms by which they can react to the sources of change noted above. The new

Sarbanes-Oxley Act in the US that restricts the ability of accounting firms to offer non-

audit services to audit clients is a clear demonstration of how regulation modifies the

relative level of influence of the different drivers of change.

Nevertheless, the underlying tenor of the evolution of the business environment

described in the reports above suggests a number of structural changes that will make

some aspects of business easier and cheaper. Many commentators expect these forces to

redefine the relationship between clients and professional experts because more powerfultechnology will empower clients to take a bigger role in managing their own affairs. As a

result, although many of the sort of services that accountants have traditionally provided

will still be demanded (for example, records still need to be kept and audited), more

businesses will be able to perform many of these procedural tasks themselves or outsource

them to a growing number of competitors to accountants. We have already witnessed

the start of this trend where compliance services such as audit and tax have begun to be a

diminishing part of an accounting firms revenue base relative to so-called management

services work.4 The way in which this trend unfolds in the future has now become more

problematic in the light of the restrictions placed on non-audit services by the Sarbanes-

Oxley Act. However, it is clear that clients will continue to demand the non-audit services

and accountants will need to explore new ways in which they can meet these demands(see, for example,Currie, 2002; Ham, 2002).

All of the above factors suggest that the major products of the early 21st century

may not be physical goods or even many existing services but rather knowledge and

the ability to manage knowledge. These days people talk, not of an information age

but rather of moving into a so-called knowledge age. Knowledge as a commodity

will significantly alter the way clients operate and in turn change the type of product

professionals have to offer and how they offer it. It will also create new ethical

challenges because, as the adage goes, knowledge is power. Many commentators see

the knowledge age as a catalyst for an explosion in business growth but it also has

the potential to, inter alia, stifle competition as businesses and professionals act to

protect their valuable intellectual capital.

2 At the time of writing, there was also the possibility of a war in Iraq.3 An excellent review of the accounting practices adopted by Enron, for instance, can be found in Benston and

Hartgraves (2002).4 In the context of the US, Albrecht and Sack (2000, p. 12) cite evidence about these relative changes in

accounting services. They note: In 1993, the Big 5 firms accounting and auditing services averaged 51%

of total fees; tax services were 22%; and consulting and other services accounting for 27%. By 1999,

accounting and auditing had slipped to 33% of total fees, tax was 18% and consulting and other services

had grown to an average of 49% of firms fees.



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Building on the forces for change identified previously, we can consider what might be

some of the structural and operational changes for accountants and their clients.

2.1. Clients

The various reports described earlier suggest that advancements in communications and

e-commerce mean that all businesses could potentially face a global marketplace, a number

of commentators have called this virtual business. This potentially presents more business

opportunities for firms but it also increases the competition that any particular firm must

face (not to mention the complexities of doing business in a larger market). To compete in

such a market, firms will need to be constantly innovative in the products and services they

provide. In the reportVision 2010: Designing Tomorrows Organization5 it is predicted that

the change to a virtual business environment will mean that companies must concentrate

on their core competencies (Epstein, 1998, p. 9) and jettison all non-core activities suchthat the company of the future will be a lean organization drawing on a network of external

relationships (Epstein, 1998, p. 8). If firms must focus on their core competitive

advantage, then it is predicted that there will be a major growth in outsourcing and joint

ventures, particularly internationally. Indeed, it has been reported (Epstein, 1998, p. 9) that

in 1995, the Institute for the Future in Menlo Park, California, found that the number of

international joint ventures had grown 25% a year since 1990. Australian chief financial

officers have stated that Strategic alliances are becoming more common as specialist

businesses seek to gain synergies with other businesses (ICAA, 1998b, p. 5).

For small to medium businesses,Gottliebsen (1998)predicts that the rapid changes in

the business environment will create a short-term crisis that many firms will not survive.

However, he predicts that those that do emerge will have completely transformed their

systems and will be much more professionally managed. They will no longer need

accountants to process their cheque butts and make adjustments in June to save them tax

(Gottliebsen, 1998, p. 17). Others believe that there should be a trend for more and more

small businesses. This is because it is becoming increasingly easier and cheaper to start a

business, especially online (Thompson, 1998, p. 20).

Recent experience suggests that this initial enthusiasm for virtual business is perhaps

premature. On the one hand, internet-business (I-business) remains unproven, a segment

epitomized by the still-as-yet-unprofitable Amazon.com and Ebay. Few retail pure

I-business ventures show profits at this time, less than 1% as reported by the US

Department of Commerce (Nemzow, 2000). One of the reasons for the lack of success

in the I-business sector may be that comparative price information is so easily obtainable

in this market that retailers are forced to be price takers by the resulting high levels ofcompetition. On the other hand, the success story in electronic-business (E-business)

would seem to be businesses use of electronic data interchange (EDI). It has been reported

that business-to-business communications and transaction processing represents more

than 99.9% of all E-business transactions. In contrast, greater than 90% of E-business is

EDI, which is unlikely to vanish (Nemzow (2000)). The growth in EDI is at least

5 Prepared jointly by the Economist Intelligence Unit and Andersen Consulting (as it was then called. See

footnote 6).



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consistent with the view that firms are streamlining their business processes and

information systems which can lead to more relevant and timely information for

managerial decision-making, inventory control, faster transaction processing, and othervalue adding activities.

Overall, there seems to be general agreement that technological improvements in data

management will mean that the average business person will become more sophisticated

and educated and thus more self-reliant than at present. One American social

anthropologist, Jennifer James, has stated The more society pushes complexity, the

more homo sapiens will push back and take back autonomy (quoted in Keeva, 1998,

p. 82). She notes that professions like lawyers and doctors in the US have felt the effects of

a self-help craze where, for instance, medical self-care has reached the point that it is

possible to buy a home-model heart defibrillator (Keeva, 1998, p. 82). Just as consumers

are now more willing to question a doctors diagnosis and demand a second opinion,

business people are being equipped with technology that allows them to keep their own

accounts and monitor their own affairs. AsAlbrecht and Sack (2000, p. 6) have noted, the

forces of change have eliminated the old model that assumed information is expensive.

