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The Impact of International Standards in Accounting Education
Posted By Ceci On 2 September, 2010 @ 10:51 am In Accounting,Edition 34 | No Comments
By: Sylvia Meljem
At the same time that globalization is found in every corner of the world, the issue of national and international standards convergence becomes more relevant every day. Almost in all the capital markets convergence towards a set of generally accepted accounting and auditing standards is actively discussed. The contribution of these standards shall be to reduce vulnerability and to strengthen accountability in all the accounting information systems, specially in the securities market, where public companies are listed.
In this process, education plays a very important role because the quality of a profession cannot be sustained and improved if the individuals that form it are not educated to comply with the standards established. Therefore, this article will analyze the objective and the standards issued by the International Federation of Accountants (IFAC) on education and also their impact in the design of the curricula in business schools in Mexico.
The IES sare generally accepted “good practices” in education and the development of professional accountants;; they are the benchmark to be used by IFAC members to comply with the minimum requirements established for them to be considered “professional accountants” in the world. These standards are essential elements that education and extension programs must include to be internationally recognized, accepted and applied.
Legally the IES may not contradict local laws or regulations. However, they are a reference for regulators to know the generally accepted good practices. They are prescriptive by nature as they help to implement the best practices; they recognize the cultural, language, education, legal and social systems diversity, but they also establish unique essential elements for all.
Their objective is to educate professional accountants so that they may make a positive contribution to the profession and to the society where they will work throughout their life.
The documents issued by the International Accounting Education Standards Board (IAESB) are of three kinds as seen in Figure 1.
The IAESB statements aim to comply with the following functions:
The IESs shall be analyzed as they are of higher hierarchy; eight of them have been issued to date:
The IESs may be grouped as shown inFigure 2:
As can be seen in that Figure, the IESs set a evaluation point to assess the minimum skills and a person’s competences in order to be considered a “professional accountant”.
Before the evaluation point, the International Standards refer to professional knowledge, skills, attitudes, values and ethics that, together with experience should translate into the relevant and appropriate competences of professional responsibilities. To agree and achieve some level of competence maintained in education, practical experience and continuous education, demands the setting of standards in these areas.
This pre-evaluation period should be sufficiently long and intensive to acquire the competences and to have good professional growth and development in the future.
Professional accounting studies are part of the pre-evaluation program, and as fundamental basis should include the following areas of knowledge:
Accounting, finances and related knowledge.- They should provide the essential technical bases to be successful as a professional accountant.
General education should contribute to develop the skills needed by professional accountants, which can be grouped as follows:
Intellectual Skills.- Help solve problems, make decisions and use good judgment in complex situations in the organization.
Technical and functional skills.-They are:
Personal Skills.s.- Are related to the attitudes and behavior of professional accountants.
Interpersonal and communication skills.- They include:
Organizational and business administration skills..- These skills have become more important for professional accountants:
The objective of education in general is to develop non professional knowledge and the skills and attitudes mentioned before, which are:
The scope of the values and attitudes in the public accountants’ education programs must be committed with:
The teaching of values, ethics and professional attitudes must include::
In addition to formal studies, professional experience must be part of the pre-evaluation program. The experience period must last enough so that the candidates may prove that they have the initial professional competence and the necessary basis to professionally continue to grow and develop in the future. A minimum three year period is established.
Professional experience provides the right environment to develop the competences required because:
In this manner, it establishes that the evaluation to be acknowledged as a “professional accountant” will be based on the skills and competences and not on knowledge per se, since candidates will have to prove the following:
This evaluation proposal changes the traditional approach that existed in the accountant’s education, because all the curricula highlighted the transmission of knowledge and little development of skills and attitudes. The important thing was to be in control of the accounting technique and not the integration of other areas of knowledge.
Professional competence is developed by the combination of academic studies, training at work, labor experience and professional education. The academic approach covers the accounting theory, while professional education focuses more on practice and the skills professional accountants need. Labor experience concentrates in work training and continuous updating.
Aligning the three approaches (academic, professional education and work experience) to develop functional competences and skills will be more productive than trying to develop a broad range of competences required by only one of these paths.
The academic, labor and professional education factors will determine how much these three components can be combined to guarantee the professional accountants’ competence. When the evaluation of the work environment is not favorable or education has a low standard, then the professional entities will rather be backed up by their own education programs and professional competences exams.
The approach in developed countries has to take into consideration the economic and cultural environment. The approach based on competences is specially important in these countries, due to the growing drive they are immersed in because they are part of the global economy.
In the case of our country, professional regulations established by government play a fundamental role in curricula, because when a higher education institution with a program that as a valid official registry grants a public accountant’s degree, the Mexican government automatically authorizes or gives permission to practice in the professional arena.
Hence, the curricula in Mexico has a professional orientation and it focuses on providing knowledge in the short term as demanded by the labor market.
There is a saturation of technical knowledge given the amount of accounting, tax and legal rules that an accountant has to know to practice as a professional accountant. There are few optional subjects and to a large extent education continues to be traditional; namely, it is focused on transmitting knowledge.
This approach makes the international trend difficult as it is based on an Anglo-Saxon model, and in it academic education is not totally linked to professional practice and thus it can focus on general education based on human beings in the long term; each individual, with the help of a guide, designs his or her own program (selecting optional subjects) based on his or her future expectations as is shown in Figure 3:
Hence, and given the diversity in the quality and content of the different Public Accountant curricula in the country, in order to be considered a “professional accountant” in Mexico, called Certified Public Accountant CPA), the Mexican Institute of Public Accountants (IMCP, a professional organism) uses the three “E”s model:
As mentioned above, this model converges in the IES. However, there are some problems in each one of the elements considered as mentioned herein below:
Other additional weaknesses of the Mexican model is that it is not mandatory and it is only a requirement for external auditors that give their opinion on financial statements for tax purposes, and asides from the three elements mentioned they are isolated instead of being part of as is established by the IES.
Challenges and Conclusions
One of the challenges of the international approach based on competence is to establish the cut-off points and how to evaluate them. The most difficult component is to obtain sufficient evidence of the quality of performance at work. Another problem we find in continuous professional education is how to monitor competences after they have gone through a certification process.
The main challenge in adopting the International Standards in the world is to guarantee that public accountants obtain the necessary knowledge and skills to comply with their responsibilities, even taking into account the cultural, economic, legal and social differences.
The academia must prepare students and professionals who are able to understand the new international standards, to apply them in the various national contexts that require them, since this knowledge will be reflected in better accounting recording practices, which in turn will translate into better quality of information and this will affect the decisions made and will be more in tune with the international businesses reality.
[4]The objective, as shown in Figure 4, is to build trust environments that involve market participant agents: the academia, the public and private sectors and also professional and international organisms. Coupled with these participants, transnational companies will be certain that they can make investments in environments regulated in standard ways and with the guarantee that there will be a reliable accounting-financial record basis that complies with international standards.?
Bibliography
International Federation of Accountants (IFAC), International Accounting Education Standards.
Ponencia Central ANFECA (2005), Academia ANFECA.
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