Prior to 2007 I had little idea the accounting profession existed. I mean, I knew it was a thing and it’s possible young me read a story or two on the Yahoo! homepage about Enron but it wasn’t until 2007 that I really knew about it. That was the year I started working in CPA review, Going Concern was founded two years later.
Why am I talking about this? Because old people have a compulsion to constantly refer to the nebulous period of time we call “back in the day?” As much as I love giving in to my old person compulsions (another being unable to get up or down from a seat without making a loud and painful sounding grunting noise), I bring it up to say that there’s a lot of stuff I missed prior to 2007, which is why I have a deep appreciation for old-timers who generously share accounting profession lore in the comment section and letters to the editor.
Here’s an example of something I wasn’t aware of until many years after it happened: the time The Powers That Be tried to shit out the XYZ credential. Let’s quickly transport ourselves back to 2001:
Under the AICPA plan, professionals who possess the XYZ credential will have specific integrative competencies, professional competencies, and cross-disciplinary knowledge. Integrative competencies represent the true differentiators of the XYZ professional and demonstrate the capacity to envision, strategize, conceptualize, and innovate. These competencies include creating and leveraging knowledge, systemic thinking, future focus, strategic thinking, innovation, conceptual skills, and a global perspective. Professional competencies are the enablers that allow the XYZ professional to be effective. These competencies include an entrepreneurial orientation, stakeholder focus, external focus, analytical prowess, organizational insight, networking and resourcing, recognized expertise, impactful communication, compelling influence, dedication to excellence, and lifelong learning. The XYZ professional must also have a solid knowledge base. This knowledge differs from knowledge required for other credentials in that it covers a much broader range of functional expertise. This cross-disciplinary knowledge covers accountancy, business law, corporate finance, human resources, information technology, marketing/sales, and operations. The knowledge required in each of these areas is not at the depth of a professional who works exclusively in the area; however, the XYZ must have a big picture understanding of specifically how a competency brings value in a business sense.
When put to a vote, 62.7% of voting AICPA members shot it down. RIP XYZ, we hardly knew ye. Note that ‘XYZ’ was a placeholder, they were apparently in such a rush to create this CPA-killing credential they couldn’t come up with a name.
Something else happened back then at the turn of the century, this Journal of Accountancy article dated January 1, 2002. The article is “The Crisis in Accounting Education” by Alexander L. Gabbin, CPA, PhD, then the KPMG LLP Professor of Accounting at James Madison University. It looks like he’s still teaching and as recently as 2020 he wrote about the supply of accounting graduates in The CPA Journal.
From the JofA piece:
One of the early warning signs that major changes in accounting education were needed came when major CPA firms reengineered themselves as “professional services” rather than “public accounting” firms. So convinced were they of the need for dramatic change, not even intense SEC pressure could deter them from offering the services the marketplace demanded. Unlike the academic community, CPA firms were quick to realize that new business realities demanded a broader set of competencies.
Some faculty argue that the loss of the best students to other majors is due to higher starting salaries. Employers, they say, aren’t paying accounting graduates as much as those with other majors such as consulting and computer systems. While starting salary is certainly an issue, is it the only reason the best and brightest students are choosing fields other than accounting in growing numbers? Why have the starting salaries of accounting majors decreased relative to other majors? Perhaps salary differentials reflect marketplace expectations about valuable skills, knowledge and abilities. Faculty who label starting salary as the culprit should consider that the real reason may be an accounting curriculum that both employers and students no longer value.
The flight of the best students to other areas of study exposes a deeper problem: The academic community, in general, tends to resist major curriculum shifts. In many accounting programs, it isn’t unusual to find decision-making models focused exclusively on enrollment trends, number of students hired by major firms, starting salaries and anecdotal testimony of alumni, campus recruiters and employers as proxies for program quality.
The article also includes some fast facts which I’ve taken a screenshot of to immortalize forever on the internet. Reminder, this is 21 years ago:
- The percentage of college students majoring in accounting dropped to 2% in 2000 from 4% in 1990.
- The percentage of high school students who intend to major in accounting fell to 1% in 2000 from 2% in 1990.
- More than 80% of faculty members surveyed said there were fewer qualified accounting students than five years ago.
- Accounting department heads reported that information systems graduates commanded the highest starting salaries among business-related graduates.
- Faculty members and practitioners agreed paying higher starting salaries was the most important step corporations and accounting firms could take to attract better students into the accounting profession.
The American Accounting Association link referenced in the above screenshot is dead, I’ve embedded a PDF of the paper (“Charting a Course through a Perilous Future”) at the bottom of this post. The paper is a result of four major professional groups — The Institute of Management Accountants (IMA), the American Accounting Association (AAA), the American Institute of Certified Public Accountants (AICPA), and Big 5 accounting firms — joining forces to study the current and future problems associated with accounting education, funded by the Big 5 firms’ Sponsors Task Force.
A snip from that paper:
Accounting educators have been warned many times that accounting education must change to maintain relevancy, retain its position within the profession, and add value to students and business. The time to change just to be better is past. In fact, we must transform our educational programs merely to survive. Failure to embrace market-based changes will continue to decrease the relevance of accounting education.
This all seems so familiar…
Accounting education is plagued with many serious problems that if not seriously addressed and resolved will lead to its demise. Consider the following as examples:
- The number and quality of students majoring in accounting is decreasing rapidly. Students are telling us by their choice of major that they do not perceive an accounting degree to hold the same value it once did nor is it considered as valuable as certain other business degrees.
OH MY GOD this could have been written in 2022. In fact, the value proposition comes in in 2021 Illinois CPA Society research “A CPA Pipeline Report: Decoding the Decline” which is a follow up to their 2016 feature “Pipeline Disruption: The Search for Solutions to the Weakening Supply of CPAs.” Which is to say, we done been knew. Nothing changes if nothing changes. I think they teach that in AA meetings.
The gatekeepers and overlords of the profession have had ample warning this would happen, firms were literally told in research they themselves funded that something had to be done to change course. And yet here we are. All that’s changed is we’re down to a Big 4 instead of 5.