The Institute of Management Accountants and the American Accounting Association’s Management Accounting Section have released a new framework intended to broaden the scope of accounting education.
The framework includes broad management and accounting competencies for excelling in an organization and becoming a strategic business advisor. Details of the updated curriculum are available in the latest edition of Issues in Accounting Education, an accounting education journal published by AAA.
Among the competencies listed are planning, analysis and control; external reporting and analysis; tax compliance and planning; information systems; assurance and internal control; professional values, ethics and attitudes; leadership; process management and improvement; governance, risk and compliance; analytical thinking and problem solving; and quantitative, interpersonal and technological competencies.
The new framework is part of the IMA’s efforts to incorporate management accounting into the accounting education curriculum of more colleges and universities. In line with that effort, the IMA has been endorsing several universities that have been expanding their curricula to teach students more about management accounting (see IMA Endorses University Accounting Education Programs and IMA Endorses More University Accounting Programs). The IMA has also created a Web site to serve as a forum for what it sees as a “competency crisis” in teaching the necessary accounting skills to students (see IMA Worried about Entry-Level Economy’).
“It fits in with what we call the competency crisis initiative, where companies are finding it hard to hire accounting talent with the skills and competencies they need,” said IMA vice president of research and professor-in-residence Dr. Raef Lawson. “What our task force did was look at the history of accounting education and how it’s changed, and looked at the curriculum offered by most schools. In many schools, accounting education is focused on public accounting. That is driven by a few factors. About half of accounting students go into public accounting for their initial job. Second, accounting schools want their accounting curriculum to be accepted by state boards of public accountancy and need to meet the requirements that they set, so that tends to put management accounting competencies on the back burner.”
Lawson acknowledged that public accounting is an important profession and the skills needed for it are important as well. “But the problem is that in two to three years, half the students that enter public accounting will then have transitioned to corporate accounting or management accounting,” he added. “Those students and those that have entered directly into public accounting are often not prepared with the skills that they need to succeed. What we’re recommending is that schools should not just focus on students’ initial job. They should prepare students for their lifelong careers. That entails providing students with a well-rounded accounting education, including the competencies that we list in the framework in that paper. That includes both the competencies you need for public accounting like assurance and internal control, but also corporate accounting-related competencies like planning, analysis and control.”
Research by the IMA indicates that schools are generally not preparing their students for careers in corporate accounting. “Over 80 percent of students end up pursuing corporate accounting careers, so it really is essential that we start this discussion about reorienting accounting education and making it broader than it is on many campuses,” said Lawson.
He would like to see more colleges and universities teaching accounting students about areas such as decision analysis, budgeting, financial planning and analysis, performance measurement and performance management, and cost analysis and management.
So far, the IMA has endorsed the accounting curricula of about a dozen colleges and universities. “That includes some of the best schools in the world, including Michigan State and Brigham Young University and other schools of that caliber,” said Lawson in an interview Tuesday. “We have a diverse set of schools that we endorse. We actually received our first application from a European school today, so that’s encouraging. Quite a few other schools have indicated that they are in the process of preparing their applications for IMA endorsement. We do expect the program to grow significantly over the next year.”
The IMA has also been getting involved internationally to promote management accounting around the world, joining with the International Federation of Accountants and recently renewing a memorandum of understanding with the Institute of Cost Accountants of India (see IMA Joins IFAC and Indian Cost Accountants Celebrate First Year of American Center).
“I think globally there is a challenge finding an adequate number of accountants with the requisite skills in management accounting,” said Lawson. “For example in China this year the Ministry of Finance is strongly emphasizing management accounting. Schools are developing management accounting programs, and we’re actually working with the Ministry of Finance and others to help address this issue. It is an issue in many areas of the world. We just recently joined IGC, which stands for the International Group for Controlling, an association based in Germany and Eastern Europe who focus on what they call controlling,’ which is loosely translated as management accounting. We’re the first non-European association to join that. The IMA is becoming a global thought leader in this space. We just renewed recently our mutual recognition agreement with the Institute of Cost Accountants of India. We recognize each other’s professional designation, so that’s a way in which we’re helping develop management accounting globally and as a profession and helping to advance it.”
In the U.S., the IMA is working with the American Accounting Association’s Management Accounting Section on a task force for improving management accounting curricula, which produced the paper on the new framework. “We’re very active in supporting the section and have quite a few educational initiatives that we support and are actively contributing to,” said Lawson.
He noted that the task force has also just written a second paper on integrating the various competencies. “What we are suggesting is that you can’t just develop these competencies in silos,” said Lawson. “For example, one of the competencies in our framework is planning, analysis and control. To really advance beyond a certain level you need to integrate the knowledge of that competency with other competencies such as information systems or process management and improvement. Every other framework that we know of just presents some list of competencies, but what we are suggesting is that we shouldn’t just develop these competencies in silos but look holistically at them and develop them in an integrated way. That’s really what folks do in the real world. You don’t do budgeting by itself, or you shouldn’t. You need to draw on the information systems. You need to have an understanding of an organization’s processes. You need to show leadership. You need to know the impact on external financial reports. These are all different competencies that you really need to integrate. You can’t just turn on this integration of competencies when you graduate. You need to have started doing that as a student and then build on that in post-graduate education.”