Role of NASBA and State Boards in Accounting Education
How Should an Accounting Curriculum Be Determined?
Nicholas J. Mastracchio Jr.
MARCH 2008 -
issue of what accounting education should consist of and to what
extent state regulators should be involved is a topic of great interest
to the entire profession. State boards of accountancy have the responsibility
to determine if a CPA candidate has sufficient education, experience,
and examination success to be licensed.
should board members fulfill their responsibility of determining
what education is sufficient? Should they determine the specifics
of a curriculum, or should they rely upon educational institutions
or accrediting bodies? The individual state boards look to the
National Association of State Boards of Accountancy (NASBA) for
direction in this area. NASBA has been considering what guidance
it could provide to state boards on this issue, and has sparked
controversy with academia over what role the boards should play.
The AICPA has also been involved, given its role in determining
the content specifications of the Uniform CPA Examination through
surveys of practitioners.
been actively considering ethics, course requirements, and general
topical requirements issues since 2003. As part of its final recommendations,
NASBA convened a joint panel on education in April 2007. The moderator
was Jan Williams, past president of the American Accounting Association
(AAA) and dean of the school of business at the University of
Tennessee. The panel consisted of two representatives from the
AAA, two from the AICPA, two from the Big Four, two from accreditation
organizations, and one from the Federation of Schools of Accountancy.
NASBA’s original suggestions had already been modified before
the April 2007 panel, some attendees and panel members still resisted
the idea of regulators being involved in setting curricula. One
thought was that regulations were not needed. Instead, changes
should be made to the CPA content specifications, the hypothesis
being that if the content were tested in the Uniform CPA Examination,
academia would follow and include the subject matter in business
and accounting courses. This idea received some support, particularly
among educators, at the April 2007 panel meeting. The author’s
survey below tested that hypothesis.
the CPA Exam to Drive Changes in the Curriculum
of AICPA members in the education sector was conducted in the
summer of 2007. One objective was to determine whether the CPA
exam content specifications influenced course content and whether
a change in specifications would alter the curriculum. This survey
asked respondents what type of accreditation their institution
had, what kind of students they taught, and what their primary
areas of instruction were. A total of 980 active teachers responded.
37% indicated that the accounting department was accredited, 32%
indicated the school of business was accredited, 28% indicated
the institution was accredited, and 3% stated that there was no
accreditation. Regarding students, 60% of respondents said they
taught primarily undergraduates, 8% taught primarily graduates,
and 32% had a balanced schedule of graduates and undergraduates.
The third question gave respondents the opportunity to designate
two areas in which they taught. Of the leading subjects, 74% of
respondents mentioned financial accounting, 37% managerial accounting,
31% audit, 23% tax, and 15% accounting information systems (AIS).
directly addressed what influence the CPA exam content and state
regulation would have on curriculum (Exhibit
1). When broken down by the level of students taught, regulation
maintained a significant margin, with no significant variation
between levels except that graduate teachers gave more responses
that neither exam content nor regulations would influence curriculum.
down by teaching area, there is slightly more variance, with AIS
giving a higher influence to regulations, and auditing giving
a slightly higher influence to the exam than other areas. The
very clear sentiment here is that state board regulations have
more influence on curricula than do the CPA exam content specifications.
Therefore, the proposal not to regulate but to let the CPA exam
drive topic coverage is not supported by this survey.
Instructors Aware of Exam Content?
were asked to determine if the CPA exam content specifications
were used in determining course content (Exhibit
the majority of respondents in all categories were aware of the
content specifications of the CPA exam, a significant number did
not know or were not sure.
varied more by subject matter than between levels of students
taught. Auditing leads the way with the most knowledge of the
specifications. Managerial and tax, areas that do not have their
own section of the CPA exam, demonstrated less familiarity, although
AIS, also without its own exam section, was essentially average.
Almost one-third of the auditing instructors responding were unable
to say they knew the content specifications.
