Pathways Commission Update Charting a National Higher Education Strategy for the Next Generation of Accountants

1. Pathways Commission UpdateCharting a National Higher Education Strategy for the Next Generation of Accountants Sponsored by the American Accounting Association (AAA) and the American Institute of CPAs (AICPA) Tennessee Society of Accounting Educators (TSAE) September 2011

2. Official Statement • All views presented today are our own and do not reflect the official views of the Pathways Commission, our organizations, AAA, or AICPA. Pathways Commission (AAA and AICPA)

3. U.S. Treasury Recommendation • In 2008, the U.S. Department of Treasury Advisory Committee on the Auditing Profession (ACAP) made a number of recommendations. Part VI. Human Capital recommendation #5 was: • “Encourage the AICPA and the AAA jointly to form a commission to provide a timely study of the possible future structure of higher education for the accounting profession.” Pathways Commission (AAA and AICPA)

4. Sponsoring Committee • AAA – Gary Previts, Case Western Reserve University, Former AAA President • AAA – Tracey Sutherland, Executive Director • AICPA – Denny Reigle, Former Director Academic and Career Development Team • AICPA – George Krull, Grant Thornton (Retired) Pathways Commission (AAA and AICPA)

5. Challenges for Profession and Academia • Globalization of business and markets • Escalating complexity of business • Lack of financial literacy • High profile frauds eluding regulatory scrutiny • Increasingly sophisticated technology • Increasing need for fair value, predictive and non-financial information Pathways Commission (AAA and AICPA)

6. Pathways Commission Objective • To meet these challenges we need to develop strategies and then structures to ensure that we have an adequate supply of the best, diverse talent to sustain the accounting profession, broadly defined, over the long-term. Pathways Commission (AAA and AICPA)

7. Pathways Commissioners • Bruce Behn - Chair (University of Tennessee) • Bill Ezzell(Deloitte) • Leslie Murphy (Murphy Consulting, Inc.) • Judy Rayburn (University of Minnesota) • Jerry Strawser(Texas A&M University) • Mel Stith(Syracuse University) Pathways Commission (AAA and AICPA)

8. A Collaborative Structure • Scope of the Commission • Attract individuals with high potential to excel in accounting, at any point in their lives • Enable higher education to provide the best possible educational experience • Support the need for ongoing educational experiences throughout the professional accountants’ careers • Three Supply Chains each to focus on several different aspects of the challenges • Work Groups emerged within and across the three Supply Chains Pathways Commission (AAA and AICPA)

9. Supply Chain Organizations

10. Supply Chain Representatives Pathways Commission (AAA and AICPA)

11. Overall Pathways Statistics • 639 Years of Practice Experience • 585 Years of Education Experience • Many people wear different hats (examples) • Ernie Almonte, past AICPA chair, former Rhode Island Auditor General, now DiSanto, Priest & Co. • Jack Krogstad, Creighton University, former Academic Fellow at the Office of the Chief Accountant Pathways Commission (AAA and AICPA)

12. Supply Chain Leaders • Supply Chain #1---Susan Crosson, (Santa Fe College) • Supply Chain #2---Mark Higgins, (University of Rhode Island) • Supply Chain #3---Scott Showalter, (Retired KPMG partner and N.C. State University) Pathways Commission (AAA and AICPA)

13. A Collaborative Process • Information gathering and sharing to level-set all participants • Development of key questions for exploration • Build-out of perspectives on key issues • Leading to implementable recommendations Pathways Commission: Charting a National Strategy for the Next Generation of Accountants

14. Feedback Received from Presentations by Members of the Pathways Commission Pathways Commission (AAA and AICPA)

15. Feedback Received from Presentations by Members of the Pathways Commission Pathways Commission (AAA and AICPA)

16. Commission and Supply Chains have Developed the Following Working Issuesusing Feedback from Presentations

17. 1.What is the Value Proposition of a Broadly Defined Accounting Profession? Issues • Definition of our profession • Define a signature pedagogy • Identify benefits and contributions of accounting to our economy • Stress the breadth of the profession - accounting goes beyond auditing Impediments • Public perception of accounting careers as “less than exciting” • Lack of understanding of important role of accounting to our economy

18. 2. Identify Current and Forecast Future Markets for Accounting Information And Professionals Issues Impediments Currently bits and pieces of job market are tracked Lack of national data base to track job market for all accounting students and careers No “Meta”-Professional accounting organization that cuts across functional areas • Gather supply and demand data for all accounting professionals • Identify necessary current and future competencies for each area of practice • Conduct research to identify demand, considering outsourcing trends

19. 3. Strengthen quality and quantity of high potential accounting students Issues Impediments Students discover accounting too late in their career choice process • Career Perceptions • Brand identity and careers beyond auditing • High schools: Dual enrollment and AP • The first course as a recruitment tool • Placement of accounting course in curriculum

20. 3. Strengthen quality and quantity of high potential accounting students Issues Impediments Diversity of accounting professionals does not mirror diversity of US population Under represented populations lack role models and mentors • Curriculum • Educational paths for less “traditional” entrants and career options (paraprofessionals) • Less traditional educational paths for traditional entrants (Rutgers program) • Diversity

21. 4. Broaden and improve the speed of curricula and pedagogy innovation in a rapidly changing complex global environment Issues Impediments Cost of development of teaching materials (simulations) to facilitate experiential learning Difficulty of integrating IT changes into the classroom Lack of national clearinghouse for innovation in curricula and pedagogy. • Inventory accounting curricula at high schools, community colleges, and universities • Integrate cutting edge practices, IT/systems, and global/cultural experiences

22. 4. Broaden and improve the speed of curricula and pedagogy innovation in a rapidly changing complex global environment Issues Impediments Inadequate integration of educational research findings into PhD programs and faculty awareness Slow process of updating textbooks and integrating new material • Understand learning patterns of different generations of students • Rethink textbooks and other learning materials

23. 5. Assess Faculty Supply/Demand Status Issues Impediments One-size fits all PhD program design Lack of national (global) PhD program clearinghouse Distance between accounting research and practice • Continue to actively recruit Ph.D. students from practice for specialized disciplines (audit and tax) • Review current Ph.D. programs and processes (program length and foci) • Improve integration of professionally and academically qualified faculty • Gather data on supply and demand for Ph.D. graduates

24. 6. Strengthen bi-directional links between business/profession and the educational community (research and teaching) Issues Impediments Research disconnect between accounting professionals and academia Difficulty of obtaining data for research Narrow focus of academic accounting research reward systems • Internships/externships • Collaborative research and data sharing • Integration of professionals into classrooms and academe • Professional experiences for faculty by specializations

25. 6. Strengthen bi-directional links between business/profession and the educational community (research and teaching) Issues Impediments Faculty time constraints Lack of easily available and affordable mechanisms to update faculty Only partial integration of clinical faculty into academia • Continuing educational opportunities for faculty • Advanced, professional degrees (post-MS specialist, leadership Ph.D.) • Professional certifications and licensure

26. Next Steps • Initial recommendations by Summer/Fall 2011 • Final recommendations by November/December 2011 • Final Report targeted for January 2012 • Phase 2 planning in process now – focus on implementation Pathways Commission (AAA and AICPA)

27. Potential Discussion Questions Pathways Commission: Charting a National Strategy for the Next Generation of Accountants • How do we overcome impediments? • Higher education? • Practice? • Sustaining change is hard • How can innovation become institutionalized? • Other?

28. We Need Your Input Send your input via the Pathways Commission space: http://pathwayscommission.org Or send your input to Bruce Behn (bbehn@utk.edu) Pathways Commission (AAA and AICPA)