Pathways Commission Update Charting a National Higher Education Strategy for the Next Generation of Accountants Sponsored by the American Accounting Association (AAA) and the American Institute of CPAs (AICPA)

All views presented today are our own and do not reflect the official views of the Pathways Commission, our organizations, AAA, or AICPA. Official Statement Pathways Commission (AAA and AICPA) 2

In 2008, the U.S. Department of Treasury Advisory Committee on the Auditing Profession (ACAP) made a number of recommendations. Part VI. Human Capital recommendation #5 was: “Encourage the AICPA and the AAA jointly to form a commission to provide a timely study of the possible future structure of higher education for the accounting profession.” U.S. Treasury Recommendation Pathways Commission (AAA and AICPA) 3

AAA – Gary Previts, Case Western Reserve University, Former AAA President AAA – Tracey Sutherland, Executive Director AICPA – Denny Reigle, Former Director Academic and Career Development Team AICPA – George Krull, Grant Thornton (Retired) Sponsoring Committee Pathways Commission (AAA and AICPA) 4

Globalization of business and markets Escalating complexity of business Lack of financial literacy High profile frauds eluding regulatory scrutiny Increasingly sophisticated technology Increasing need for fair value, predictive and non-financial information Pathways Commission (AAA and AICPA) 5 Challenges for Profession and Academia

To meet these challenges we need to develop strategies and then structures to ensure that we have an adequate supply of the best, diverse talent to sustain the accounting profession, broadly defined, over the long- term. Pathways Commission (AAA and AICPA) Pathways Commission Objective 6

Bruce Behn - Chair (University of Tennessee) Bill Ezzell (Deloitte) Leslie Murphy (Murphy Consulting, Inc.) Judy Rayburn (University of Minnesota) Jerry Strawser (Texas A&M University) Mel Stith (Syracuse University) Pathways Commissioners Pathways Commission (AAA and AICPA) 7

Scope of the Commission – Attract individuals with high potential to excel in accounting, at any point in their lives – Enable higher education to provide the best possible educational experience – Support the need for ongoing educational experiences throughout the professional accountants’ careers Three Supply Chains each to focus on several different aspects of the challenges Work Groups emerged within and across the three Supply Chains Pathways Commission (AAA and AICPA) 8 A Collaborative Structure

Supply Chain 1Supply Chain 2Supply Chain 3 Santa Fe CollegeU. of Rhode IslandNorth Carolina State U. Ernst & YoungKPMG FoundationPricewaterhouseCoopers Wake Forest UniversityDixon-HughesBailiwick Data Systems Belmont UniversityDiSanto, Priest & Co.CitiGroup Austin Comm. CollegeUniv. of ArkansasUniv. of Memphis Kansas State Univ.Arizona State Univ.FSA DeVry UniversityCreighton UniversityAACSB National Business Education Association Financial Executives International NASBA Colorado State Univ.Association of Government Accts. Institute of Management Accountants Beta Alpha PsiNational Association of Black Accountants Institute of Internal Auditors Colorado State SocietyAssoc. of Latino Professionals in F&A Minnesota State Board Supply Chain Organizations 9

Supply Chain 1Supply Chain 2Supply Chain 3 Susan Crosson (L)Mark Higgins (L)Scott Showalter (L) Ken BouyerBernard J. MilanoHolly Paul Jack WilkersonLarry EvansBill Travis Del DeVriesErnie AlmonteSteve Young Tracie NoblesKaren PincusCarolyn Callahan Dan DeinesHarriet MaccrackenMartha Doran Beth RescignoJack KrogstadJan Williams Madge GreggRobert WalkerMelanie Thompson Margarita LenkJeanette FranzelDave Burritt Cindy CruzGregory JohnsonPaul Sobel Mary MedleyManny EspinozaKate Mooney Pathways Commission (AAA and AICPA) Supply Chain Representatives 10

639 Years of Practice Experience 585 Years of Education Experience Many people wear different hats (examples) Ernie Almonte, past AICPA chair, former Rhode Island Auditor General, now DiSanto, Priest & Co. Jack Krogstad, Creighton University, former Academic Fellow at the Office of the Chief Accountant Pathways Commission (AAA and AICPA) Overall Pathways Statistics 11

Supply Chain #1---Susan Crosson, (Santa Fe College) Supply Chain #2---Mark Higgins, (University of Rhode Island) Supply Chain #3---Scott Showalter, (Retired KPMG partner and N.C. State University) Supply Chain Leaders Pathways Commission (AAA and AICPA) 12

A Collaborative Process Information gathering and sharing to level-set all participants Development of key questions for exploration Build-out of perspectives on key issues Leading to implementable recommendations Pathways Commission: Charting a National Strategy for the Next Generation of Accountants 13

Pathways Commission (AAA and AICPA) 14 Feedback Received from Presentations by Members of the Pathways Commission AAA 2010 Annual Meeting San Francisco TSCPA Accounting Education & Career Awareness Meeting Tennessee Accounting Educators Conference AAA 2010 Northeast Region Meeting 2010 AICPA Fall Council Meeting AAA 50th Anniversary Region Meeting NASBA 2010 Annual Meeting Michigan Association of CPAs Educators Conference AAA November 2010 Executive Council Meeting AICPA Board of Directors Meeting Accounting Sponsoring Organizations 2011 Maryland Accounting Educators Conference 2011 AICPA Board of Directors Meeting 2011 AAA FARS and IAS Section Meetings 3rd Annual On-Line TLC Section Midyear Meeting 2011 APLG/FSA Annual Meeting