Even if instructors
are aware of the content specifications, they may not always refer
to it in determining topics for their courses (see the second
question in Exhibit 2).Therefore, one cannot conclude that CPA
exam content drives accounting course content, and the hypothesis
that the exam drives curriculum and can be relied upon to determine
content of courses is not supported.
Instructors Rely Upon Textbooks to Stay Abreast of Exam Content?
was asked to determine if instructors relied upon authors of their
textbooks to determine the CPA content that should be taught (Exhibit
on textbook authors is significant with the undergraduate instructors,
but graduate instructors show less reliance.
is fairly consistent across courses. Tax is lowest in reliance
on authors. It was also lowest in CPA exam content knowledge,
probably because the tax laws change rapidly and instructors must
keep up. In fact, CPA exam content specifications are very broad
when it comes to tax requirements.
Courses Include the Content Specifications?
asked instructors’ opinions about whether the content specifications
were covered in their courses (Exhibit
4). More than three-quarters of respondents said they covered
“all” or a “majority” of the content specifications
in their courses. The general consensus was that although textbook
authors cannot be relied upon to cover all areas, and the instructors
themselves do not always refer to the specifications, somehow
most of the material does get covered.
of topics to be covered in the accounting curriculum was undertaken
by NASBA at the request of its constituents. In 2003, NASBA was
approached by a number of state boards requesting guidance on
education requirements for CPA licensure. The state boards, charged
with protecting the public interest in licensing candidates to
become CPAs, are responsible for deciding if students’ education
and experience, coupled with passing the CPA examination, are
sufficient for licensure. Some states, such as New York, had very
specific requirements for education content in accounting, business,
and liberal arts. Most states’ statutes and regulations,
however, lacked such guidance. Some of those states were specifically
looking for what the minimum education requirements should be.
In May 2003,
NASBA’s Uniform Accountancy Act (UAA) Committee,
with the consent of the NASBA board of directors, asked the education
committee to develop and recommend changes to the UAA education
rules that would address the content of the 150-hour requirement
and would include contemporary education rules that were easy
to apply. The education committee, then chaired by Wes Johnson,
agreed to undertake the challenge, and because of the auditing
failures occurring at that time, it incorporated the specific
issue of addressing ethics education.
recommendation that was developed resulted from a study of current
offerings. In an effort to gather information on current education
practices regarding ethics, the AAA agreed to cosponsor a survey
of educators on the issue of ethics education on campus. The NASBA
staff engaged an outside survey company. The subcommittee received
204 responses (an acceptable response rate of 14%). The results
were as follows:
- 46% of
the schools offered a separate course in ethics.
- 68% of
the courses offered were in the school of business.
- 18% were
offered in the accounting department.
- 56% provided
separate coverage for protecting the public interest.
- 51% stated
the ethics course was a requirement for accounting majors.
- 45% stated
it was a requirement for other business majors.
- 90% indicated
that protecting the public interest was covered in the auditing
were offered the option of identifying what institutions they
were affiliated with. From those who identified themselves, the
committee obtained syllabi of designated ethics courses. Although
some institutions had a good, solid ethics course, most of the
courses designated as ethics courses were business law–related
with a brief look at ethics and, with a few exceptions, did not
provide adequate coverage of ethics, values, and appropriate professional
conduct. In essence, these were not the type of courses the committee
believed would result in the appropriate level of education to
help ensure an awareness of the ethical and professional responsibility
committee concluded that there should be an education requirement
for ethics. The committee discussed whether a separate course
or integration of ethics into the overall accounting and business
curriculum would be better. The integration approach was considered
to have merit in that there would be the ability to address ethics
issues specific to the subject matter and that it would avoid
the perception of simply another course requirement divorced from
other business applications. Additionally, it could be implemented
faster, without the need to create an additional course and the
resources that would entail.
concern that the education committee was giving guidance to regulators
charged with protecting the public interest, who would find it
difficult to ascertain whether certain subject matter was actually
integrated. The perceived advantages of a separate course was
that regulators would be able to easily verify compliance, and
that having an instructor qualified in ethics teach a course might
be easier than having the faculty as a whole teach the subject.