Today anyone, armed with the right software, can be an accountant and produce financial

information. The problem for the businessperson then becomes what to do with all the

information and how to avoid information overload. The opportunity for the accounting

professional is to add value to the client/employer by analysing and interpreting that

information and providing recommendations for appropriate courses of action.

2.2. Accounting practitioners

What do all these changes to the business environment mean for accounting

practitioners?Accountants must be proactive. It has been noted that there are no monopolies on

business advice (Keeva, 1998) and accountants must compete with other existing and

emerging advisory professionals. With more self-reliant clients who are focussed on their

core business activities, accounting practices will have to become more multi-disciplinary.

(This is discussed further below.) In the context of small accounting firms, Gottliebsen,

(1998, p. 17) warns that they will need to invest in the latest technology and have a better

knowledge base. If they fail to do so, they too will disappear along with the clients that did

not adapt.

There is much, however, about these expected changes in the business environment that

is very positive for accounting practitioners. If knowledge is the commodity of the future,

then accountants are ideally placed to seize the opportunity to be the main player in thiscommodity. After all, accounting has always been an information system designed to

collate, analyse and disseminate knowledge in a way that is useful to various decision

makers. Knowledge management is the raison detre of accounting. The trick for

accounting practitioners will be, in the language of BarryJones (1999), how to turn this

comparative advantage into a competitive advantage. In a world of intense competition

accountants will need to effectively position themselves as the gurus of knowledge

management by thinking globally and in a way that provides clients with value added

services. To demonstrate the latter, accountants must reinvent themselves to clients as



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being in the ideas and advocacy business rather than in the compliance business (Jones,

1999). One possible direction in which accounting services might further develop is that of

analysing risk.Albrecht and Sack (2000, p. 9)have noted that the increasing complexityand uncertainty of the business world has given rise to new types of professional services

focusing on understanding risk. Although many people expect the demand for audit

services to decrease because an audit is a commodity that adds little future value, this

increase in risk may create an even higher demand for audit-type services in the future.

More generally, knowledge management is described byParker (2001, p. 437)as a

continuous process of creating, capturing, storing, sharing and redistributing knowledge

that can enhance organizational performance. The key concept here is not merely the

structuring of a data system, but rather a question of how can information be used within

an organisation to add value to its activities by identifying strengths and weaknesses and

improving business processes. TheIMA (1999, pp. 45, 7)views knowledge management

as a transformation of management accountants from scorekeepers to business partners

with the result that these accountants spend the bulk of their time as internal consultants

or business analysts performing tasks such as strategic planning, internal consulting,

process improvement, and performance evaluation. In a similar vein, theICAA (2001,

p.11) has operationalised knowledge management in terms of activity based manage-

ment methods such as strategic cost management (including activity based costing and

value chain analysis), analysis of those product/service attributes most valued by

customers, customer profitability analysis, and the evaluation of the profitability of alter-

native sales and delivery channels. Accountants have a competitive advantage in know-

ledge management relative to many other professionals because they tend to understand

the interrelationships between different segments of a business (ICAA, 2001, p. 8).

Another opportunity for accountants comes from the expected outsourcing of

organisations non-core activities. In commenting upon theVision 2010report, AndersenConsulting6 partner Wayne Furphy noted (quoted inRyan, 1998, p. 28):

Theres a fair investment in the skilling up of people. Any service, which is not

customer-related, could be outsourced. This includes financial management, human

resources, IT management, legal services, procurement and back office processing.

The processing of information typically takes 75% of employee effort and this

aspect is suited to outsourcing to obtain available efficiencies. The remaining 25%

consists of effectiveness and interpretation, which typically is insourced. Manage-

ment focuses substantially on the interpretation of information for executive

decision making.

Accountants have an opportunity to significantly capture this growing outsourcing

market but to do so they will need to reconsider their structure and the services they

provide. To speak of the accounting firm of the future is probably a misnomer because

the expectation is that clients will want all their needs both locally and internationally to be

met by one set of professionals, the so-called one-stop professional shop! This one-stop

shop will have to be multi-disciplinary if it is to meet the complete needs of a business. As

6 Andersen Consulting changed its name to Accenture in 2000.



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mentioned previously, that means that accountants must re-model themselves beyond their

traditional boundaries and create alliances with a wide variety of professionals such as

lawyers, architects, actuaries and engineers.7

This re-modelling will bring problems too ofcourse. For example, as discussed shortly, there are ethical considerations associated with

the ethical principle of independence when accountants become primarily business

advisers.8 For the larger accounting firms that are already global or enjoy international

associations this process of transformation will be aided by economies of scale. Again,

these accounting firms enjoy a competitive advantage that may make them the dominant

partner in such one-stop shops. As the futurist John Naisbitt has said at a conference of

American lawyers (quoted inKeeva, 1998, p. 81), Theres a good reason for mergers with

accounting firms. Theyre everywhere, and law firms will increasingly need people in key

cities. Smaller and local accounting firms may only achieve survival and growth if they

are prepared to lose some autonomy and become franchisees in a professional shop

network. This is already underway in the US, for instance, where companies such asAmerican Express, Merrill Lynch and Oppenheimer are purchasing individual accounting

(and other professional) practices across the country and creating a professional services

franchise network (Melancon, 1998). The Chairman of the Australian Society of Certified

Practising Accountants9 (ASCPA) National Public Practice Committee, Mr Rob

McAdam, has been reported to have recommended that small accounting practices

should consider the following responses to this sort of consolidation and the other changes

discussed previously (seeArmstrong, 1999, p. 41):

enhancing and diversifying the skills set of practitioners

increasing the strength of internal and external networks

increasing the use of technology

ensuring that there is a structured marketing and promotions program for

practitioners

reinforce the CPA brand. Presumably a similar claim can be made for other

professional designations.

