The Prevalence of CPAs in the Accounting Academy

Tapis grew weary of answering the question and used a semester sabbatical to prepare for and pass the CPA exam. He explains in his article how preparing for the exam changed the way he teaches; he does not teach toward the exam, but instead uses his knowledge of the exam content to know what practicing accountants need to understand. Tapis believes he is a better teacher as a result of his experience and that being a CPA helps bridge the education gap by opening the dialogue between educators and practitioners. Indeed, recent research shows a significant, positive relationship between a faculty’s CPA certification status and candidate performance on the CPA exam (Dennis Bline, Stephen Perreault, and Ziaochuan Zheng, “Do Accounting Faculty Characteristics Impact CPA Exam Performance? An Investigation of Nearly 700,000 Examinations,” Issues in Accounting Education, August 2016, http://bit.ly/2hqAcPA).

The CPA license is also an asset to the accounting program. The Association to Advance Collegiate Schools of Business (AACSB) establishes the standards for a university’s accounting program to achieve a level of accreditation separate from the accreditation of the overall business program. Although these standards deal heavily with the academic training and research activity of accounting faculty, they also emphasize faculty involvement with the accounting profession. One standard specifically states that a sufficient portion of the school’s accounting faculty should have professional credentials (including certifications) and experience, while a second requires that the faculty, individually and as a group, have significant engagement and interaction with the profession on a continuing basis. The requirements for obtaining and maintaining the CPA license allow faculty to meet many of the AACSB’s requirements as well, such as through the study and experience necessary to obtain the license, engaging in CPE activities, and becoming involved with professional organizations (not mandatory for CPAs, but an easy way to gain access to CPE). Other standards require faculty to meet the criteria for one of the AACSB’s four categories of qualified faculty, three of which require faculty to stay current through professional (as opposed to research) activities. The AACSB also requires ongoing assessment of the program’s quality based upon its success in meeting its own learning objectives (e.g., graduates’ passing rate on the CPA exam) as part of its overall mission.

Overall Results

A 1970 study revealed that 71% of the accounting faculty at AACSB-accredited schools were CPAs, while 57% held a doctorate (Donald Kyle and Jan Williams, “The Significance of the CPA Certificate for Accounting Professors,” Journal of Accountancy,vol. 133, no. 5, 1972). Using J.R. Hasselback’s Accounting Faculty Directory 2014–2015, which provides a wealth of self-reported information on the faculty from all U.S. accounting programs, the authors determined that these percentages have changed drastically in the intervening 45 years. Today, only 55.64% of the faculty at AACSB-accredited accounting programs are CPAs, while 78.36% hold a doctorate.

Since accounting programs granting a doctorate typically have a stronger research focus than nondoctoral programs, the authors split the sample between the 57 doctoral programs and the 116 nondoctoral programs. Interestingly, little difference was found between these two groups concerning the portion of faculty holding the doctorate (79.41% and 77.54%, respectively).

Exhibit 1, however, shows significant differences between doctoral and non-doctoral programs with respect to the percentage of faculty holding the CPA license. For example, only 47.65% of the faculty at doctoral programs are CPAs, compared with 61.81% of the faculty at nondoctoral programs. Doctoral programs are typically associated with the larger, flagship universities; thus, their accounting programs are larger as well. Still, the vast majority of students attending doctoral accounting programs are pursuing their bachelor’s or master’s degrees, just like students enrolled in nondoctoral programs.

Exhibit 1 also shows the results for faculty who hold a doctorate. Again, a significant difference exists between faculty at doctoral and nondoctoral programs; only 46.23% of the PhD faculty at doctoral programs are CPAs, as opposed to 60.54% at nondoctoral programs. Finally, Exhibit 1 reveals a similar discrepancy when considering faculty without a doctorate (i.e., highest degree achieved is MAcc, MBA, JD, LLM, or other), as 53.10% of these faculty at doctoral programs are CPAs, compared with 66.21% at nondoctoral programs.

Gender Effects

Examining gender reveals that 35.07% of the total accounting faculty at the 173 institutions are female, while 64.93% are male. Exhibit 2 shows that the percentage of faculty with a CPA license differs very little between females and males (i.e., 54.56% of female faculty and 56.22% of male faculty are CPAs). Exhibit 2 also provides a gender comparison within doctoral and nondoctoral programs, again showing little difference. At doctoral programs, 46.14% of female faculty and 48.46% of male faculty are CPAs; at nondoctoral programs, 61.09% and 62.20% of female and male faculty, respectively, are CPAs.

Discipline Effects

Most would expect a high percentage of faculty teaching auditing or financial accounting courses to be CPAs since the franchise for the profession is the CPA’s ability to audit a company’s financial records and render an opinion on its financial statements. Exhibit 3 shows, however, that only 58.33% of these faculty are CPAs. For doctoral programs, less than half (49.75%) are CPAs while, for non-doctoral programs, 64.85% are CPAs.

Since no one other than CPAs can perform external audits and opine on financial statements, one might presume that nearly all faculty teaching auditing would be CPAs. Exhibit 3 shows that this is not the case; for the overall sample, approximately 70% of the faculty teaching auditing are CPAs, which means almost one-third are not. The percentage of auditing faculty who are CPAs increases to approximately 75% for nondoctoral programs, but decreases to approximately 65% for programs granting doctoral degrees.

Analysis

University accounting programs have a dual mission (i.e., preparing students for their professional careers and advancing the accounting profession through published research). The backbone of any AACSB-accredited accounting program’s faculty is its corpus of tenure-track educators, who guide the program in achieving these goals. Having a research doctorate in accounting is important for the latter objective, but having professional experience and licensure would seem crucial for both, especially training students for careers as practicing accountants. Thus, it would seem a real advantage would exist in hiring tenure-track faculty who have both a research doctorate and the CPA license. As noted above, the percentage of accounting faculty at AACSB-accredited programs with a CPA dropped from 71% in 1970 to 56% in 2015. Instead, the hiring of tenure-track accounting faculty seems biased toward hiring faculty with only a research doctorate. Below is an excerpt taken from a recent advertisement for an assistant professor (i.e., tenure-track) position at an AACSB-accredited accounting program:

The advertisement is from a nondoctoral accounting program. The above qualifications are not an anomaly, as many accounting programs do not require professional certification or experience for tenure-track positons. Obtaining the doctorate is a rigorous journey, typically taking four years or more. Preparing for and passing the CPA exam, as well as obtaining the professional experience needed for licensure, require considerable effort as well. Teaching accounting at the collegiate level carries with it, however, significant responsibilities and rewards, especially for tenure-track faculty, and the profession should expect those charged with educating its future members to be adequately qualified to do so.

There seems to be a widening gap between accounting education and the accounting profession, as fewer accounting faculty have ties to the practice of accounting (Louis Grumet, “Bridging the Education Gap,” The CPA Journal, August 2001, http://bit.ly/2uZGKJE). Perhaps it is time for the accounting profession to adopt the education model of schools of medicine and law, where in addition to academic training, faculty members must also possess professional certification and practical experience.