Accountancy Education Research

Prof. J.P.J. (Hans) Verkruijsse PhD RE RA

Objective of accounting education

Building a sound financial future

and

restoring the trust

The qualification, education, training and experience of professional accountants and auditors are of crucial importance for the functioning of the global financial infrastructure.

A wide range of stakeholders, including regulators and standard setters, professional accountancy organizations and accountancy firms as well as issuers of financial reports and users of accounting services depend on their professional expertise and skills.

Objective of accounting education

Building a sound financial future

and

restoring the trust

• A sound financial future is build on trust

• Trust is based on reliable information

• Information is reliable when produced by people with the right professional skills

• Proper accounting education supports the development of professional skills

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Accountancy Education Research

Research area’s:

• specifications of appropriate assessment methods,

• competencies,

• professional attitudes and ethics,

• variations in nationally-imposed requirements,

• supply and demand for accountants and auditors who can produce and audit transnational accounts.

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Global Accountability Development Institute

Global Accountability Development Institute (GADI), research project:

Global Accountability Transparancy Index (GATI):

Research question:

To what extend can you rely on the work performed by an auditor in another jurisdiction?

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43 countries reviewed

Asia & Pacific: Australia, Hong Kong, India, Japan, Malaysia, New Zealand, Pakistan, Singapore and Sri Lanka.

Middle East, North Africa, Central Europe and Eurasia: Kazakhstan, Kosovo, Moldova, Saudi Arabia, Serbia and Turkey.

European Union: Czech Republic, France, Hungary, Ireland, Italy, Netherlands, Romania, Sweden and United Kingdom.

Latin America: Argentina, Brazil, Chili, Colombia, Cuba, El Salvador, Mexico, Peru and Venezuela.

North America: Canada and USA.

Sub Saharan Africa: Cameroon, Ghana, Kenya, Lesotho, Senegal, South Africa, Tanzania, Zimbabwe.

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More to come

Countries under review on this moment

• China

• Russia

• Germany

• Panama

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Global Accountability Transparancy Index (GATI)

GATI’s information blocks:

Pillar 1, Legal, Regulatory and Institutional Framework

Pillar 2, Audit, Assurance and Quality Control

Pillar 3, Global Accountancy Education

Pillar 4, International Public Sector Accounting Standards

Pillar 5, International Financial Reporting Standards

Pillar 6, Ethics & Discipline

Pillar 7, Corporate Governance – Transparency & Disclosure

Pillar 8, Professional Accountancy Association Institutional Capacity

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GATI-Pillar 3, Global Accountancy Education

The Global Accountancy Education pillar (GAE 2012):

• developed a competency framework that includes:

qualification requirements,

general and professional education,

practical training and experience,

Continuing Professional Development.

• makes available information about:

the qualification,

education and

training of accountants and auditors

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GAE 2012 based on earlier research

• 2002 “Impact of Globalization on Accountancy Education”; global classification study

• 2005 “Global Accounting Education Benchmarking”; regional benchmarking study of accountancy education

• 2007 “Trends in Global Accounting Education”; global analysis of trends in development of accountancy education

• 2009 “Accountancy Development Index”; global benchmarking pilot study of the accountancy environment

• 2011 “Measuring country-level accountancy performance and achievement”; accountancy development index, a pilot study funded by USAID

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Accountancy Educational programs

Accountancy educational programs:

• operate in a very complex environment:

rooted in local concerns

affected by outside influences and international movements

sensitive to the educational requirements for qualification

• factors influencing qualifications are;

regulation set by law and/or by professional bodies,

criteria set by academic organizations

standards set by professional accounting firms.

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Accountancy Education in Developing Economies

Bel Needles (2005) identified the following weaknesses:

• quality of academic education for pre-qualification needs improvement;

• too much emphasis on bookkeeping

• instructors lack knowledge of international standards and practices;

• lack of adequate resources for higher education;

• professional ethics is not taught as a separate subject;

• examinations do not always represent good practice;

• continuing education requirements do not always exist.

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GAE 2012 research methodology

The benchmarking methodology may be summarized as follows:

• country experts with up-to-date knowledge of the present situation conduct the self assessment;

• external and independent assessors validate the results of the self assessment to achieve internal relevance and external credibility; and,

• multiple indicators.

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GAE 2012 research references

References used:

• IES’s issued by the IAESB

• model curriculum of the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting

• Common Content Initiative12 devised by a group of professional bodies in the EU and the EU 8th Directive on Statutory Auditors

• standards issued by Certified Management Accountant (CMA)

• Standards issued by American Institute of Certified Public Accountants (AICPA)

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IAESB / IFAC

IAESB:

• developed high quality standards and other guidance to strengthen accountancy education worldwide;

• focuses on:

prequalification

practical experience and training,

assessment,

continuing professional education needed by accountants.