These general expectations that accounting firms will become one-stop shops have

recently suffered a hiccup due to the fallout in the US from the accounting and auditing

improprieties exposed in corporations such as Enron and others. Not only was one of

7 Clegg (1999a)notes that these multi-disciplinary dimensions to accounting practices are underway already.

With respect to the Big Five accounting firms he states that Many of the recent appointments are not even

qualified accountants. They are lawyers and IT wizards, management gurus and change consultants, merger

experts and human resource planners.8 These ethical issues are starting to emerge. For instance, Durie (1999)reported that a proposal by KPMG in

the US to float its consulting division in association with the network equipment company Cisco Systems was put

on hold by the Securities and Exchange Commission (SEC). The SEC was concerned that such alliances create

the potential for significant conflicts of interest between the audit and consultancy divisions. This proposed

merger has since provoked a sometimes bitter debate between the SEC and large accounting firms over

independence issues. These sorts of conflicts have now been superseded in the US by the requirements of section

201 of the Sarbanes-Oxley Act which forbids a registered public accounting firm from providing any non-audit

services contemporaneously with audit services to the same client.9 The ASCPA has since changed its name to CPA Australia.



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the Big Five accounting firms, Arthur Andersen, erased world-wide in a matter of weeks

but the ability of the remaining Big Four firms to simultaneously offer audit and non-

audit services to the same client has been severely curtailed by section 201 of theSarbanes-Oxley Act. As noted earlier, subject to some very limited exceptions, a registered

public accounting firm cannot contemporaneously provide audit services and:

1. bookkeeping or other services related to the accounting records or financial statements

of the audit client;

2. financial information systems design and implementation;

3. appraisal or valuation services, fairness opinions, or contribution-in-kind reports;

4. actuarial services;

5. internal audit outsourcing services;

6. management functions or human resources;

7. broker or dealer, investment adviser, or investment banking services;8. legal services and expert services unrelated to the audit; and

9. any other service that the [Public Company Accounting Oversight] Board determines,

by regulation, is impermissible.

The impact of this prohibition is far more wide-ranging than might at first be

appreciated. Although it is a piece of US Federal legislation, there are widespread

concerns that its provisions might be more widely imposed in the US by being replicated

by various State legislators (see Partners Report, 2002; Sachdev, 2002). More

importantly, there are worldwide repercussions because section 106 of the Act requires

foreign public accounting firms who audit a US corporation to register with the Public

Company Accounting Oversight Board and so be subject to the provisions of the

Sarbanes-Oxley Actand the regulations of the Board!At the time of writing the ramifications of this legislation for the structure and conduct

of accounting practices have yet to unfold. At one extreme, accounting firms were being

starkly exhorted to choose between the audit and the consulting work (Partners Report,

2002). The president of the American Institute of Certified Practicing Accountants

(AICPA) was reported to have predicted that as many as two-thirds of the approximately

800 [US] firms that audit public companies will forgo that business in the next two years

(Sachdev, 2002) due to concerns about the increased regulatory environment. In reality,

although Sarbanes-Oxleymay have speeded up the process, the separation between audit

and consulting divisions was already underway in some accounting firms (see endnote 8

andHam, 2002). Auditor independence is clearly important to all stakeholders (including

accountants) but in the medium to long-term the demands for accountants consulting andknowledge-based services are unlikely to diminish. There are a number of reasons for this

expectation. One of the strongest is simply that the general forces for change discussed

earlier have not gone away as a result of Enron. Clients continue to need the sorts of skills

that accountants have and that strong demand may well mean some compromise between

independence and consulting services will emerge (see, for instance,Currie, 2002; Ham,

2002; Marcus, 2002). It seems likely that in the short-run firms will now have difficulty

using audit services as a vehicle for selling non-audit services but this could even be at the

expense of additional costs to clients.Marcus (2002)has argued that there are efficiencies



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that can be achieved from the conduct of both audit and non-audit services because the

knowledge obtained and the improvements made to a clients systems from one of these

types of services can assist in the conduct of the other service thus reducing overall costs.Another reason to expect that audit firms will be reluctant to withdraw entirely from non-

audit services is because the latter are lucrative (Ham, 2002)!

Although there are clearly incentives for firms offering audit services to have some

involvement in non-audit services, the mechanism by which this might be achieved, if at

all, remains to be seen. It may be that accounting firms separate their audit and consulting

divisions and, perhaps, treat their old consulting division as a preferred supplier (Ham,

2002, p. 57) or non-audit services may become the primary focus of regional and specialist

boutique accounting firms (Kelcher, 2002) with whom audit based firms may form

alliances or partnerships. Nevertheless, the key point remains that although the mechanism

by which accountants deliver non-audit services may change, these services will remain an

important, if not growing, component of the work of many accountants.There are many other matters relating to the future of the accounting profession that

could be mentioned if space allowed. For example, as business becomes virtual and

borderless, what does the future hold for our professional accounting associations and their

accreditation requirements for both local and overseas accountants (see, for instance,

Wells, 1994)10 Although many national accounting associations have been exploring ways

of implementing cross-accreditation, these proposed changes have met with some

resistance. For instance, the AICPA had proposed a change in its bylaws that would have

allowed the granting of an interdisciplinary global credential by an affiliated entity to

qualified persons who seek to obtain it. The global credential was to be offered by a new

organisation entitled the International Institute of Strategic Business Professionals. In a

vote by approximately 134,000 of the AICPAs members in December 2001 the proposalwas defeated when 62.7% of the voters opposed it (AICPA, 2002). One of the main

reasons for the opposition was a concern by AICPA members that the global credential

would have empowered the AICPAs competitors rather themselves.

Enough has been discussed here to allow a consideration of what skills will be required

by an accountant to survive and prosper in the first 20 years of the new millennium.

3. What skills will be required by the accountant of the 21st century?

In a world of rapid change where business is conducted globally and via e-commerce

the skills of the future accountant are likely to be demanding. For instance, the one-stop

shop concept is not just about delivering a range of services. An Australian senior

managing accounting partner, Chris Knoblanche, was reported as saying, Its not so much

a one-stop shop [clients] want: its a depth of competencies in all the services, and

10 One example of the possible direction of professional associations was the announcement that the Canadian

Institute of Chartered Accountants proposed to recognise specialist CA designations from association with the

designations of The Canadian Institute of Chartered Business Valuators and The Information Systems Audit and

Control Association (seeCanadian Institute of Chartered Accountants, (1999a and 1999b)).



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the ability to bring all those together in a team to do the major transactions and projects

(quoted in van Leeuwen (1999)).

