The Institute of Management Accountants has launched a new initiative to endorse undergraduate accounting programs that provide the skills needed for corporate accountants.
The new initiative will provide the IMA’s endorsement for higher education programs that meet the educational standards to enable students to earn the IMA’s Certified Management Accountant credential and prepare them to contribute valuable accounting skills, as well as soft skills like strategic planning, within businesses. The first two undergraduate accounting programs to be recognized through the pilot phase of the program are at Pennsylvania State University and Washington State University Vancouver.
Under the program, the IMA will endorse higher education programs that meet the following criteria: the program must substantially cover the CMA exam content; the program must have adequate faculty resources to deliver the content; the program must be accredited by a recognized accreditation organization; and a faculty member must be designated as an IMA Campus Advocate.
The program offers two tiers of endorsement: full endorsement, for those university programs that meet all of the endorsement criteria; and provisional endorsement, for programs with some minor to moderate shortcomings in meeting all the criteria for full endorsement.
IMA vice president of research Dr. Raef Lawson sees the new initiative as an important one for the profession. “One thing that we hear a lot is that many of the students entering the workforce are not adequately prepared,” he said in an interview Monday. “For over 20 years, we’ve done research on this topic, and many schools are not addressing those needs.”
The IMA did a survey of accounting curricula last year and found that the competencies considered the most important for corporate accounting are included on college curricula to a lesser and lesser extent. “Schools are dropping management accounting-related courses or combining them, so the management accounting component of the college curriculum at many schools is decreasing, and this is at a time when the importance of management accounting and the role of management accountants has actually been expanding,” said Lawson. “Management accountants are no longer considered bean counters, but we call them now bean growers. They’re in a strategic business partner role and moving beyond preparing and analyzing data. They’re interpreting it and helping managers make firms more successful. There’s really a huge competency issue here.”
The IMA plans to launch a microsite in the next few weeks called CompetencyCrisis.com to highlight the problem. “We’re trying to bring practitioners and academics together to really raise awareness of this issue and try to start addressing it,” said Lawson.
Another way is by endorsing undergraduate education programs, as the IMA announced last week it would. “The whole motivation of this was to single out colleges and universities that are adequately preparing their students for careers in management accounting,” said Lawson.
Part of that includes covering the topics on the IMA’s own Certified Management Accountant exam. Before giving out its endorsement, the IMA will conduct a rigorous review of the content of a school’s accounting education programs, similar to an accreditation program, in that it will be largely based on self-evaluation, and the IMA will then review the self-evaluation produced by the school.
“We list the categories of topics that are covered on the CMA exam, which we believe is the gold standard of certification in our industry,” said Lawson. “We do a study every two or three years level looking at the competencies that corporate accounting believes new hires should be competent in, and we have schools match the content of their program to those competencies. We ask what courses they’re covered in and we ask what level they’re covered in. There are A, B and C levels, with C being the most difficult. They have to cover 70 percent of those competencies at the C level. Then we also get copies of their syllabus to get some validation of that. We request sample documents to show how they test student knowledge. We ask for information on the number of students in the program, the commitment of the faculty and school to the program, the amount of resources they are committing to the program, and also whether they have an IMA student chapter and an IMA Campus Advocate, which is another program we have just started, where there is a faculty member who has a responsibility for promoting management accounting and IMA information on campus.”
Schools aren’t required to promote the CMA exam to win the IMA’s endorsement, but it helps. “A school does not have to mention our certification exam,” said Lawson. “They don’t have to have their students take our exam. Our goal is really to prepare students for careers in management accounting. We’re one of the leading associations in our field, and we believe our students would benefit from taking our exam, becoming CMAs, joining our student chapters and getting involved in IMA, but that’s really something that’s very much separate from this endorsement program. What we really want to do is to make sure that there are a sufficient number of programs out there that are training students for careers in management accounting, and we want to help promote those programs so that they can address the challenges that many of them are facing because many schools are becoming more public accounting oriented and not preparing their students for corporate accounting.”
According to the IMA’s research, over 80 percent of accounting students end up in corporate accounting or management accounting careers. Over half the students who start out in public accounting firms switch to the corporate accounting world within two to three years. “The fact is that regardless of whether a student goes directly into corporate accounting, or they go into public accounting for two or three years and then do a career change, overall 80 percent of students will end up in corporate accounting careers,” said Lawson. “I’ve talked to some faculty members who say, ‘What’s the problem? All my students get jobs, largely in public accounting.’ But over half the students who go into public accounting, within three years will switch to corporate accounting or management accounting. So it’s increasingly likely that the students don’t have the competencies they will need in their future careers and their future jobs. That’s the issue we’re trying to partially address with this endorsement program.”
The IMA also has another initiative underway through a joint task force with the American Accounting Association’s Management Accounting section looking at curriculum issues. “We’ve been working at it for three years,” said Lawson, who chairs the task force. “One of our recommendations is that schools should not be preparing students just for their first job. They should be preparing students for their lifelong career, and many schools are failing to do that.”
One of the skills they appear to be lacking is cost accounting. “Probably 10 years ago, when the accounting profession switched from a 120- to a 150-hour education requirement for public accounting, the thought was that students would be getting a more diverse preparation,” said Lawson. “Instead what many schools are doing is just teaching their students accounting rules, standards and regulations. The problem is that’s the most perishable type of knowledge. We’re not teaching them the skills and the competencies that will last them a lifetime. What should they be teaching? They should be teaching analytical thinking, business processes, decision-making, cost analysis, a whole host of other competencies that might not be typically included in the general public accounting-oriented curriculum.”
Michigan State University has indicated that it will be sending in an application to the IMA for an endorsement by the end of the month. “That’s one of the top accounting programs in the world,” said Lawson. “It’s an indication of the necessity of this program and the value attributed to it that a school like Michigan State would be submitting its application for an IMA course.”
Another school whose accounting program is traditionally highly ranked is Wake Forest University. Lawson said that Wake Forest has not yet contacted the IMA, but he expects the new program to attract more interest from colleges and universities in the U.S. and abroad. “We think there will be a lot of schools both domestically and internationally that will be interested in this program once they learn about it,” he said. “One of the top schools in China has indicated they will be submitting an application as well. IMA is truly a global association, and this program is truly one that we will extend around the world.”