Educating Accountants: A Strategy for Success
Author:
David Hatherly
[Full text] Any strategy, whether for a nation, a firm, or a profession, must focus on the need for innovation and have the ability to exploit it.
Business innovates. Accounting observes, explains and thus creates a new platform of understanding for further innovation.
Fundamentally accountancy is about explaining and understanding business innovation and corporate performance. This goes well beyond, and contextualises, the traditional accounting of the profit statement and balance sheet.
Strategy for the Accounting Profession
Universities, firms, and institutes engaged in the training of accountants must train to retain in a lifelong partnership for knowledge development. There must be a partnership between trainers as the guardians of the global knowledge platform, and individual accountants who adapt this knowledge to a local context. Think globally, act locally but also learn locally, apply globally - because much innovative thinking begins locally and is subsequently absorbed into global knowledge schema. To maintain local contextualisation and innovative independent thinking, the profession needs a strong focus on its ethical dimension. The combination of integrity and innovation is much needed and very powerful.
Implications for Education
The future implies less serial learning and more holistic learning. Serial learning is systematic and incremental. Holistic learning is creative flowing from an understanding of and desire to challenge the whole picture. It requires more case study learning and a longer training period enabling post experience study. Formal accreditation of front-end university degrees should end, replaced by partnering between universities and institutes. Qualification should not be the assessment of a point in time set of competencies but assessment of commitment and ability to account for innovative situations over an extended period. For example, an interwoven experience of accounting education and practice over 6-8 years might culminate in the simultaneous award of degree and CA.
For some time to come universities, firms and institutes will continue to form an uneasy partnership providing the professionâ??s structure for knowledge reception, generation and transfer. Universities' research capability should give them a strong position but over-rigorous academic research models may marginalise them.
The global firms seem best placed to dominate and have taken the lead to date but their size is a weakness as well as strength. How can they keep the talented partner who may be more highly regarded as a challenging member of the client's team than as one of many thousands of partners worldwide? To succeed, the big firms may need to go for a less centralised, more networked organisational structure appropriate to an innovative, less structured environment.
With powerful networks at their disposal, through their sister bodies internationally and through their lifelong members in business and in the profession, the institutes are well placed to become the networked virtual "membership" universities of accounting for the future. To date, however, they have focused on standardisation projects rather than on the creation of new knowledge.
The Mission
Many educationalist ideas are ill suited to the holistic knowledge base required for accounting as a service to innovation and wealth creation. Rather than detailed outcomes what is needed is a sense of mission. In my view the mission is to produce a profession of well balanced professionals with the right combination of technical expertise, a sense of business and public responsibility, creative thinking ability and common sense. Mindset is as important as toolset. Accounting trainees are currently weighed down by accounting rules and techniques and disillusioned by their seeming irrelevance to the driving forces of business. This is not a good platform for the future. Change is essential. The institutes in particular must realise that changing a syllabus is only part of the solution. There must also be a vision of how the professional institute is to function as the premier accounting knowledge organisation of the future.
INSET IN BOX
Illustrations of Accounting Beyond the Financial Statement
Reinvention of Audit - Business Risk
Audit now has business risk as its primary interest. Audit helps to identify the risks. Management decides which risks to run. Financial results are judged in terms of adequacy of reward for the risks engaged with.
Strategic Accounting
Strategic accounting can refer to obtaining financial and non-financial information about competitors, markets, customers and suppliers. It can refer to non traditional cost /profit analysis by, for example, customer or business process. It can refer to the general need to interpret financial results in a strategic context as might be done, in the better quality of Operating and Financial Review.
Enterprise Planning Systems
Enterprise Planning Systems are an example of how standardisation can itself, in the right circumstances, be innovative, for example, by facilitating operational integration between functions and convergence of accounting and management information systems. But, if accountants only work at the innovative edge who is going to do all the standard accounting process for standard business models? The answer is, of course, the IT system and the accountant responds to this by developing the knowledge to ensure that the software selected meets the requirements of the business.
Intangibles
Only a fraction of Microsoft's stock market value appears in the balance sheet. Much of this gap is due to the strategic advantage of market position, brand strength, and increasingly, research and knowledge.
Knowledge Management
If knowledge is the main resource, then knowledge management is the key to success. Such management has both global and local dimensions. The rate at which new ideas are disseminated around the world puts a premium upon reflection and understanding of their financial consequences.
Tomorrow's Company
The Tomorrow's Company Movement picks up the knowledge theme. In contrast to the traditional assumptions of accounting, tomorrow's company is about knowledgeable people hiring financial capital.
David Hatherly is Professor of Accounting at Edinburgh University Management School.
Accountancy Ireland Vol 31 No 3 June 1999