The Institute of Management Accountants is hoping to prepare more accounting students for careers in industry.
The IMA is concerned that most accounting students are being prepared for entry-level tax and audit work, but not for long-term careers in business, where a vast majority of professionals end up working. Thus, they are not being armed with business strategy and other skills needed for management and executive roles. But when steps aren’t taken to fill the talent gap, businesses can promote employees who have only the basic skills to management-level positions, creating what the IMA is calling an “entry-level economy” that can be harmful on a global level.
The IMA has been researching the talent gap and launched a Competency Crisis online community last year to gather together accounting and finance stakeholders to discuss ways to solve it (see IMA Site Addresses Competency Crisis’ in Accounting).
IMA president and CEO Jeff Thomson pointed out that CFO teams are being asked to take on more and more responsibilities at companies, including providing advice on mergers and acquisitions and doing financial planning and analysis. However, the accounting curriculum has mostly focused on auditing and tax. The availability of management accounting jobs is greater than the availability of young professionals who have the necessary marketable skills to land all those jobs.
“It’s a global issue because our profession is global,” he said. “This is where preparation at the undergraduate level is so valuable. We have to work together to create more balance in the curriculum.”
He noted out that only the large public companies are likely to invest in developing such skills in young employees, and only if they believe the employee has potential. “The vast majority of small and medium companies are not going to invest in that development,” said Thomson.
Nevertheless, the majority of undergrad accounting majors eventually find their way into an industry job, even if they start out in public practice.
“The statistics are really clear from the AICPA that those who enter the public accounting track find their way in a few years into a company,” said Thomson.
Even if they come in with great auditing and attestation skills, they often end up leaving, perhaps discouraged by long work weeks and the realization that they won’t be making partner anytime soon. Still, there is a great deal of overlap between those who enter public practice and those who go into industry jobs.
“When you think about the CFO team, it’s not like one hallway is audit and tax, and the other is management accounting,” said Thomson. “They’re expected to close the books on timely basis, file quarterlies and K-1s, develop M&A and FP&A, and talk to investors and customers.”
Thomson pointed out that he experienced all of that during his previous career at AT&T. “Being in corporate America, some of it is trained and learned, and some of it is experiential,” he said.
He believes that professors, deans and the chairs of university accounting and finance departments need to get involved in educating accountants for careers in industry. “Corporations also need to create more of a coordinated, unified approach to talent,” Thomson added. “By their very nature, companies are competitive for talent, but the more you increase the talent pool for these kinds of skill sets, hopefully it will translate into closing the talent gap at the corporate level.”
Last year, the IMA launched an endorsement program under which it evaluates schools across the country that file an application and endorses them if they demonstrate that they have a balanced curriculum in management accounting (see IMA Endorses University Accounting Education Programs and IMA Endorses More University Accounting Programs).
To date the IMA has endorsed 10 schools, including Brigham Young, Penn State and Michigan State University. “We expect that to grow over time,” said Thomson. “That endorsement program will help move the needle.”
The IMA has also been partnering on an initiative with the American Accounting Association for curriculum reform. Thomson said he would like other accounting organizations to have the “same skin in the game” in terms of initiatives and spending to “move the needle.” He invited the American Institute of CPAs and the Chartered Institute of Management Accountants—which partner on the Chartered Global Management Accountant (CGMA) designation, in competition with the IMA’s Certified Management Accountant (CMA) credential—along with Financial Executives International and other accounting organizations, to join the effort.
“That’s not to suggest that they’re not doing their part, but we think here is a perfect example of a coalition that could serve the public interest,” said Thomson. “We compete with the AICPA and the CGMA. There is competition, but we can rise above that in terms of the public interest. We invite accounting associations, academics and corporations to get involved, get engaged and do their part.”
On Thursday, the AICPA and CIMA announced research on their own CGMA Competency Framework, listing the areas where employers such as IBM and Unilever are expecting greater proficiency from management accountants.
The framework comprises 45 areas, including four knowledge areas—technical, business, people and leadership—with competencies defined at four levels: foundational, intermediate, advanced and expert. The framework was developed through research, including a survey of nearly 3,400 members, students and educators; roundtable discussions in 13 countries; and in-person interviews with representatives from 67 organizations, including IBM, Unilever, Microsoft and Shell.
The CGMA Competency Framework was created to assist Chartered Global Management Accountants—including CFOs, controllers and treasurers—in identifying the broad skills employers expect from their finance professionals. The framework aims to help management accountants assess their current competency level and provides insight on steps they can take to expand their skills while meeting their commitment to lifelong learning. The AICPA and CIMA said it is available to any employer or educator to benchmark their team’s capability, create job profiles or design curriculum.
Expected capabilities include risk management and internal controls, macroeconomic analysis, communication and negotiation along with strategic understanding in a global context. Technical financial competencies include financial accounting and reporting, management reporting and analysis, and risk management. The number of competencies and proficiency expected varies by functional area and level of seniority.