Instead of blue collar and white collar workers there is now talk of the emergence ofso-called gold collar workers who will be the elite top advisors to business (ICAA,

1998a, p. 33). The broad skills, the demand for which is already emerging, of the future

accounting practitioner have been aptly summarised by Andrew Mcelhone of Drake

Executives (seeLamba, 1999):

Employers demand skills within specific industries Banks which would normally

take anyone with a commerce degree are now asking for commerce graduates who

specialised in banking. The same goes for insurance companies, superannuation,

whatever.

He says that while specialised industrial knowledge is being asked for, the role of

accountants within those companies requires a far wider range of skills.Employers also want accountants to have business nous. They have to produce,

interpret, and advise on those numbers, not just crunch them in a backroom while

someone else makes the decisions.

Mcelhones remarks attempt to reconcile an apparent contradiction between the

need for professionals to be generalists and specialists at the same time.

Accountants may, for instance, need to have specialist knowledge in a specific

industry but they will also have to possess a range of generalist (generic) skills

which enable them to apply their specialist knowledge within the big picture context

of a clients/employers organisation and strategy. These dual roles are reflected in a

number of reports by accounting professional bodies around the world, who have alsosought to identify the skills needed by practitioners in the early decades of the next

millennium. The Report of the ICAEWs 2005 Working Party has considered the

implications of change for the accountant in different areas of public practice. These

are summarised inTable 1. Table 2 reports the ICAEWs projections by employment

sector (also see Table 3).11

At the individual and generalised level, the ICAEW and Australian chief financial

officers have summarised the future skills set of accountants as inTable 4.

To many, these competencies are at odds with more traditional concepts of accounting

which portray accountants as skilled technicians, who possess specialisations in the rules

and procedures of financial reporting, auditing, or tax. They are also at odds with a system

of training accountants (both within universities and the professional entrance exams) that

has emphasised the gaining of technical competence as the primary goal of an education

and apprenticeship. In addition, the reported shredding of Enron audit work papers by

Arthur Andersen staff and the increased public awareness of the need for auditor

independence mean that accountants need increased sensitivity to the ethical implications

of their decisions and (in)actions.

11 A similar survey has been conducted in Australia. The 1998 ICAA survey of Australian business people

which was mentioned earlier summarised the competencies of the future gold collar worker into four broad

areas as shown inTable 3(ICAA, 1998a).



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Table 1

Activities and skills necessary for success in various areas of public practice. Source: ICAEW (1996)

Auditinga Financial reporting Tax compliance Tax advice and

planning

Corporate finance Insolve

and cor

recover

As firms:

Add value to the

audit by reducing

the perceived risk

to the users of

financial statements

Exploit technology to

provide/interpret

relevant timely

financial information

Expected to be an

unattractive area of

work for accountants

because of changes in

technology and

competition from

non-accountants.

Unlike tax compliance,

seen as a growth area

An excellent

understanding of a wide

range of businesses

The en

urial sp

to run a

Develop and diversify

the range of

assurance services

Champion the conver-

gence of management

and financial accoun-

ting, and non-financialperformance measures,

to increase users

information value

Likely to be

a platform from

which other types of

advisory servicescould be sold

Combine enhanced

specialist expertise with

broader interdisciplinary

business and team skills

A wide range of

contacts in industry,

commerce, the profess-

ions and government

Manag

Have the ability to

deploy teams with

the right mix of

specialist skills

Understand the

changing needs of new

and existing users

No special skills

mentioned

Be able to handle

IT applications in

order to access

information quickly

Access to sources

of capital

The ski

and exp

necessa

value b

and ind

assets

As individuals: Analytical skills to

give simple/relevant

information tailored to

precise needs of users

Be seen to maintain

the highest standards

of practice

Negotiating skills A broa

of busi

skills, s

as mark


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Table 1 (continued)

Auditinga Financial reporting Tax compliance Tax advice and

planning

Corporate finance Insolve

and co

recove

Develop specialist

expertise and/or

industry-specific

knowledge built on

sound general

business training

Keep pace with

international

reporting changes

Market themselves very

strongly against high

quality competition from

within and outside the

accounting profession

A good knowledge

of company law and

other relevant legislat-

ion and regulations

Have an excellent

understanding of IT

and the systems

approach to auditing

Skills in inter-

pretation of

financial information

Expertise in

financial modelling

a With respect to auditing, the ICAEW also had some recommendations for the profession which were: (i) emphasise and build on th

capital markets; (ii) maintain a strong reputation for professional ethics, and promote these as unique selling propositions for auditing

training programmes in the skills necessary to allow members to diversify away from standard audit products.


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Table 2

Strategies and skills necessary for accountants to succeed in different employment sectors. Source:ICAEW (1996)

Small firms Medium sized firms The big firms Corporate sector

The technical, financial,

marketing and business

skills to add signi-

ficant value to their

clients affairs

Making better use of

international networks to

share investments, risks

and expert knowledge

Exploit the opportunities

in value added areas such

as tax-planning, corporate

finance and business advice

An ability to contribute

to the strategic direction

of the business

The broader business and

personal skills to be an

effective adviser and

establish long-term

relationships

Forming co-operative

alliances or mergers

with other accountants,

lawyers and

professional firms

Further development of

consultancy divisions and

challenging the strategic advice

consultancies

Broad management skills

including change manag

ment, people management

and marketing

Long-term

continuity of staffing

Focussing on niche sectors

and services, and turning awaybusiness that does not

fit the strategy

Diversification of standard

audit

Strong IT skills

The ability and integrity

to sell on the basis of a

strong reputation

Developing innovative

marketing programmes to

support their strategies

and to differentiate

themselves

Joint ventures with

other professionals

Non-financial performance

measurement and

management skills


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Table 2 (continued)