Pathways Commission (AAA and AICPA) 15 Feedback Received from Presentations by Members of the Pathways Commission South Carolina Association of Accounting Educators Tennessee High School Educators’ Symposium NASBA CPE Conference AAA 2011 Southwest Region AAA 2011 Southeast Regional AAA 2011 Mid-Atlantic Region Meeting AAA 2011 Western Region Meeting Indiana CPA Society’s 2011 Educators Conference Michigan Association of CPAs Spring Advisory Forum AAA 2011 Ohio Region Meeting 2011 TACTYC – Keynote Speaker AICPA Spring Council Meeting 2011 Virginia Society of CPAs Educators’ Symposium CPE Society Executives Interchange Conference

Commission and Supply Chains have Developed the Following Working Issues using Feedback from Presentations What is the Value Proposition of a Broadly Defined Accounting Profession? 2. Identify the Current and Forecast Future Markets for Accounting Information And Professionals 3. Strengthen quality and quantity of high potential accounting students 4. Broaden and improve the speed of curricula and pedagogy innovation in a rapidly changing complex global environment 5. Assess Faculty Supply/Demand Status 6. Strengthen bi-directional links between business/profession and the educational community (research and teaching)

1.What is the Value Proposition of a Broadly Defined Accounting Profession? Issues Definition of our profession Define a signature pedagogy Identify benefits and contributions of accounting to our economy Stress the breadth of the profession - accounting goes beyond auditing Impediments Public perception of accounting careers as “less than exciting” Lack of understanding of important role of accounting to our economy 17

2. Identify Current and Forecast Future Markets for Accounting Information And Professionals Issues Gather supply and demand data for all accounting professionals Identify necessary current and future competencies for each area of practice Conduct research to identify demand, considering outsourcing trends Impediments Currently bits and pieces of job market are tracked Lack of national data base to track job market for all accounting students and careers No “Meta”-Professional accounting organization that cuts across functional areas 18

3. Strengthen quality and quantity of high potential accounting students Issues Career Perceptions Brand identity and careers beyond auditing High schools: Dual enrollment and AP The first course as a recruitment tool Placement of accounting course in curriculum Impediments Students discover accounting too late in their career choice process 19

Issues Curriculum Educational paths for less “traditional” entrants and career options (paraprofessionals) Less traditional educational paths for traditional entrants (Rutgers program ) Diversity Impediments Diversity of accounting professionals does not mirror diversity of US population Under represented populations lack role models and mentors Strengthen quality and quantity of high potential accounting students

4. Broaden and improve the speed of curricula and pedagogy innovation in a rapidly changing complex global environment Issues Inventory accounting curricula at high schools, community colleges, and universities Integrate cutting edge practices, IT/systems, and global/cultural experiences Impediments Cost of development of teaching materials (simulations) to facilitate experiential learning Difficulty of integrating IT changes into the classroom Lack of national clearinghouse for innovation in curricula and pedagogy. 21

Issues Understand learning patterns of different generations of students Rethink textbooks and other learning materials Impediments Inadequate integration of educational research findings into PhD programs and faculty awareness Slow process of updating textbooks and integrating new material Broaden and improve the speed of curricula and pedagogy innovation in a rapidly changing complex global environment

5. Assess Faculty Supply/Demand Status Issues Continue to actively recruit Ph.D. students from practice for specialized disciplines (audit and tax) Review current Ph.D. programs and processes (program length and foci) Improve integration of professionally and academically qualified faculty Gather data on supply and demand for Ph.D. graduates Impediments One-size fits all PhD program design Lack of national (global) PhD program clearinghouse Distance between accounting research and practice 23

6. Strengthen bi-directional links between business/profession and the educational community (research and teaching) Issues Internships/externships Collaborative research and data sharing Integration of professionals into classrooms and academe Professional experiences for faculty by specializations Impediments Research disconnect between accounting professionals and academia Difficulty of obtaining data for research Narrow focus of academic accounting research reward systems 24

Issues Continuing educational opportunities for faculty Advanced, professional degrees (post-MS specialist, leadership Ph.D.) Professional certifications and licensure Impediments Faculty time constraints Lack of easily available and affordable mechanisms to update faculty Only partial integration of clinical faculty into academia Strengthen bi-directional links between business/profession and the educational community (research and teaching)

Initial recommendations by Summer/Fall 2011 Final recommendations by November/December 2011 Final Report targeted for January 2012 Phase 2 planning in process now – focus on implementation Pathways Commission (AAA and AICPA) 26 Next Steps

How do we overcome impediments? – Higher education? – Practice? Sustaining change is hard – How can innovation become institutionalized? – Other? Pathways Commission: Charting a National Strategy for the Next Generation of Accountants 27 Potential Discussion Questions

We Need Your Input Send your input via the Pathways Commission space: Or send your input to Bruce Behn Pathways Commission (AAA and AICPA) 28