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International Education Standards

The IAESB has issued the following standards:

• IES 1: Entry Requirements for Professional Accounting Education Program;

• IES 2: Content of Professional Accounting Education;

• IES 3: Professional Skills and General Education;

• IES 4: Professional Values, Ethics and Attitudes;

• IES 5: Practical Experience Requirements for Aspiring Professional Accountants;

• IES 6: Assessment of Professional Capabilities and Competence;

• IES 7: Continuing Professional Development;

• IES 8: Competence Requirements for Audit Professionals.

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GAE 2012 reseach vs IES’s

General Characteristics

Country Characteristics Legal system, economic position, region

Professional Characteristics Professional regulation and recognition

Qualification Characteristics Practice rights of accountants and auditorsInternational recognition of qualifications

Competency Pillars

Personal DevelopmentUniversity Entrance & Exit Level (IES 1 & IES 2)Professional Skills & General Education (IES 3)Professional Values, Ethics & Attitudes (IES 4)

Professional Accountancy Education Accountancy, Finance, Organizational, Business Information Technology

Knowledge (IES 2)

Professional DevelopmentPractical Experience Requirements (IES 5)Professional Capabilities & Competence (IES 6)Continuing Professional Development (IES 7)

Competence for Auditors Professionals Advanced Professional Knowledge, Skills, Values, Ethics, Attitudes, advanced

Practical Experience, Assessment & CPD (IES 8)

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GAE 2012 research Competency Pillars

Competency pillars:

• personal development, combines elements that in many countries are achieved through university education; entry level should be at least equivalent to that for admission into a recognized university degree program or its equivalent ;

• professional accountancy education, the theoretical education normally provided by universities and/or professional accountancy organizations;

• professional development, combines practical experience, assessment of professional competence, and CPD. Normally the accountancy profession is leading in these areas.

• competency for audit professionals, includes higher level requirements for licensed accountants and auditors.

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GEA 2012 research scores by region

Region Personal Development

Professional Accountancy Education

Professional Development

Competence for Audit Professionals

Adopt Impl Adopt Impl Adopt Impl Adopt Impl

Asia & Pacific .91 .81 .98 .97 .98 .89 .91 .95

Central Europe & Eurasia, Middle East & North Africa

.93 .61 .80 .61 1.00 .70 .83 .71

European Union .97 .86 .91 .94 .95 .89 .91 .96

Latin America .90 .58 .84 .57 .32 .23 .70 .58

North America .97 .89 .96 .96 .83 .89 .75 .95

Sub Saharan Africa .97 .76 .96 .95 1.00 .70 .89 .77

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GEA 2012 research scores by country

Personal Development

Professional Accountancy Education

Professional Development

Competence for Audit Professionals 0.00

0.50

1.00

Saudi Arabia

Personal Development

Professional Accountancy Education

Professional Development

Competence for Audit Professionals 0.00

0.50

1.00

Moldova

Personal Development

Professional Accountancy Education

Professional Development

Competence for Audit Professionals 0.00

0.50

1.00

Sri LankaPersonal Development

Professional Accountancy Education

Professional Development

Competence for Audit Professionals 0.00

0.50

1.00

Australia

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GEA 2012 research scores aggregated

Region Aggregate Adoption Implementation

Asia & Pacific .93 .95 .91

Central Europe & Eurasia, Middle East & North Africa

.79 .88 .70

European Union .92 .93 .91

Latin America .60 .69 .51

North America .90 .88 .92

Sub Saharan Africa .88 .95 .80

Sub Saharan Africa

Latin America

Central Europe & Eurasia, Middle East & North Africa

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

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Conclusions

• The IES’s are a comprehensive set of consistent, high-quality standards for educating professional accountants.

• Educational programs in compliance with IES, financial reporting and auditing standards will produce high quality professional accountants.

• Studies by Karreman and Needles (Karreman, 2002, 2006, 2007; Needles 1994, 2005, 2008, 2010, 2011) has identified numerous occasions of internationally compatible development.

• GEA 2012 research results indicates a difference between adoption and implementation on country level.

• GEA 2012 research results will support the users of auditors reports in validating them.

• GEA 2012 research will contribute to the GATI research project.

Questions?

Don’t hesitate!

Prof. J.P.J. (Hans) Verkruijsse PhD RE RA

Tilburg University

e-mail: J.P.J.Verkruijsse@tilburgunivesity.edu

mobil: +31 6 53 354 957