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ACCOUNTING: EDUCATIONAL BACKGROUND AND REQUIREMENTS

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The aptitudes, skills, and attitudes, as well as technical competence that are fundamental to success in professional accounting will develop most effectively during your high school and college education. A college degree with a concentration in accounting has become the norm. Nearly all state boards of accountancy (the licensing agencies for practicing public accountants) require that candidates who sit for the CPA examination must have at least the equivalent of four years of college education. CPAs require the broadest kind of education to understand. Analyze, and report on management operations and to recognize problems and propose solutions. This training can be acquired through education programs that lead, ideally, to a graduate degree in accounting or through the curricula offered by professional accounting schools.

In some universities, the accounting program is offered in a school of accountancy; in others, it is provided in the college of business administration. Certain core courses are required. Generally, accounting courses will include financial accounting theory, auditing, taxation, and cost analysis and control. Economics, management, marketing, finance, quantitative methods, and computer technology are included in the business courses comprising a degree program. As mentioned earlier, speaking and writing skills are so important that, wherever possible, electives in those subjects should be taken.

HIGH SCHOOL



Today's aspiring professional accountants should be concerned very early in their education with acquiring accounting and business knowledge as well as important interpersonal skills. This training can begin in high school through a college preparatory program. Subjects in the college preparatory course-languages, science, and mathematics- constitute a better foundation for accounting training at the collegiate level than do business subjects. Although all required subjects in the curriculum are necessary for a well-rounded background, perhaps the most important one is English. The ability to write and speak well is a plus factor in all walks of life, and the inability to do so is a constant handicap. Courses in mathematics are also important-not because these subjects have a direct relationship to accounting but rather because they serve to develop reasoning ability, accuracy in dealing with facts, and facility in using figures.

COLLEGE

Higher education for accounting can be accomplished in a variety of academic settings-four-year liberal arts colleges, undergraduate schools of business, two-year junior colleges followed by two years in senior college, and undergraduate business or non-business study followed by graduate business school. Appendix C in the back of this book lists United States schools offering courses of study leading to a degree with a major in accounting.

A model educational program drafted by the American Institute of Certified Public Accountants recommends that about half of a student's undergraduate study be devoted to general education subjects. Such non-accounting subjects as communications, behavioral sciences, economics, and computer science, for example, are considered useful Communications. Effective communication, both written and oral, is an indispensable skill of the professional. In every course, the student should be required to demonstrate continuing ability in written communication. Concern is not with literary style but rather with the student's ability to convey the intended message clearly, concisely, and precisely, without errors in grammar, punctuation, or spelling.

Behavioral science

The accounting profession's interest in the behavioral sciences results from accountants' need to understand individual and group behavior, the decision process, and organization theory. Topics of specific interest include authority, learning, motivation, conflict, and innovation. Accountants need to know the process by which individual and organizational decisions are made. And, as members of organizations working with and for other complex organizations, they must understand the formal and informal networks of individuals and groups within organizations, chains of command, fixing of responsibilities, cross loyalties, information flows, and controls.

Economics

An understanding of economics is essential to accountants. For that reason, it is advisable for students to incorporate into their college programs courses in macro- and microeconomics.

Computer science

A basic knowledge of computers-what they are and what they can do-should be a part of any student's general education. Such knowledge is essential for those planning to enter accounting careers. Introductory courses in computer science should be taken during the first or second year in college and should give an understanding of at least one computer system-the functions of its component parts, the general capabilities of the system, and the general terms associated with computer science. Students should develop a working knowledge of at least one computer language sufficient to permit them to program and debug a simple problem.

SPECIFIC ACCOUNTING STUDIES

In recent years, AICPA has noted a growing practice at undergraduate business schools of limiting the number of semester hours a student can devote to any single subject. Although this concept lays the groundwork for a broad education covering many disciplines, it should be applied with caution to prevent inadequate accounting training. It is generally accepted that a broad, well-rounded education can be attained through a five-year course of college study, made up of generalized courses such as those outlined, together with a portion of the curriculum devoted specifically to accounting. College students preparing for accounting careers very often do not decide whether to accept employment in private or public accounting until they are approaching graduation. By following a curriculum meeting the most rigid CPA education requirements, they will avoid the possibility of being required to make up deficiencies if they decide to enter public accounting and become certified. The study program AICPA recommends includes four main accounting areas-financial, managerial, taxes, and auditing. The overall objective is to give students an understanding of the functions of accounting and the underlying body of concepts that comprise accounting theory as well as the applications of both to business problems and situations. A discussion of a general accounting curriculum follows.

FINANCIAL ACCOUNTING

Financial reporting theory

This deals with financial accounting measurement including such areas as the determination of period income, revenue recognition, cost allocation, and the flow of funds. Inventory valuation, depreciation theory, liability recognition, and corporation equity measurement are also included in the study of financial accounting theory. Additionally, an understanding of the fundamentals of accounting would be incomplete without a good knowledge of the means by which accounting data are communicated, and this embraces a study of accounting statements, their form of presentation, and accounting terminology.