Small firms Medium sized firms The big firms Corporate sector

Good local knowledge

and close involvement in the

local business structure

Matching the office network

to the strategy, perhaps by

closing offices to cut costs

or by opening more

high street offices

to attract smaller

clients

Firms may organise themselves

in functional silos

rather than on a

regional or local basis

The flexibility to take

on new roles outside

the traditional accounting

sphere and to acquire

new specialist skills:

e.g., in tax planning

and internal audit

Strong working relationships

with other service providers

in order to offer a full

range of services

Exploiting big firm conflicts

of interest in insolvency, litigation

and similar work

Develop more efficient

staff recruitment and retention

policies designed to develop

better trained and more

flexible workers

The marketing tools (including

database software) totarget clients with appropriate

services

Streamlining personnel policies:

e.g., placing greater relianceon low cost para-professionals

Making better use of recruits

by offering broader training andmore varied career options

and mobility

A commercial approach to

the types of fees and service

levels expected by clients

Recruiting staff with MBAs,

industry-specific knowledge

and post-qualification

experience in other

disciplines

Practice management skills


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If the futurists are correct, then there will need to be a major change in the way both

practitioners and educators view the objectives of university accounting studies and

continuing professional development.12

As an aside, the rise of gold collar workers will present very challenging issues for the

human resource management of the one-stop professional shops. The gold collar worker

will be a more independent and empowered entity than at present. For instance, the 1998

ICAA survey notes that (ICAA, 1998a, p. 33):

The marketable gold collar worker will increasingly be unprepared to work excessive

hours per week, looking for flexible working arrangements that meet lifestyle

requirements and career objectives. Employment contracts will be tailored to fit with

lifestyle expectations. Short-term contracts, out-sourcing arrangements, and other

flexible employment practices will enable the worker to move in and out of the paid

workforce, and to change work practices from say, consulting to permanent

employment and back to consulting, as needs change.13

The need for flexibility in work practices will also become more important as more

women enter what has been a male dominated profession. The membership statistics of

Table 3

Competencies of Gold Collar Workers. Source: ICAA (1998a)

Knowledge Skills Attitudes and value Intellectual

framework

Formally qualified in a

particular discipline: a

prerequisite only

Core basic

technical skills

Portable, adaptive

skills: likely to

change career

several times/wants

to upgrade skills

Well-connected

A general specialist:

breadth of knowledge

and experience

Demonstrated high

level business

management skills

Embrace change Team working-skills:

able to manage

a multi-disciplinary

team

Understanding of

business dynamics

Good communication

skills: also relates wellto people

Ability to work in

global markets

A strategist

Technology wise (not IT

technically-expert)

Leadership skills:

motivate and

ideas people

12 Some of these changes are already beginning, for example, the introduction in 2000 of the ICAAs CA

Program which seeks to emphasise analytical skills and strategic thinking. The details of this program are

described later in the paper.13 For instance, a recent survey by Morgan and Banks of 1000 Australian employees indicated that 57%

would much prefer home-based work, with interest highest among middle to lower-income earners in the

accounting and finance, engineering and IT industries (reported in Field (1999)). 60.2% of men but only

55.3% of women were interested in telecommuting. Clegg (1999b) mentions that at least one large

accounting firm, Deloitte Touche Tohmatsu, has started to address this issue by instituting a system called

Signals which aims to provide employees with a balance between work and personal life.



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professional accounting associations indicate that women represent over 50% of members,

at least at the graduate entry level (for example, seeCPA Australia, 2001; ICAA, 2002c;

Wooten, 2001). However,although thereare signs that women aremaking some headway in

advancing their careers in accounting,14 a considerable divide still exists between men and

Table 4

General Summary of Skills for Future Individual Accountants. Sources: ICAEW, 1996; ICAA, 1998b)

ICAEW (1996) ICAA (1998b)

See the qualification as the starting

pointnot the end pointfor their

professional education and development

Strategic skills including a thorough

understanding of the employers business

Market themselves effectively Accounting and finance skills including

measurement and reporting skills,

management skills, environmental

skills, costing and cost management skills,

valuation skills (particularly intangible assets),

financial market skills, risk management,

and compliance with tax legislation

Develop strong communication and IT skills People skills including general

management skills (particularly forco-ordinating teams), communication and

presentation skills, project management

skills, change management skills,

negotiation skills, outsource provider/supplier

management skills, international social and

cultural skills

Use every opportunity to broaden and

extend their business skills

Information technology skills including

systems usage (e.g. sophisticated modelling

software), systems delivery (e.g. ensuring

appropriate information flows)

Shift their emphasis from the tasks

accountants have traditionally done, to

those the market is now willing topay for, such as business analysis,

strategic planning, decision support,

information management

Combine technical skills and strategic vision

to contribute effectively to the new

range of performance measures stakeholders will

demand in the 21st century

Add value by managing and improving

their clients, customers and employers performance

Recognise the need to start taking

action now to shape their skills

for the future

14 For example, US surveys suggest that the proportion of women partners in Big 5 accounting firms has grown

from 4.9 to 11.9% between 1992 and 2000 (Strafford Publications, Inc., 2000).



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women in senior managerial and partner positions. For instance, Baldiga and Doucet (2001)

report that US evidence indicates that only 15% of women CPAs hold positions of partner,

principal, director or senior manager while 41% of male CPAs hold these positions. AnAustralian survey found that 34% of male CPAs were senior managers or partners and 11%

were chief executive officers but women CPAs represented only 9 and 1%, respectively, of

these categories (CPA Australia, 2001).Wooten (2001)argues that there are at least five

institutional pressures that are likely to continue to promote the interests of women CPAs:

external pressure for firms to manage workforce diversityfor example, social

responsibility obligations and a need for firms to achieve an economic advantage.

Failing to retain women employees means a loss of valuable expertise and experience.

Staff turnover is also costly;

pressures from constituentsfor example, professional accounting associations have

begun to promote the interests of their women members and are proactive in exploring

means of improving womens career prospects such as mentoring programs. Wooten

also reports some anecdotal evidence that suggests that some clients of accounting firms

are expecting to see more women in the firms customer service teams;

consistency of institutional pressures within organizational goals and characteristics

for example, large public accounting firms adopt socially responsible policies in the

expectation that this will add to the perceived prestige and reputation of the firm;

institutional pressures imposed by legal authoritiesfor instance, equal opportunity and

sexual harassment legislation; and

environmental uncertaintyduring times when skilled professionals are scarce,

accounting firms can help manage their labour shortages by making their workplace

practices more attractive to skilled women accountants.