One disadvantage was that creating a new course would take time
and resources. The committee suggested that two separate courses
in ethics would work better. One course would cover the underlying
philosophical reasoning and ethical foundations; the other would
cover application, using business and accounting rules and regulations.
is also supported in academia. In a 2007 survey of members in
the AICPA education section, 49% indicated that all of their courses
had an ethics component, and 41% stated they had an ethics component
in some of their courses. Only 10% did not have an ethics component.
Cindy Blanthorne, Stacy E. Kovar, and Dann G. Fisher (“Accounting
Educators’ Opinions About Ethics in the Curriculum: An Extensive
View,” Issues in Accounting Education, June 2007)
reported on a 2004 survey which indicated that 18% of accounting
instructors do not teach ethics in their courses; 75% indicated
they should probably teach more ethics. The integration of ethics
was supported by 98% of the respondents, while 27% thought that
a philosophy class that teaches normative ethical theory should
also be required.
a draft of the proposed new education rules. It had two components.
First, it provided for state boards to rely on different levels
1 accreditation was defined as the accreditation
of the accounting department. In a Level 1 accreditation, the
institution, business school or program, and the accounting program
are all separately accredited. This level is granted to an accounting
program or department that has been accredited by a national accreditation
agency recognized by the NASBA board of directors. Currently,
the Association to Advance Collegiate Schools of Business (AACSB)
is the only body with that authority. Accounting programs or departments
accredited in this manner have met standards substantially higher
and much more specific than those required for Level 2 or Level
2 accreditation was defined as an accreditation
of the institution and the business school or program, but not
the separate accreditation of the accounting program. Level 2
is granted to a business school, program, or college of business
that has been accredited by a national accreditation agency recognized
by the NASBA board of directors, such as the AACSB, following
a specific and comprehensive examination of its strategic management,
participants, and assurance of learning processes.
3 accreditation was defined as accreditation of
the institution, but not separate accreditation of the business
school or the accounting program. Level 3 is granted to a four-year
degree-granting college or university that is accredited by one
or more recognized regional accrediting agencies.
4 was defined as educational institutions that do
not have an accreditation of the institution, business school,
or accounting program, and includes institutions that have an
accreditation from agencies not recognized by the NASBA board
that transcripts from Level 1–accredited accounting programs
should require little scrutiny of the accounting and business
subject matter requirements. Transcripts from Level 2–accredited
business programs should require little scrutiny of compliance
with the business subject matter requirements, but should require
detailed scrutiny of compliance with the accounting subject matter
from Level 3–accredited institutions should require detailed
scrutiny of compliance with both the accounting and business subject
matter requirements. For Level 4 institutions, it was suggested
that reliance on other procedures and information be used if the
board were to accept the education.
addressed specific course requirements. The proposed rules suggested
the accounting component of the applicant’s educational
program include at least 30 semester credit hours (SCH) of accounting
at the upper-division undergraduate level, or 20 SCH at the
graduate level, or an equivalent combination thereof. It included
a list of specific courses and credit hours.
the business component of the applicant’s educational
program include at least 36 SCH of business other than accounting
at the upper-division undergraduate level, or 24 SCH of business
other than accounting at the graduate level. It also listed
the courses and credit hours to be covered.
draft called for ethics to be taught in two courses: one on ethical
foundations, and the other on the application of ethics to accounting.
to the Suggested New Rules
through 2004, NASBA addressed accounting education at its annual
and regional meetings. In addition, state boards were questioned
about their views on education issues.
