The Pressure to Adapt
Accounting as a discipline must evolve to remain relevant in higher education. Its evolution must be more than a reorganization of existing courses, as suggested in The Accounting Professional of Tomorrow (2020), or an increased emphasis on technology and statistical methods. Those minor changes, many reflected in the AICPA’s CPA Evolution Project, may prolong the life of accounting as a stand-alone major, but they are not enough. It will help departments make the next enrollment period, but ultimately they will be forced to close their doors. As noted by Alexander Gabbin (Warning Signs about the Future Supply of Accounting Graduates, September 2019, http://bit.ly/2pT8Vud), college and university customers—students—are already leaving the major for more lucrative majors. Accounting departments cannot expect to reengage those students by repackaging the major (e.g., transforming cost accounting into managerial decision making, adding data analytics to audit theory, incorporating financial statement analysis into advanced accounting) and selling the same product with more buzzwords or new courses. Like a conglomerate that has become too large to manage its business lines, accounting as an independent business major must be broken up and realigned with academic competitors to save it from extinction. Much of the core accounting curriculum should remain—albeit in other departments and in general interdisciplinary business courses—but the accounting department itself should be eliminated and reorganized predominately under finance and information systems departments. In the author’s opinion, this approach will unlock the value in the fast-evolving accounting roles that accounting firms and future employers seek from graduating students.
The Evolution Project
The AICPA, observing the declining pipeline of CPAs, launched the CPA Evolution Project to modernize the professional certification and reorient the collegiate curriculum. The AICPA has given colleges and universities a roadmap to reorganize their accounting departments over the next decade. Notably, the Evolution Project highlights skills consistent with what accounting is becoming and downplays skills native to traditional accounting (e.g., journal entries, tax preparation, manual controls). The Evolution Project establishes a core of accounting, tax, audit, and technology, and pairs it with a required specialty in either tax compliance and planning, business analysis and reporting, or information systems and controls. In this author’s opinion, this lays out a path to reorganize accounting into the majors where its contents fit neatly and provide supporting knowledge and skills. The financial statement preparation and tax concentrations should be reorganized as tracks under collegiate finance departments. Audit and accounting information systems concentrations should easily be absorbed by universities’ information technology departments. Students would then be able to further specialize in their track, as the Evolution Project envisions—albeit in departments other than accounting.
Even though the CPA Evolution Project is aligning the credential with practice, it is also underscoring that the value in the license lays not within the accounting curriculum that has existed for decades; the new value is the technology, the analytics, the systems, and the tax research. But I believe the curriculum realignment anticipated by the CPA Evolution Project will only lead to an even faster decline in enrollments if accounting remains siloed as a stand-alone major.
Over the past decade, the profession has expected aspiring accountants to master a broader set of skills. Accountants are not only expected to prepare and analyze financial statements, perform tax research, or audit complex corporate entities; they are also expected to be management consultants, expert data analysts, coders, technical writers, and information system auditors. The sum of these parts should make accountants desirable, highly compensated technical experts. In practice, they seem more like jacks of all trades, masters of none: CPAs as currently constituted are worth less than the sum of the parts. As the profession gets more specialized, the accounting curriculum is expanding to include more information, more courses, more skills, and more tracks—but students are less skilled at each one. It’s a cycle that can’t be fixed by repackaging existing courses. It can only be fixed by eliminating the accounting major and unlocking accounting’s interdisciplinary value and specialization within finance, information systems, or other departments.
By modernizing the professional credential to match practice, accounting would be deemphasized, but not eliminated. This transition out of accounting and towards a broader skill set is quickly actionable if business schools are willing to adapt, moving accounting faculty to new departments where their skill sets will be more directly applicable, but just as valuable to the accounting career track students who will take them. The ongoing pandemic has already caused universities to perform comprehensive reviews of majors and consolidate where necessary. Accounting divesture and consolidation by finance and information systems would solve two problems at once—it would better prepare students for the accounting profession of today while giving them a deeper skill set they can market if they leave the profession.
Accounting still matters. But this author believes it can no longer add value by standing alone.
Accounting is already integrated across every business major, whether these majors consider their foundations in accounting or not. Accounting is what tells a business owner or manager if they have enough cash to make next week’s payroll (entrepreneurship) or how to budget for their quarterly sales, bonuses, and purchases (management). Accounting is what gives analysts the information to assign prices to equities (finance). It determines budgets for ad campaigns (marketing). And it serves as a core base for many of the job opportunities in technology work (information systems). Despite its broad reach and cross-discipline importance, accounting attempts to stand alone; yet its true value lies in its position as the “language of business.” Like the accounting student of today, the parts of the accounting discipline are greater than their sum.
CPA firms seem to have recognized the value in skills not concentrated in accounting, as they are hiring an increasing amount of non-accounting professionals. According to the 2019 AICPA Trends Report, 30% of recent Big Four hires were non-accounting majors. The firms built to deliver accounting expertise are seeking out employees with expertise outside of accounting. They are telling job seekers what they value, and what they value is no longer students who specialize only in accounting. The market for accounting services has fundamentally shifted away from a narrow skill set in accounting—and it’s not coming back. I believe academia must meet the firms where they are and realign our courses so that our students can specialize and deliver value to accounting firms.
The hiring trend of the largest firms is in part a recognition that the profession will continue to need fewer newly minted CPAs. A 2013 study by Oxford University predicted that approximately 94% of accounting and audit work will be automated over the coming decades, further reducing firms’ demand for graduates with only accounting degrees. Accounting is only one tool Big Four new hires need—it is not the toolbox it once was.
Even as CPA firms require more of their new hires, they have failed to compensate their employees for the breadth of knowledge and skills that are demanded. CPAs are expected to have data analytics skills, but are paid less than a data analyst. They are expected to complete 150 credit hours, yet are given the same jobs as classmates with a typical 120-hour undergraduate degree. As automation expands, CPA firms will continue to hire fewer accounting students, at lower pay. Many students come to accounting because they can secure a job upon graduation. But we don’t ask the counterfactual: what kind of job and salary could they have found if they took their talents to another field? It doesn’t appear to be a stretch to suggest they would be still gainfully employed.
Specialty, not Stand-alone
There is still a need for accounting knowledge. However, the combination of automation, firm hiring trends, and expanding demand for other specializations makes it more likely that the knowledge is best delivered as a component or specialization within other disciplines, not as a stand-alone discipline. Accounting still matters. But this author believes it can no longer add value by standing alone. It must shrink its educational footprint and divest its core components into existing majors, thereby eliminating accounting as a collegiate major and department. By breaking itself up, the accounting discipline can thrive as a knowledge base and area of study that will attract the best and brightest students—albeit through other departments.