The need to ensure more flexible workplace practices is not limited to attracting more

women accountants. As with theICAA, 1998asurvey, the Vision 2010 report predicts that

gold collar workers will be highly mobile and if employers are to retain them, then there

will be a need to supply constant training and opportunities for career enhancement that

the worker, rather than the employer, can control (Epstein, 1998). Epstein (1998, p. 9)

concludes:

That suggests a dual reality for employers: That they must value their workers

knowledge and skills, while at the same time acknowledging that todays employee

may work for someone else tomorrow. Japanese business culture, for example, tends to

value personal relationshipsand thereby the tacit knowledge in individualsevenmore than Western culture does. As enterprises work more through alliances than

through their own internal organization, the ability to manage networks of people may

be as key to future success as the core competencies of the partners involved.

Breaking old hierarchies and rigid work practices could be a considerable challenge to

many accounting firms. For instance, in February 1999, Business Review Weekly ran an

article entitled Small CPA Firms in Danger in which the buyout of small firms by bigger

organisations was noted. The article suggested that there was a brain-drain from smaller



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accounting firms due to poor handling of staff. One consultant, Allison Ashby, was

reported as making the following comments (Thomas, 1999, p. 64):

They (accounting staff) want out, into the corporate sector, where they perceive the

hours to be lower and pay higher. Rightly or wrongly they also perceive the work

variety in companies to be better. Those hours in the big firm arose through staff

shortages, job deadlines and partners lack of awareness of what their staffs were going

through. Partners are often not good at saying thank you; its more a case of saying

youre late to someone who comes in at 10 a.m. after a long nights work.

In a similar vein,The Australian newspaper reported the comments of two academics

that there was a brain-drain from higher studies in accounting because students were put

off a career in accounting because of the perceptions of a low pay rate (relative to finance

careers), the difficulty of the professional entrance requirements and the rigidity of thecareer structure in accounting public practice (Pryor, 1999). Middle tier and small firms, in

particular, will have to make serious attempts to address these perceptions if they are to be

able to attract a suitably high level of raw material for future gold collar accountants.

4. What are the implications for accounting education?

Given the forces for change and the accompanying skills set reviewed so far, what are

some of the issues accounting educators must address if they are to supply the sort of future

graduates that the profession requires? The release of a major review of accounting

education in the US (Albrecht and Sack, 2000) provides one source of valuable evidence

and insights into this issue.

In Chapter 5 of their monograph it is suggested that there are six broad problems with

the current state of accounting education:

1. Course content and curriculamany stakeholders view accounting curricula as too

narrow and often outdated or irrelevant. [Curricula] are driven by the interests of faculty

and not by the demands of the market (Albrecht and Sack, 2000, p. 43).

2. Pedagogythe teaching of accounting is dominated by a rule based approach which

promotes memorisation rather than creativity.

3. Skill developmentthe focus of teaching is upon content rather than the development

of generic skills.

4. Technologythe emphasis remains on technology as a bookkeeping system rather thanon how technology can be leveraged to make business decisions (p. 43).

5. Faculty development and reward systemsaccounting teachers are largely divorced

from teachers of other business disciplines and business practitioners.

6. Strategic directionmost accounting schools have failed to strategically plan for

the changes to their environment and as such have lost ground to other disciplines

and other education providers.

These problems are explored below.



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4.1. Pedagogy and content

In too many respects, accounting education is being delivered the same way today as itwas 20 or 30 years ago. In one simple sentence,Albrecht and Sack (2000, p. 2)succinctly

summarise the predominant state of accounting education and what is wrong with it.

Despite actual and predicted changes in business practice, accounting is still largely taught

within the long established format of lectures, tutorials and workshops and from the

perspective as if it consists of nothing more than a series of discrete independent topics

relating to technical matters, usually entirely divorced from other related disciplines.

For example, intermediate accounting courses are usually a litany of technical

bookkeeping subjects such as lease accounting, consolidations, and tax-effect accounting

with limited attempts to inter-relate the various topics to each other or to place them in a

realistic and interesting business context. As such, students leave these courses with little,

if any, sense of an inquiring mind and do not have an appreciation that the financial

reporting choices they make may have an impact on other parties both within and external

to the organisation. The approach is even worse in the context of so-called accounting

theory courses where we would expect to see an attempt to place the theory in an

institutional and practical context and to explore the relationship between accounting

practices and user needs. But typically each topic is presented as an independent subject

such as the conceptual framework or agency theory with little effort to relate the

abstract concepts to real world phenomena. In addition, most of these courses on

accounting theory and concepts are actually taught towards the end of an undergraduate

degree. It seems strange to wait until theendof their degree to ask students to reflect on,

for instance, the nature of an asset when they have had to work with that concept right

from the start of their studies. Consequently, it is not surprising that many accounting

students find accounting theory irrelevant and uninterestingthe exact opposite of whattheir reaction should be!

The traditional approach described above can be contrasted with the needs of the

knowledge worker or new information professional as described by two American

practitioners (Elliott and Jacobson, 2002, p. 75):

The required competencies will be broader, covering not only all types of information

that might be relevant to a business problem, but also all types of decisions.

The challenge of the new information professional will be to formulate the strategy to

align or mesh the right information with particular and generic problems requiring

decisions.

They argue that academics have a role to play in the evolution of the accounting

profession by defining a body of knowledge more suited to the realities of the

marketplace, to the needs of the decision makers, and to the future prospects of both

(Elliott and Jacobson, 2002, p. 79). Students of accounting need to be prepared so that they

can identify and create decision-useful information, arrange its availability when needed

for decisions, and design feedback loops to ensure the continued readiness and

effectiveness of systems (Elliott and Jacobson, 2002, p. 79). An overemphasis on

accounting rules and techniques will clearly not meet these aims.



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Albrecht and Sack (2000)document a declining interest by US students in accounting

studies. These students are now choosing to major in other business areas such as finance,

strategy, information technology and e-commerce. The two researchers even found thatmany accounting teachers and practitioners would not choose to undertake the accounting

courses they took as students if the approach and content of teaching was to remain the

same! As such, they argue, accounting is in danger of becoming a second class citizen

relative to other business majors because these alternative fields of study appear to reflect

changing business practices.

On the other hand, asMathews (2001, pp. 118, 120)notes Albrecht and Sacks gloomy

picture needs to be balanced by the understanding that they did not survey the members,

academics, and graduates of other professions who may be experiencing similar

disillusionment. Nevertheless, even Mathews (2001, p. 120, emphasis added) acknowl-

edges that:

The absence of courses in accounting theory, and the exclusion of non-financial data

from the programme lead to the results of narrow thinking discussed in the [Albrecht

and Sack] report.These issues are common to many [non-US] systems of accounting

education.