2, 2005, the NASBA board of directors exposed a draft of new education
requirements that specified credit-hour requirements. The comment
period, originally to end on June 30, 2005, was extended to August
26, 2005, because of the huge response. In total, 178 responses
were received. The greatest number was from academia, with 108
responses from 97 different institutions. State boards provided
32 responses, nine came from state societies, and seven came from
organizations such as the AAA and the AACSB. Individuals accounted
for 17 responses. The results primarily objected to the provisions.
felt that the requirements were not flexible enough, and were
too specific with regard to subjects and the number of credit
hours per subject. They were also concerned with the administration
of the rules. Many academics argued that the rules were input-oriented
rather than measurements of output. It was evident that some respondents
did not understand the responsibility of state boards in ensuring
that future CPAs have the appropriate education, and had a “leave
us alone” attitude. Respondents were generally supportive
of an ethics component in the curriculum. Regarding the proposed
changes in curricula requirements in general, respondents expressed
concern about the number of credit hours and the integration of
ethics throughout the accounting and business curriculum versus
a stand-alone ethics course.
As a result
of the comments, NASBA’s education committee recommended
to the board of directors that the rules not go forward in the
form they had been exposed. The committee recommended that a joint
panel, led by NASBA with representatives of relevant stakeholders,
continue to work on the proposed rules.
a six-person task force with representatives from the AACSB, AAA,
and NASBA. The task force met in December 2005 and January 2006,
and created a first draft of an education proposal that was exposed
in March 2006. Again, the greatest number of responses came from
academia, with 19. State boards provided 15, six came from various
organizations, and individuals accounted for two responses. The
Education Committee considered the comments and revised the draft.
A joint panel
on education convened in April 2007 brought together various stakeholder
groups. Approximately 75 people attended the panel discussion.
The education committee considered the comments and gave its final
recommendations. On October 26, 2007, NASBA’s board of directors
approved a final draft of the new rules to be incorporated into
the UAA. The proposed rules were exposed for comment in November
2007. The course guidance revision does not, for the most part,
include credit-hour specifications.
on accreditation for Levels 1 through 3 (as described above) was
adopted essentially the same as prior drafts. [Notable additions
were a comment that Level 4 courses would generally not be accepted,
and the inclusion of the Association of Collegiate Business Schools
and Programs (ACBSP) as a Level 2 accreditation agency.] The curriculum
guidance in the proposed rules eliminated credit-hour specificity
in most cases but would provide that candidates do the following:
1. Earn a
minimum of 24 SCH (or the equivalent) of accounting courses at
the undergraduate or graduate level, excluding principles or introductory
accounting courses, covering some or all of the following subjects,
which are to be contemporaneously derived from the Uniform CPA
Examination Content Specification Outline (CSO):
accounting and reporting for business organizations
ii) Financial accounting and reporting for government and not-for-profit
iii) Auditing and attestation services
iv) Managerial or cost accounting
vi) Fraud examination
vii) Internal controls and risk assessment
viii) Financial statement analysis
ix) Accounting research and analysis
x) Tax research and analysis
xi) Accounting information systems
xii) Ethics (accounting course), as described in Rule 5-2 (c)(6)
xiii) Other areas included in the CSO or as may be approved
by the NASBA board of directors.
2. Earn two
credit hours in research and analysis in accounting through a
discrete undergraduate and/or graduate accounting course, or two
credit hours integrated through the undergraduate and/or graduate
3. Earn a
minimum of 24 SCH (or the equivalent) of business courses, other
than accounting, at the undergraduate and/or graduate level, covering
some or all of the following subjects:
vi) Business communications
viii) Quantitative methods
ix) Technical writing
x) Information systems or technology
xi) Ethics (business course), as described in Rule 5-2 (c) (6)
xii) Other areas as may be approved by the NASBA board of directors.
4. Earn a
minimum of two SCH in communications in business or accounting
in an undergraduate and/or a graduate accounting or business course,
or two SCH integrated through the undergraduate or graduate accounting
or business curriculum.
