In a recent publication by the American Accounting Association and others,¹ the authors lament the current status of accounting education:

We can no longer deny that there are serious problems with accounting education. We have an enterprise that is experiencing decreasing customer demand, where past customers are recommending that prospective customers shop elsewhere, and where there are significant complaints about our services and products. Accounting education is in a precarious situation.²

It is important to recognize that these comments apply primarily to the accounting programs for majors as opposed to the beginning accounting course. The authors fear that accounting will become a "mere" service discipline. However, the beginning accounting course, which has increasingly become a service course to course disciplines due to the decline in accounting majors, has continued to thrive in most schools. Over the past ten years, the beginning accounting course has adapted and continues to adapt to ways that authors say accounting education should do so. For example, the authors say, among other ideas, that accounting education should develop:

More relevant measures of performance;
Ways to help businesses make critical, strategic decisions;
New ways of interpreting and using data, and
More innovative ways to teach accounting.

In fact, the beginning accounting course at many schools has been the locus of leadership in innovation. It is in this course that faculty are adapting to the changes in the business environment by moving toward a more user–oriented approach which emphasizes performance measures, new teaching techniques involving technology, teamwork, and other varied approaches. These improvements are not only better for the business majors we serve but they also provide a good foundation for the accounting major.


One way to look at the changing needs of today’s students may be reflected in the analysis by Robert Elliott, KPMG Partner and recent Chairman of the IACPA, who has identified the five stages of the "value chain of accounting" as shown in Figure 1.³ Elliott argues that too much time is spent on low-value activities represented by the first three stages (I, II, III) as opposed to the high-value activities represented in stages IV and V. The first three stages focus on transactions and information processing which, in today’s business environment, are likely to be achieved through the use of technology.


Traditional beginning accounting courses focus on the first stages, as illustrated by Figure 2. In this model there is a heavy emphasis on journals and ledgers that underlie the accounting system. However, given the use of technology and the high percentage of business majors in the beginning accounting course, the focus of beginning accounting today has moved in a new direction. Many faculty have made the transition to the higher-level activities (stages IV and V) that provide a foundation for decision making, as might be illustrated by Figure 3.


Business majors, who make up the vast majority of beginning accounting students, will benefit from this approach when enrolled in subsequent business courses as well as throughout their business careers. Note that while a basic knowledge of the more procedural activities associated with stages I-III is not abandoned, the primary focus is on high-value learning activities, providing a more useful balance of emphasis between the procedural stages of accounting and the more user-oriented stages (IV and V).


Some schools have tried to abandon the first three stages altogether but are finding that this is an unsatisfactory approach. This approach stems from a fundamental misunderstanding of the foundations of accounting. It confuses the strengths of double entry with the unattractiveness of journals and ledgers and debits and credits. The fact is that the double entry system is a powerful analytical tool that underlies all of accounting. It is difficult to be a good user of accounting information without being able to analyze the affects of business decisions on the financial position of a company.


In summary, the "center" or focus of the beginning accounting course has shifted away from the fully procedural approach to a more user–oriented approach and from total reliance on lecture to the use of a wider variety of pedagogical approaches. This is not to say that improvement is not needed. The spirit of continuous improvement must always prevail. However, if accounting educators are looking to stimulate the upper level courses taken by accounting majors, at many schools they need look no further than to the innovations taking place in the beginning accounting course.


Endnotes


1 W. Steve Albrecht and Robert J. Sack, Accounting Education: Charting a Course Through a Perilous Future (Sarasota: American Accounting Association, 2000).
2 Ibid, p. 59.
3 Ibid, p. 36.