These problems of course content and declining student interest are only exacerbated

by university administrations that, particularly for the long established institutions, have

been driven more by research interests and, perhaps, scholarly prejudices rather than by

teaching quality.

Practitioners too have traditionally encouraged an entrenched technical approach to

accounting education. For instance, some sectors of the profession have persistently

complained that universities produce graduates, who cannot instantly be turned toprofitable activities. The professional accounting bodies have also, until recently,

promoted the command of technical accounting, tax and auditing rules as the primary

benchmark to satisfy their entrance examinations. It seems that if accountants are ever to

become gold collar workers, then both universities (including university administrators)

and the practitioners must change their perspective away from the short-term and technical

and more towards the long-term and adaptability. In the new millennium, the practicality of

an accountant is not to be judged by competence in procedures alone, but also by capacities

in problem solving and client advice. It is time to acknowledge that the objective should be

to prepare students tobecomeprofessional accountants, notbeprofessional accountants at

the time of entry to the profession (Williams, 1994, p. 208, emphasis in original).

Our discussion of the gold collar worker indicated that we must move away from anapproach that seeks to pass on to our students a thorough knowledge of all the technical

rules of accounting or tax, etc. With the rate of change in business and business regulation

it is simply becoming physically impossible to be an encyclopaedia of rules. Bandy (1994,

p. 427)notes:

At one time it was possible to read everything published in accounting. R.M. Mautz

reports that, in 1948, A.C. Littleton stated that he read everything that was published in

accounting Who would do that now? Or would want to?



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He goes on to argue that (Bandy, 1994, p. 428):

Law schools do not attempt to teach law students every law. Rather law schools attemptto provide students with skills needed to conduct legal research. Moot court serves to

provide students with simulated courtroom experiences before they serve real life clients.

Williams (1994, p. 208) summarises the change that must take place in accounting

instruction when he states:

They should be taught to identify and solve unstructured problems, learn by doing,

work in groups, and learn to use technology effectively, such as databases for

researching issues.

Students learning should focus on skills as well as knowledge. Especially important,

students should develop good communication and interpersonal skills. In addition, theirethical and professional values should be enhanced.15 But of greatest importance, the

curriculum should focus on the process of learning, not just teaching answers. If

students can learn how to find answers, then they are well prepared for a lifetime career.

To achieve these outcomes, various innovative strategies must be devised, tested and

incorporated into the teaching methods and curriculum of accounting courses. Some

suggestions include:

a revision of course curricula and degree structure that seeks to develop an integrated

set of courses, which place the content firmly within a realistic context and avoid the

trap of treating each topic as though it is unrelated to any other topic; the use of team teaching of courses needs to be developed much further (particularly

across various business disciplines). This has the advantage of exposing students to

different mind sets and of setting the course material in a wider business context. This

would help students appreciate the interrelationships between all aspects of a firm. It is

necessary for students to understand the role of accountants as consultants who need

skills in the use of IT and strategy;

a continued use of case studies to help stimulate student interest and link course

material to accounting practice. However, the content of cases should be extended to

incorporate so-called scenario planning in which students must think strategically

within a particular business context rather than simply technically. As such, it is time to

recognise that managerial accounting may be the more dominant major in an

accounting degree rather than financial accounting; class activities need to be set in more of a systems contextnot only a technical

command of IT systems but how such systems can be designed and used for analysis

and decision making. In the words ofAlbrecht and Sack (2000, p. 57), Our students

must understand how technology has and will continue to change the way we provide

and use information to make decisions;

15 An understanding of ethics has assumed a much higher profile in the light of the scandals associated with

Enron and other corporations.



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related to these prior two suggestions, it may be time for university accounting and

finance departments to reassess the place of work-based learning in their programmes.

Eraut (1990, p. 25), amongst others, has noted the common separation betweentraining and the workplace and the importance of trying to integrate these two

contexts:

knowledge is transformed by the process of being used. Hence knowledge used only

in the training context will not be the same as apparently similar knowledge used on the

job; and knowledge used in one job context will not be quite the same as apparently

similar knowledge used in a different context.

Various methods of getting students to involve themselves in real work-place

scenarios are available (see, for instance,Crebert, 1995; Martin, 1996; Trigwell and Reid,

1998). However, given that most mainstream accounting and finance courses may havemany hundreds of students in them, work-based learning opportunities will be admittedly

difficult to implement. One successful role model is the initiative between the University

of Newcastle upon Tyne, PricewaterhouseCoopers (PwC), and the ICAEW to offer a

business programme that includes a significant component based on a placement with

PwC. This placement not only gives students a valuable opportunity to explore how their

university studies are transformed by practical experience but it also allows them to fast-

track their Chartered Accountant qualification;16

there is a need for more interactive group work within tutorials rather than simply

presentations by individual students;

much greater use of the world wide web as a reference source; the training of students in the practical skills of ethics - namely personal and

professional values clarification, ethical decision making, and ethical policy setting.

Past experience suggests that implementing these sorts of pedagogical changes is more

easily said than done (see, for example,Mathews, 2001). The types of resistance that might

be encountered and the barriers to change are explored in the next section of this paper but

one example of the types of changes that might and can be made can be found in Australia.

This example is the ICAAs new CA programme which is the recent replacement to its

Professional Year programme (PY) for entrance to the ICAA. The objectives and

proposed learning techniques dovetail very well with the observations made here in that

the ICAA is clearly seeking to develop the types of skills it identified earlier in its various

surveys. The PY concentrated on in-depth technical modules in subjects such as FinancialAccounting, Auditing, and Taxation. The new CA programme, however, consists of five

modules, the first of which, CA Foundations, is a module devoted to broad business

knowledge, skills and values providing an important base for the collaborative and

interactive learning that is central to the programme (ICAA, 2002a). The objectives of CA

Foundations are to develop chartered accountants who are (ICAA, 2002b, pp. 273):

16 Information on the program can be found at http://www.ncl.ac.uk/flyingstart/about.htm



25/35

informed about the latest international, disciplinary and business knowledge

innovative problem solvers

forward-thinking change managers technology-literate

collaborative team workers

capable communicators of shared understandings

service-oriented

ethical

professional and

reflective about their own knowledge, skills and values.

