The Changing Landscape of Educational Standards in

the Accountancy Profession

ByDr. Musa Inuwa Fodio,CNA

presented at the 2ND African Congress of Accountants (ACOA), May 14 -16, 2013 held at Accra

International Conference Centre, Accra, Ghana.

Background Drivers of change in global educational

standards for accounting profession Implications of changes in educational

standards for the accountancy profession The Role of IAESB in setting Standards for

global accounting education The Role of professional bodies in promoting

IES IES and the academics Recommendations and Conclusion

OUTLINE

The accounting profession has never in its history been confronted with the kinds of challenges that it faces today. Unending sensational accounting scandals

Loss of public confidence Loss of authority as self-regulating profession

BACKGROUND

The profession’s reactions to the challenges led to radical innovations in the principles, standards and practice of accounting

This challenges and responses have widened the gap in accounting education – What accountants do and what accounting educators do.

BACKGROUND

Public accounting firms recognised the problem over 20 years ago. Consistent with Bedford Report, a white paper issued by the big 8 audit firms in 1989 described the profession as Expanding Changing Becoming increasingly complex.

Accountant are no longer mere information providers/financial advisers but executive partners.

Suggested the critical need for the profession to re-examine its educational process

Concluded that the “current environment” makes real curriculum change essential and necessitates a dynamic partnership between practitioners and academics

BACKGROUND

In late 1980s and early 1990s, IMA received complaints from financial executives indicating that entry-level accountants were inadequately prepared and lack skills necessary for success as entry corporate accountants.

The IAESB has since its coming into being, been building on the work of IASCF. The foundation in 2002 identified some areas of change which included education standards and regulations.

BACKGROUND

The overall mission of IAESB is to serve the public interest by the world wide advancement of education and development for professional accountants leading to harmonised standards.

Current trend is towards globalisation of educational standards for accounting profession.

BACKGROUND

Unrelenting competitive pressure

Impact of information and communication technologies

Demand for improvements in corporate governance and ethics

Globalisation of business

Focus on fair value accounting

Demand for new knowledge and skills

DRIVERS OF CHANGE IN GLOBAL EDUCATIONAL STANDARDS FOR ACCOUNTING

PROFESSION

Unrelenting competitive pressureRapid change has been the

characteristic of the environment in which professional accountants work

Pressures for change are coming from expanded stakeholders including regulators and oversight bodies

DRIVERS OF CHANGE IN GLOBAL EDUCATIONAL STANDARDS FOR ACCOUNTING

PROFESSION

Impact of information and communication technologies

ICT continues to advance at a rapid pace Internet has revolutionised global

communications XBRL is an off-shoot of ICT development

Demand for improvements in corporate governance and ethics; and growing concern for the environment and sustainable development

DRIVERS OF CHANGE IN GLOBAL EDUCATIONAL STANDARDS FOR ACCOUNTING

PROFESSION

Globalisation of Business Business and organisations are engaging

in ever more complex arrangements and transactions

Risk management has become more important

Focus on fair value accountingFair value becomes the conceptual foundation

of financial reporting and valuation techniques are basic tools of accountants (which involves modelling)

DRIVERS OF CHANGE IN GLOBAL EDUCATIONAL STANDARDS FOR ACCOUNTING

PROFESSION

Demand for new knowledge and skills Accountant to be a “Jack of all trade and a

mini-master of all”; ICT, Managerial, Actuarial valuation etc as part of the challenges associated with IFRS.

Judgement is now more important as well as reliance on conceptual framework

Less reliance on memorization of rules and more focus on application of principles and use of best judgement.

DRIVERS OF CHANGE IN GLOBAL EDUCATIONAL STANDARDS FOR ACCOUNTING

PROFESSION

Recognition of changes in educational standards for the Accounting profession

Recognition by the profession that its only Real Capital is its Human Capital◦ Need for investment in human capital

The need to change nationally-based accounting education systems to reflect global dimension.◦ Through collaborative efforts with academics,

practitioners, government and regulatory agencies, industries, etc.

