The words "accounting major" do not always mean what they used to on college campuses. Most students today don't have the same high reverence for the accounting profession that their parents had. Instead, they think of someone sitting behind a desk crunching numbers all day, and if they're dreaming about a job in the financial field it has to do with investments, marketing or financial analysis. Accounting is often seen as the mundane thing to do in finance.
"That's not what the accounting profession is about," says Dr. Lawrence Gordon, Professor of Managerial Accounting and Director of the Ph.D. program at the University of Maryland's Robert H. Smith School of Business. "Accounting once had a comparative advantage in terms of how to use information, but we're now in an information economy," explains Dr. Gordon. "It's no longer clear that the typical accounting education still provides such an advantage. Hence, accounting programs are changing to meet the new challenges posed by the information economy."
Students Losing Interest
Students are recognizing the need for a comparative advantage in the marketplace, and many are turning away from the standard accounting education. Over the past few years, there has been a steady decline in high school and college students expressing an interest in becoming a Certified Public Accountant. The number of students taking the CPA exam for the first time in 1997 had declined by 15.5 percent in 1998, bringing the total from 45,674 to only 38,573.
On campus, the numbers paint the same discouraging picture. For more than 20 years the number of students obtaining bachelors and master's degrees in accounting had averaged around 60,000 per year. In 1998-1999, the average fell to 47,600, a 20% decline from 1995-1996 numbers.
A New Economy
With an ever-changing business world, it becomes even more difficult for educators to catch up with the current trends and responsibilities in accounting. In a recent report, Accounting Education: Charting the Course Through a Perilous Future, authors W. Steve Albrecht and Robert J. Sack note there are three specific changes within the business environment that have a direct impact on the accounting industry, and in turn are changing the way teachers can instruct accounting students. The first, of course, is the rapidly changing technology that has made the preparation and dissemination of information relatively inexpensive. The second change is the globalization of the business world, where faster transportation and "instantaneous information" have turned the world into one giant marketplace. And finally, Albrecht and Sack list the concentration of power in certain market investors as another substantial change within the economy.
The effect of these, among many other changes, is the elimination of the idea that information is expensive.
"Today," Albrecht and Sack write, "anyone armed with the right software can be an 'accountant' and produce financial information.
"With such drastic changes affecting the business environment in such a relatively short period of time, the accounting industry must change to stay in step with the rest of the information economy, and to attract the best students to the profession."
A number of accounting organizations have been predicting this problem for years. The Institute of Management Accountants, in three different studies, reported that accounting programs needed to change if educators wanted to meet the future needs of the accounting industry. The AICPA also called for accounting education programs to evolve to meet the future needs of CPAs, and the American Accounting Association-more than 14 years ago-called for a much broader role for accounting education than that being provided by most schools at the time.
Changes On Campus
An important part of the necessary changes, according to many experts, begins in the schools, by changing the perception of the field and revising it to meet the demands of today's companies. As the accounting profession experiences one of the most competitive employee markets in decades, finding qualified candidates within the profession can be extremely difficult. And many fear it will only get worse as fewer students choose to study accounting.
"We need to show people coming into the profession that it's not only a viable profession, it's an exciting one," said Stuart Kessler, head of the Foundation of the American Institute of CPAs, in the Electronic Accountant. The current trend within the academic world is to focus on the new responsibilities and requirements of today's accountants.
"You have to think of accounting as a much broader discipline than mere number crunching," says Dr. Gordon. In fact, "information management," with a focus on decision-making, is a substantial part of today's accounting profession. As a result, schools throughout the country are now beginning to restructure their programs to encompass Accounting and Information Management.
Organizations Encourage Change
At the 2000 AICPA Fall Council Meeting, council members made a pledge to effectively market accounting as a profession to high school students. The AICPA has already taken a number of steps to lure more students to the profession, including the development of new accounting curriculum materials to introduce students to the profession. This past fall, the AICPA sent curriculum to about 10,000 high schools throughout the country, to be integrated into math, social studies, science and technology classes as well as accounting and business courses, according to the Electronic Accountant.
Other accounting organizations are reaching out to students by inviting them to join their associations. Accountants for the Public Interest (API) has made plans to increase its current membership of 1,500 by inviting student members to join. The Maryland Association of CPAs has developed a website for students interested in learning more about accounting. The site, www.tomorrowscpa.com, provides resources, CPA exam information, links to schools and scholarships-even a chat room for students to discuss the profession.
Contributing to the Solution
Accounting firms have also realized the need to change education, and bring more students into the profession. More than ten years ago, the Big 5 accounting firms advocated changes in accounting education in their 1989 White Paper. They were so convinced that change was necessary that they contributed five million dollars to support the Accounting Education Change Commission.
Today, many firms continue to work on teaching potential students about the excitement of the profession. "We're making big investments in the development of a high school pipeline," said James Hayes, a PricewaterhouseCoopers partner, in a New York Times article this past summer. PWC sends recruiters to nearly 3,000 schools every year to scout promising students.
"We believe that because practice has changed so dramatically and because accounting education has not kept up, we have lost ground to other business majors, corporate competitors and to other types of educational programs," say Albrecht and Sack in their report.
The typical accounting education is changing on campuses across the country, evolving to meet the demands of the new information economy and the students themselves. Accountants, according to Dr. Gordon, are now using their knowledge to help make decisions and moving much more to strategic planning roles within their companies. Now the accounting educators have to catch up, and students have to learn that accounting can offer an exciting, influential career.
Today, accounting professionals are dealing with a number of monumental changes in the field. Yet the issues of changing accounting education and attracting students to the profession remain at the forefront of their concerns, and many members of the accounting community-from educators to accounting organizations to international firms-are taking steps to not only evolve education programs and introduce students to a new accounting profession, but spark a genuine excitement in the next generation of professionals.
Special thanks to Dr. Lawrence A. Gordon for his thoughts and interest in this article. Dr. Gordon is the Ernst & Young Alumni Professor of Managerial Accounting and Director of the Ph.D. program at the University of Maryland's Robert H. Smith School of Business. Dr. Gordon has been cited as being one of the world's most influential accounting researchers, and has published numerous books and articles on accounting, finance and economics. His current research focuses on the importance of utilizing concepts from managerial accounting/economics within an information-based economy.