5. Earn a
minimum of three SCH in an undergraduate and/or a graduate accounting
or business course in ethics. As an alternative, colleges or universities
may choose to integrate the course through the undergraduate and/or
graduate accounting or business curriculum.
the suggestions now being exposed in the revised UAA provide for
reliance on accreditation depending on the level, and less specificity
on credit hours. The revised draft also recognizes the CPA exam
content specifications in listing accounting topics.
of CPA Exam Content
Board of Examiners (BOE) is responsible for the content of the
Uniform CPA Examination and its validity for determining entry
into the profession. It fulfills this responsibility by periodically
conducting a practice analysis. The 2008 practice analysis was
authorized by the BOE in 2006 and is being conducted under the
supervision of BOE’s Practice Analysis Oversight Group (PAOG).
The BOE Content Committee and Psychometric Oversight Committee
(POC) also play a direct role in the project. The new content
specifications are expected to be ready by late 2008.
analysis studies focus on the job responsibilities of entry-level
CPAs and the knowledge and skills they need to protect the public
interest. The process includes:
and distributing a survey to gather data on the tasks performed
in the workplace by entry-level CPAs, and the knowledge and
skills needed to perform these tasks;
new content and skills specifications outlines based on survey
that specifications provide a comprehensive framework representative
of the knowledge and skills required for the various practice
areas of the profession;
and distributing an exposure draft; and
the new specifications.
included individuals who directly supervised entry-level CPAs
and had been certified for two to 15 years. An appropriate balance
of public, industry, government, and education participants were
sought from across jurisdictions.
qualified participants, invitations were sent to about 99,000
CPAs nationwide between May and June 2007. Names were drawn from
the AICPA database and lists provided by state boards of accountancy.
Survey participants were given a list of knowledge, task, and
skills statements and asked to indicate the relevance of each
to entry-level CPAs.
6,600 CPAs participated in the survey. Nearly 3,100 of them supervised
entry-level CPAs, and were sent links to the electronic survey.
About 2,100 completed surveys were received. Survey respondents
were representative of the population from which the sample was
drawn in terms of region, years certified, and area of employment.
to a Future of Cooperation
have the responsibility of protecting the public interest and
are charged with determining the experience, education, and examination
requirements for CPA licensure. Ideally, educators should lead
the way; the reliance on accounting and business-school accreditation
is an acknowledgement of this. However, state boards cannot shirk
their responsibilities, and when an institution receives only
a general accreditation, some additional assurance is needed if
the state board is to meet its responsibilities. The CPA exam
content specification will not accomplish this. In fact, many
schools take issue with the thought of teaching to the CPA exam.
The degree to which regulators can rely on academia depends on
the level of outside scrutiny that individual institutions undergo
through accreditation. The state boards have the right and the
responsibility to expect that important topics, including ethics,
to the future, NASBA believes that a comprehensive, well-resourced
task force of educators, CPA professionals, and other recognized
and trusted individuals must be formed to:
and develop revisions to the accounting curriculum;
the 120-hour exam/150-hour licensing issue (with reliable empirical
data if they exist);
the issue of foreign students wishing to take the CPA exam,
as well as possible overseas exam sites; and
the supply of accounting professors, as well as their demographics
(including possible changes in their qualifications).
that the recommended rule changes are not comprehensive, but merely
cover minimum changes to the curriculum tied to the BOE practice
analysis process, the introduction of ethics requirements, and
the updates on accreditation. A partnership with academia, along
with a practice analysis from the AICPA, should form the basis
of further guidance to state boards in a cooperative atmosphere.
J. Mastracchio Jr., PhD, CPA, has served on the NASBA nominating
committee and serves on the NASBA Education Committee. He has also
served on the AICPA Board of Examiners. He is also a past chairman
of the New York State Board of Accountancy, where he also chaired
its Education Committee; and he is a member of The CPA Journal
Editorial Board. He currently teaches at the University of South
Note: For further discussion of the 150-hour requirement,
including additional information from this author, see “CPA
Journal Forum: Preparing Future Accounting Professionals,”
in the In Focus section on page 16.