Latest News

U.N. forum finds need for accounting education

19 Apr 1993
by Glenn Alan Cheney
UNITED NATIONS — The state of the world’s accounting education is chronically inadequate for the rapid globalization of the world economy, according to the results of reports discussed at a high-profile United Nations meetings here.

The reports sparked often hot debate during an all-day forum on accounting education at the 1993 Session of the U.N. Intergovernmental Working Group of Experts for International Standards of Accounting and Reporting (ISAR).
The reports found the severest educational inadequacies in the developing countries, where in some cases there was virtually no accounting education or certification process at all. One report delineated several stages of the accountancy profession. frompre-profession to “mature profession,” and found a disturbing parallel between a country’s accounting profession development and its economic development.

Representatives from several African nations pointed out that economic development in their countries was virtually impossible without a well established accounting profession, and that the profession could not be established without improved education. Education, in turn, was impossible without better educated professors armed with appropriate materials. Too often the only materials available were produced in other countries
and therefore of limited relevance to the local accounting environment.
About half of the African nations surveyed in one of the ISAR reports lacked an educational and professional infrastructure to certify auditors.

Constituents from Russia and Ukraine, whose countries are considered “economies in transition,” complained that even though they once had a functioning economy, the radical shift away from a centralized economy has left them without a viable accounting profession. Lacking that, they find it very difficult to establish free enterprise companies. Their universities are wholly lacking in qualified instructors and relevant teaching materials. ISAR has been supporting educational programs in both countries, but they barely begin to solve the problem.
Most vociferous among participants was Talal Abu-Ghazaleh, chairman of ISAR. A Jordanian currently residing in Cairo, Ghazaleh is also chairman of the Arab Society of Certified Accountants. While sometimes speaking as a constituent from Jordan and sometimes as self-appointed spokesperson for the world’s developing nations, he repeatedly beseeched participants to open the scope of their concern to include countries which needed the most help.
“This state of affairs cannot be allowed by remain,” he said in reference to the gap between the states of accounting professions in the developed and developing economies. “Its continuation is a mark of the failure of the accounting profession to grasp the nettle and to seek to deal with this on the scale which is required. Global problems need global solutions. We need something more imaginative and on much bigger scale...on a
parallel with the Marshall Plan.”

Problems were not limited to developing nations. American education was seen by some as focusing too much on the details of standards and regulation and too little on the broader concepts that would apply to international accounting contexts. Very little of American curricula is dedicated to transnational accounting.
Lee Radebaugh, a professor at Brigham Young University, said that American universities tend to take an ethnocentric approach to accounting. Students consequently go into the real world of accounting under the assumption that all accounting is dedicated to the taxation and capital marketing situations found in the United States. Consequently the transfer of accounting technology to less developed economies failed to achieve a true partnership with local needs and accounting standards.

Remarking on tendencies to teach accounting by teaching technical details rather than broad concepts, John Flower, Director of the Centre for Research in European Accounting in England, said, “We must teach students to become accountants throughout their careers, not to think they are accountants upon graduation.”
According to some participants, European education had yet to fully grapple with the accounting environment of the unified European community. Very little literature exists on the topic of European accounting as a whole. At the same time, curricula, education standards and certification are different in each country, inhibiting the free practice of the profession in what is supposed to be a unified economy.

The United States is not a constituent of ISAR, but Cathy Cole, an assistant chief of accounting with the Securities and Exchange Commission, was present as an observer. She voiced objection to an item in one report, which said that in countries with a mature accounting profession, “many [users of financial statements] believe that auditors should assume more responsibility for the detection and reporting of fraud and illegal acts.”
In a brief confrontation with chairman Abu-Ghazaleh, Ms. Cole insisted that the statement should not be adopted as necessarily true, especially the implications of the word “more.” The representative from the United Kingdom agreed. After some discussion, it was decided that the report would include an additional paragraph explaining that not all auditors and users agreed with the statement.
 
That decision hardly resolved issue of the estimated $30 billion in lawsuits currently directed at accounting firms in the United States. While this session of ISAR did consider the possibility of a link between education and litigation, the latter issue will be the exclusive focus of the organization’s session in 1994.