IMPLICATIONS OF CHANGES IN EDUCATIONAL STANDARDS FOR THE ACCOUNTANCY

PROFESSION

Future accounting practitioners must have broad and specialized knowledge and skills

Accounting practitioners must continually acquire new knowledge and skills (life long learning) because of the rapidly changing environment in which the professional accountant works◦ IFRSs, IPSASs, ISAs, XBRL, IES, etc

Future professional accountants need training in corporate governance, environment and sustainable reporting and ethics

IMPLICATIONS OF CHANGES IN EDUCATIONAL STANDARDS FOR THE ACCOUNTANCY

PROFESSION

Need for continuous monitoring of the environment in which professional accountants operate to ensure that the educational process remains relevant

Need for educators delivering professional accounting education program to respond to the changing needs of international accounting profession as well as individual professional accountants

IMPLICATIONS OF CHANGES IN EDUCATIONAL STANDARDS FOR THE ACCOUNTANCY

PROFESSION

The increased role of IAESB in developing and issuing high quality standards and other guidance to strengthen accounting education worldwide

IAESB focuses on:Prequalification accounting educationPractical experience and training as well as

assessment of professional accountantsContinuing (post-qualification) professional

education needed by accountants

THE ROLE OF INTERNATIONAL ACCOUNTING EDUCATION STANDARDS BOARD (IAESB) IN

SETTING STANDARDS FOR GLOBAL ACCOUNTING EDUCATION

All IFAC members were required to comply with IES 1-6 by January 2005, IES 7 by January 2006 and IES 8 by July 2008.

Compliance (with black letter requirements) is self-enforced by professional bodies in collaboration with and involvement of national oversight as well as third parties- universities, employers (government and private).

THE ROLE OF INTERNATIONAL ACCOUNTING EDUCATION STANDARDS BOARD (IAESB) IN

SETTING STANDARD FOR GLOBAL ACCOUNTING EDUCATION

IFAC member bodies are expected to comply with IES. IES are targeted at the member bodies and not individual members

Member bodies are to determine detailed requirements of the pre-qualification, post-qualification and development programs considering the diversity of culture, language and educational, legal and social systems in their countries

THE ROLE OF PROFESSIONAL BODIES IN PROMOTING IES

Where member bodies are subject to legal or regulatory authorities in their countries, they must consider IES and must advise legislative and regulatory authorities on same and seek for harmonization

Member bodies should assist the growing movement toward international reciprocity and comparability of qualifications through IES

Member bodies are to work with other educators and academics to ensure that programs are relevant and logically sequential

THE ROLE OF PROFESSIONAL BODIES IN PROMOTING IES

IAAER is championing the course for design and implementation of accounting education program that achieves the IES objectives of prequalification education

IAAER is also creating awareness of the need for improvement in accounting education and research

IAAER proposes a Project Athena on IES targeted at faculty development program in developed and emerging economies.

IES AND THE ACADEMICS

At various national levels academy and profession have perennially failed to settle on agreed core of accounting Knowledge and skills (what exactly is a “work ready” accounting graduate?)

Accounting academics generally feel that they are the arm of academia that studies accounting rather than the academic arm of the accounting profession

Dilemma on what student of accounting in the university or college should learn (emphasis)

IES AND THE ACADEMICS

Knowledge vocationalisation (commercialisation) which lend itself to demands of the work place

Knowledge commodification- which arises out of the marketisation of courses (revenue drive)

Knowledge corporatisation- which focuses on performance measurement and learning outcomes

Knowledge professionalization- which focuses on professional practice

IES AND THE ACADEMICS

Model 1 Model 2

TWO SAMPLE MODEL TO RESOLVE THE DILEMMA

Professional qualification

Professional qualification

Work PlaceAcademyProfessionalism

Post qualification

Post qualification

Professionalism

Pre-qualification

Formal Process

Pre qualification

Informal Process

IAESB

IFAC member bodies

Accounting educators and academics

Conclusion

RECOMMENDATIONS AND CONCLUSION

Increase awareness and understanding of IES across professional bodies and accounting academics