Applied financial accounting problems

Though is it neither necessary nor desirable to delve into every possible situation that might be encountered in the practice of accounting, certain topics are important to an understanding of the complexities of business and finance.

Contemporary financial accounting issues

Students must learn to understand that accounting is a living, growing discipline, requiring its practitioners to be aware of and involved with the issues of the day. The topic coverage of this segment of the accounting curriculum will change more frequently than other segments.

COST OR MANAGERIAL ACCOUNTING

Cost determination and analysis

This is the study of the measurement and accumulation of costs, including such topics as direct and indirect costs, the rationale behind cost allocation procedures, cost-volume relationships, and the application of burden.

Cost control

This course is intended to help students develop familiarity with the controls that are afforded in the application of cost accounting concepts to the design of information systems. Included here are flexible budgets, responsibility accounting, profit center analysis, and standard costs.

Cost-based decision making

The purpose of this course is to build understanding of how accounting can contribute to decision making and planning. Typical problems covered might involve make-or-buy decisions, product mix, capital budgeting, or inventory planning.

Tax theory and considerations

This course helps students to place in perspective the multitude of tax laws, regulations, and administrative and judicial rulings, with a broad appreciation of the tax structure and its role both as a source of revenue and as a device to influence the economy.

Tax problems

In addition to having a broad background in the field of taxes, accountants should be able to apply tax principles to the solution of specific, complex problems involving individuals, corporations, partnerships, trusts, and estates. Only when they understand the interrelationships among these can students develop a sense of the impact of taxes on decision making and planning.

Audit theory and philosophy

Auditing, whether it is done by an independent accountant or an internal auditor, contributes to the reliability of financial and other data. How this is done comprises auditing theory and philosophy, an essential part of an accountant's knowledge. This subject covers such topics as evidence, authorizations, and sampling, review of internal control, and arithmetic controls and reconciliations. Also included are the role of independent auditors, their legal responsibilities, their code of ethical conduct, and their standards of reporting, field work, and competence. The role of internal auditors as they function within management organizations also is covered.

Audit problems

As in other areas of accounting, students' understanding of auditing principles is reinforced and expanded by exposure to problems and cases. Subjects covered in this course might include statistical sampling, internal control, and auditing computerized accounting systems as well as the more traditional problems dealing with, for example, the confirmation of receivables, inventory observations, and the fixed asset audit.

Computers and information systems in business

Building on students' earlier exposure to computers, this course explores the strengths and weaknesses of the computer in the business context, develops skills with higher level EDP languages and simulation techniques, and develops understanding of the relative strengths of the human being and the ma-chine in symbiotic human-machine interaction. It also involves the investigation of complex systems, the techniques of analyzing and flowcharting, the development of basic skills in system and design, and an understanding of the control procedures required.

Although this accounting curriculum is suggested to meet CPA requirements, it is noteworthy that the same education is favored by business organizations for those whom they place in training programs for executive accounting positions and by federal government agencies such as the General Accounting Office and the Internal Revenue Service.

College degrees do not necessarily indicate course content. Some schools grant B.S. (bachelor of science) degrees, others B.A. (bachelor of arts) degrees, and still others B.B.A. (bachelor of business administration) degrees to students following about the same curriculum. The important things to find out are if the school has a good faculty and if it offers a sufficient number of credit hours in accounting and related subjects. Obviously, it is difficult to get an unbiased opinion of a school's faculty. Alumni may be biased as a result of personal experience or school loyalty, and, furthermore, they would have no yardstick by which to make an evaluation unless they had attended more than one school or had some other basis for comparison. On the other hand, the number of semester hours available in all subjects is a matter of record in school catalogs, which can be used as a guide to
meeting stated requirements.

GRADUATE STUDY IN ACCOUNTING

Some schools have programs of study leading to an M.B.A. (master of business administration) or M.S. (master of science) degree for graduate work in accounting. These programs require one or two years of study beyond a baccalaureate degree-the length of time depending primarily on the student's undergraduate curriculum. The program would generally be one year for an accounting major and two years for those who did not major in accounting at the undergraduate level.

An undergraduate degree in English or economics with two years of graduate work in accounting is an ideal background for those planning careers in accounting. It is too bad that more liberal arts schools do not point out to their students the opportunities that are available to those following such a program.

On the other hand, there is some question concerning the merit of graduate work in accounting for students who majored in accounting at the undergraduate level, and there is no positive answer that will apply equally to all students. The answer depends to a large extent on the con-tent of the undergraduate curriculum, the character of the graduate program, the scholastic records of the students, and the reasons for considering graduate study. Were their college grades good, and do they have the capacity to benefit from graduate work? Do they plan to teach? Do they think that another degree represents an "open sesame" to better employment opportunities? These are a few of the questions that would require answers before a considered opinion could be formed, for in the final analysis, the value of additional schooling must be related to the value of practical experience that could be obtained during the same period of time.

