Accountancy Board, AICPA Disagree On Ethics Training

The higher education community is resisting a call from state regulators that license certified public accountants for new educational standards that include mandatory ethics instruction.

The National Association of State Boards of Accountancy proposed in February to revise the Uniform Accountancy Rules, which specify educational standards for licensing, to increase the number of semester hours required in accounting and business and to include six hours of coursework in accounting and business ethics.

Calderon

“NASBA needs to re-examine the assumptions that underlie its proposal and arrive at more effective approaches to address the issues and challenges that derive from them,” wrote Thomas Calderon, chair of the Teaching and Curriculum Section of the American Accounting Association. The section devoted nearly 40 pages of a special issue of its newsletter to academic comment on the NASBA proposal, most of it negative. “Some supported the need for more ethics education but questioned NASBA’s proposed approach,” Calderon said.

The American Institute of Certified Public Accountants also opposes the rule change, consistent with the causes cited by many educators, that standards should focus on intended outcomes of education—more ethical accountants—rather than prescribed input—more ethics education. They challenge whether more education in ethics will result in more ethical accountants.

Bunting

“The exposure draft emphasizes program development and evaluation based upon prescriptions for three credit hour inputs of topical coverage when accounting education and the profession have called for the development of core competencies and assessments based upon learning outcomes, not input measures,” wrote Robert Bunting, chairman of the AICPA in its comment letter to state accountancy boards. “The exposure draft should not be adopted because it would not produce the intended improvements in the professionalism of CPAs.”

A handful of accounting instructors at Kansas State University are leading an effort to turn academic opinion toward support of the NASBA proposal. “Given the breach in public trust caused by recent accounting scandals, we applaud NASBA for proposing a new focus on ethics education,” wrote D.G. Fisher and Diane Swanson at Kansas State.

The pair tries to bridge the debate between whether ethics should be taught as a stand-alone course or integrated into courses throughout the curriculum. “Common sense dictates that we must do both,” they wrote.

Herz: Older Accounting Habits Challenge Shift To Principled Accounting

Old habits apparently are hard to break in the financial accounting field, according to recent remarks by Robert Herz, chairman of the Financial Accounting Standards Board, in his recent address to the 24th annual SEC and Financial Reporting Institute Conference

Herz

Herz spoke of his vision for the continued movement toward simpler, principle-based accounting standards that will be easier to follow and give professionals plenty of room to exercise judgment.

“Early returns are not great as right now, preparers and auditors, fearful of second guessing, continue to barrage us with requests for rules, bright lines and all sorts of exceptions and ask the SEC staff for ‘safe harbors,’ ” he said. “But we will continue trying.”

Herz said the complicated, meandering way in which GAAP has developed over a number of years has influenced companies business and operating models, which “often makes it a real challenge to making needed improvements in accounting standards,” he said.

His complete speech is available from the box at right.