Accounting Courses Get a Makeover


In August, 2000, a pair of accounting professors made a dire prediction: Without a serious overhaul, university-level accounting education might not survive. "Really, it cannot get much worse," argued Brigham Young University's W. Steve Albrecht and Robert J. Sack of the University of Virginia in a 70-page monograph. The academics attacked everything from mediocre teaching to stultifying curriculums at most undergraduate accounting programs.

Albrecht and Sack were wrong about one thing: It could get worse -- and it just did. As key actors in the Enron debacle, accountants at Arthur Andersen, the energy giant's Big Five auditor, have come under scrutiny for possible wrongdoing. The mushrooming scandal, which has set a new low for the accounting profession, is drawing new attention to its problems, among them the poor quality of professional education.

NUMBERS CRUNCH. Reformers see their chance. They think that for too long, accounting undergrads have been trained like human calculators in mind-numbing classes, even as the auditors' crucial role as counsel for approving or nixing increasingly complex financial maneuvers has come into focus. "Curriculums are not designed today to provide the student with sufficient training [to] know...whether the management judgment being made is right or wrong," says Lynn Turner, former chief accountant for the Securities & Exchange Commission.

What's more, B-schools see accounting as a profession that has been relegated to second-tier status, the backwater of the business world. Fewer college students are pursuing an accounting major than ever before: Enrollment in the major has declined 40% on average over the past five years, and starting salaries are some 15% to 20% below those of business majors who become consultants or investment bankers.

Elite B-schools send few grads into the profession. The late-90s rush for riches also damaged the field. While a top partner in a big firm might earn $1 million or more, that became chump change against the megabucks that corporate CFOs with options or the Street's financial engineers rake in.

In the wake of the Enron fiasco, the Big Five firms, the American Accounting Assn. (AAA), the American Institute of Certified Public Accountants, and the Institute of Management Accountants all have announced plans to team up with top universities to develop curriculum changes. The new group will selectively fund innovative courses and approaches at schools across the country.

STARTING FROM SCRATCH. The AAA recently launched a separate competition among schools for the best annual revamping of an accounting program. Even the stodgy CPA exam will change in 2003 to account for test-takers' analysis, judgment, and research skills.

This isn't the first attempt to retool undergraduate accounting education. In the early '90s, administrators at the University of Illinois at Champaign-Urbana, the top accounting school in the country, realized that their program hadn't changed in decades and "decided [it] was sufficiently broken that we could not fix it, so we started over," recalls Ira Solomon, the head of the accounting department who led the charge and finally implemented the new curriculum in 1996.

That meant ditching the litany of rules-based, single-subject courses and installing an integrated set of classes to help students understand accounting's broader role in business and society. Strategy, problem solving, analysis, and communication are now taught alongside the obligatory Generally Accepted Accounting Practices.

URGENT NEED. Now, corporate recruiters flock to Urbana to hire grads at top pay rates. Illinois, along with Arizona State University and University of Tennessee, which also embraced new programs, are among a handful of schools that have seen an uptick in accounting majors over the past six years. Most other schools have resisted change.

With the profession now in crisis, reformers' calls have new urgency. "I don't see how schools can ignore the need for change now," says Jan R. Williams, dean at University of Tennessee's business school. After all, if accounting education doesn't heal itself, more Enron debacles could result. By Jennifer Merritt in New York


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