Certainly graduate study is valuable for individuals who have the capacity to benefit from further abstract study. However, a proliferation of undergraduate subjects is not recommended. The student who received a bachelor's degree with an accounting major probably should not take more than nine to twelve semester hours in accounting out of the approximately thirty semester hours required for a fifth-year master's program. Most of the subjects should be in the area of behavioral and management sciences.

GRADUATE STUDY OF LAW

Accounting students planning to specialize in taxation often seek ad-vice concerning the necessity for a law degree. A law degree is not essential for accountants who specialize in taxation. Probably there are more tax specialists who are not lawyers than there are those who are. However, the study of law provides an excellent background or any position in the business field, and it is certainly very desirable for accountants specializing in taxation.

In recent years, there has been a substantial increase in the number of accounting majors who have entered law schools. It is also true that employers' demands for persons having both an accounting and legal background has greatly increased.

A CPA will find a legal background helpful in all phases of tax work. But the income tax law is based on accounting concepts, and therefore a sound background in accounting, including several years of practical experience, appears to be a better foundation for a specialization in tax work than a law degree without such experience.

What if the aspiring accountant cannot afford to attend college on a full-time basis? Is there another way to gain the necessary knowledge and experience? Probably there is not one that will provide the high degree of proficiency demanded of accountants today; however, it is possible to obtain an accounting education through evening classes, which allow students to divide their time between work and study. Most colleges offer evening classes; usually six years of evening study are required to complete the four-year day-school-degree curriculum. Attendance at evening school has both advantages and disadvantages, the latter generally outweighing the former.

Most students who are enrolled in evening courses have little time to spare for anything other than work and study when school is in session. Unless they are unusual, either work or study, or both, may suffer be-cause of time limitations.

The quality of instruction in evening schools varies. At some schools, a major portion of the teaching load is carried by full-time day-school teachers, but at others, part-time teachers predominate. Some part-time teachers, because of their knowledge of the practical aspects of the subjects they are teaching, may be superior to those on the full-time faculty. With others, this may not be the case. It is one thing to know a subject and quite another to be able to teach knowledge of that subject to others. Be sure that the part-time evening program you select is accredited and is preparing well-qualified accountants. You might want to talk to some former students and those currently enrolled in the program to learn more about it.

PART-TIME EMPLOYMENT

Many accounting students who are enrolled in full-time college pro-grams obtain part-time employment with public accounting firms or in the accounting departments of companies. Such experience is held in high regard by business organizations and accounting firms when it comes to selecting personnel to add to their staffs. This part-time work, of course, helps defray college expenses; but beyond that, it provides the beginning accountant with a useful introduction to the type of work accountants do. A job applicant with experience in the accounting field gives evidence of maturity and stability and may be expected to under-stand the work better than a novice. Often, part-time work with an ac-counting firm or in the accounting department of a company, begun while in college, leads to a permanent position with that company after graduation.

INTERNSHIP TRAINING

The word intern is usually used to describe a graduate medical student undergoing resident training in a hospital. However, the accounting profession has extended its use to describe accounting students taking part in programs that provide them with a short period of practical experience while they are enrolled in college.

Internships in public accounting provide students with valuable diversified experience and often result in employment offers from cooperating firms after graduation.

Internship programs for accounting majors are sponsored by colleges and conducted in cooperation with employers-principally firms of certified public accountants. Students given the privilege of obtaining this training are permitted to drop out of school during their junior or senior year for periods varying from a few weeks to several months, generally during December, January, February, and March. They are employed by cooperating firms and receive salaries only slightly less than those paid to recent graduates. In addition, many cooperating firms pay the cost of transportation from the interns' schools to their offices and return. The months mentioned include the usual peak period of work in most practices, and therefore students experience typical work in public accounting.

It is not uncommon for schools to allow only students having a scholastic average of B or better to take part in internship programs. Setting this minimum gives schools some assurance that interns have the capacity to make up the classroom work they missed while away from school and that they have the capabilities to accept staff assignments with cooperating firms under the supervision of experienced accountants. Students planning to serve an internship should endeavor to take additional courses during their sophomore and junior years in order to carry a lighter schedule during their senior year when they will spend several weeks off campus. The same result could be attained by attending at least one summer session before interning.

Some schools follow the practice of assigning interns to employers while others give each student the opportunity to be interviewed by representatives of cooperating firms and the privilege of accepting any employment offer.

A few schools also sponsor internship programs with industrial concerns. These programs are generally conducted during summer vacation periods. Students who accept positions with cooperating industrial organizations are given the opportunity to work in accounting positions of different types or are assigned to special projects and studies enabling them to get a good idea of the operations of the accounting and administrative departments. It is also quite usual for these industrial internships to result in employment offers after graduation.
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