The candidates seek to obtain these objectives via a varied mix of teamwork and

individual exercises, self-study materials, on-line learning methods, and weekly work-

shops. Only 16% of the module is directed towards developing and assessing knowledge,

while 69% of the content is directed towards skill development. The remaining 15% of the

content is oriented to developing professional values (ICAA, 2002b, p. 1). The other

modules in the CA programme include three technical modules and a final CA

Integrative module. Even the technical modules emphasise problem solving skills and

strategic planning.

One side issue, perhaps, is what is the role of a professional designation for the gold

collar worker of the future? Future workers may be more attracted to MBAs, which seem

well placed to provide the generalist type of instruction that would satisfy the desired skill

set for the future business environment. Indeed, professional accounting associations

everywhere will have to think seriously about how they position and market themselves to

an increasingly generalist class of experts. This is not to say, however, that a professional

designation is not valuable. CPA Australia, for instance, has recently launched its ownMBA programme as a means of meeting the expected skill needs of its members, while at

the same time signalling to the community that the MBAs of its members are associated

with an organisation with professional and ethical standards.

4.2. Barriers to change in accounting education

It must be acknowledged that there are a number of committed academics who are

seeking new and innovative means of training students for the future. In more recent years,

many university departments have established teaching and learning committees to help

foster innovation in instruction. Nevertheless, there remain significant barriers to those

who wish to reform the teaching of accounting. These barriers include:

lack of financial and physical resources. Most university accounting departments have

insufficient resources available to them to allow for effective innovation in teaching.

For instance, student/staff ratios are usually too high and the number of teaching venues

is too small to allow for small group teaching that could effectively support innovative

teaching methods;

despite the rhetoric, there is still a widespread perception that universities do not reward

teaching quality when it comes to promotion. Certainly, for the long established



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institutions, research still seems to be the higher, rather than equal, priority (not that

research should be abandoned or avoided);

in Australia, at least, university accounting programs are locked into a three yearmodel. Attempts to expand to a fourth undergraduate year and thus provide more room

for broadening student education have been unsuccessful. By contrast, in the US many

states now have five-year accounting programs;

a general lack of awareness on the part of accounting academics (and

administrators) of the changes the business environment and a need to re-skill

accounting educators in innovative teaching methods and content.

A major impediment to change is the readiness of some academics and students to

explore whether change might be necessary and whether they should be a part of it. For

instance, attempts to introduce a more integrative critical approach to the teaching of

accounting at Waikato University in New Zealand were strongly resisted by some

academics and students because such an approach did not accord with their understanding

of what accounting was all about (seeGallhofer et al., 1998). Widespread stereotypes of

accountants as bookkeepers are hard to dispel and should be attacked as early as

possible in students accounting studies. The professional accounting bodies may be able

to help reduce the impact of these stereotypes by way of educational visits to secondary

schools.

In a series of case studies on re-engineering change in UK universities, Allen and

Fifield (1999) indicated that university departments and academics can be particularly

resistant to widespread change in the workplace because of cultural, political, and

managerial structural factors, which stem from the ancient values of these institutions. In

particular they noted that one major factor that drives resistance to change is a culture of

individualism that exists at both the levels of departments and individual academics.Central to this culture is the notion of academic freedom in which departments are

typically decentralised and autonomous and individual academics believe that they have

the right to choose whatever pedagogical approach best suits the subject matter at hand.

Any attempt to introduce pedagogical change is usually resisted on the basis that it

represents an attack on academic freedom. In addition Allen and Fifield argue that a sense

of inertia exists in many universities where staff believe that long established academic

programmes have worked and can therefore see no reason to change them. In a similar

vein, most academics will have invested considerable intellectual capital and energy into

their existing courses and may be reluctant to embrace change if they see it as having to

start from scratch all over again. The link between research and teaching can exacerbate

this resistance to change because academics have often developed their own specialistresearch commitment for which they may be widely acknowledged and recognised. These

research specialisations in turn drive their teaching interests. Asking academics to make

major changes in their teaching may thus be seen as threatening a change to their

underlying knowledge/research base and interests.

One trend over the years that is saddening, is the extent to which the academic and

practitioner communities usually do not work together. There was a time when the

practitioners played an active role in university teaching but this is no longer the case

(compare, for example, Wildman, 1926). A shift in the research interests of academics may



27/35

be one reason for this but it is also probable that teaching links are also not rewarded within

accounting firms. However, practitioners have so much to offer. Their wealth of experience

makes them a vital but largely untapped source of case study material and even if only asguest lecturers, they can use their experiences to illustrate the study topics and capture

students interests. There are also benefits to the practitioners in that it raises their profile

with students and assists them to identify quality candidates for potential recruitment.

4.3. Competitors to individual local universities

An internationally mobile workforce with advanced communications technology poses

interesting challenges to the role of individual universities who have traditionally served

their local communities. There are at least two issues here.

First, for some time now some universities have offered distance-learning programs but

the great majority of these have been limited to national boundaries. Future professionals

(particularly at the postgraduate level) may wish greater flexibility in the location from

which they do their studies and in their choice of educational institutions. Institutions will

need to explore much closer working relationships/partnerships with other institutions in

their region (e.g., South East Asia) and globally. Such developments are currently being

explored in the UK and elsewhere.Lymer (1999)reports:

Some of the UKs top Universities are joining forces with similar bodies in China,

Australia and Canada. The new group will be called the Vice-Chancellors and

Presidents Forum.

Part of the plans appear to be the idea of global degrees where, for example, a student

could take different years at different Universities in different countries but gain a

complete degree from one of them. This credit type system has been tried,unsuccessfully, in the past in the UK, however, previously it was sunk by the very

Universities who now are supporting this concept.

Although the move to e-learning has been rapidly embraced by some institutions, it has

not been without its problems. Goodridge (2002), for instance, noted the financial

difficulties faced by the on-line Cardean Universi

accounting practice in the new millennium is accounting education ready to meet the challenge 2003...

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