Resolve the dilemma on what accounting education should emphasise. The model proposed may be useful

Reduce/harmonise areas of conflict between IES and national accounting education standards- using the IFRS model

IAESB

Increase IES awareness among individual members

Seek additional collaboration with academics through the regulatory and government agencies in different jurisdictions

IFAC MEMBER BODIES

Need to develop more interest in IES Need to assist in the implementation of IES

at prequalification level through improvement in accounting curricula

Should build stronger bodies at national and regional level to promote the course of IAESBAAFA (African Accounting and Finance

Association)Should work with other stakeholders such

as professional bodies and employers to make accounting curricula richer and more relevant

ACCOUNTING EDUCATORS AND ACADEMICS

In conclusion, it is important to note that accounting profession has today changed from its traditional role of financial information provider with emphasis on technical practice to a profession which stresses moral practice with emphasis on professional judgement

Its role will continue to be relevant to all spheres of human endeavour.

Educational standards for training future professional accountants must necessarily encapsulate an appropriate mixture of intellectual, vocational and professional viewpoints

CONCLUSION

AAA, (1986), Future Accounting Education: Preparing for the Expanding Profession, American Accounting Association, Bedford Committee Report

AECC, (1990), Objectives of Education for Accountants, Accounting Education Change Commission, Position Statement N° 1, September 1990

Albrecht W.S., Sack R.J., (2000), Accounting Education: Charting the Course through a Perilous Future, Accounting Education Series, Vol. 16

RERENCES FOR FURTHER READING

Big 8, (1989), Perspectives on Education: Capabilities for Success in the Accounting Profession, Arthur Andersen & Co, Arthur Young, Coopers & Lybrand, Deloitte Haskings & Sells, Ernst & Whinney, Peat Marwick Main & Co, Price Waterhouse, Touche Ross

Evans, C., Buritt, R. and Guthrie, J. (2010), Accounting Education at a Crossroad, University of South Australia and Institute of Chartered Accountants in Australia

Karreman, G.H., (2002), The Impact of Globalisation on Accountancy Education, International Accounting Standards Committee Foundation, London

Karreman, G.H., (2002) The Impact of Globalisation on Accountancy Education, International Accounting Standards Committee Foundation, London

RERENCES FOR FURTHER READING

IAESB, (2012), Developing a Global Model of Accounting Education and Examining IES Compliance in Australia, Japan and Sri Lanka

ICAA, (1998), Vision 2020, Institute of Chartered Accountants in Australia

IFAC, (2006), SMO 2, International Education Standards for Professional Accountants and Other Guidance

IFAC, (2007), International Accounting Education Standards Board, Strategic and Operational Plan 2007 – 2009

IFAC, (2007), Developing Nations Committee, Strategic and Operational Plan 2007 – 2010

IFAC, (2007), Member Body Compliance Program, Strategic and Operational Plan 2007 – 2010

IFAC, (2003), IES 1, Entry Requirements to a Program of Professional Accounting Education

RERENCES FOR FURTHER READING

IFAC, (2003), IES 2, Content of Professional Accounting Education Programs

IFAC, (2003), IES 3, Professional Skills IFAC, (2003), IES 4, Professional Values, Ethics and

Attitudes IFAC, (2003), IES 5, Practical Experience Requirements IFAC, (2003), IES 6, Assessment of Professional

Capabilities and Competence IFAC, (2004), IES 7, Continuing Professional

Development: A Program of Lifelong Learning and Continuing Development of Professional Competence

IFAC, (2006), IES 8, Competence Requirements for Audit Professionals (Implementation 2008)

RERENCES FOR FURTHER READING

Needles, B.E. Jr., (2005), Implementing International Education Standards: The Global Challenge, Accounting Education: An International Journal, 14, March, 2005, 123-129

The 103rd American Assembly (2003), The Future of the Accounting Profession, the American Assembly, Columbia University

RERENCES FOR FURTHER READING