Information Technology and Accountants' Education

Tradition-bound accountancy profession is under threat. The threat, in an IT environment, comes from non-accountants, whether business graduates with IT skills or IT experts. These competitors are now the preferred employees of the accountancy firms worldwide. In the SAFA region too as business, finance, trade and even governments move forward to adopt IT as a mode of conducting their business, the professional accountant is only able to hold his/her own provided he/she exhibits necessary knowledge and skill in IT.

“Information Technology is pervasive in the world of business. Competence with this technology is imperative for the Professional Accountant.” These are the opening lines of the preface to IEG-11, the International Education Guideline on “IT and Accounting Curriculum” issued by IFAC, emphasizing very succinctly the need of the time.

A report entitled “Entry, Education, Training, Post Qualification and CPE” prepared by a SAFA Task Force, reads thus: “The Accounting profession (in South Asia) has not yet realized the importance of its power in the new millennium and we have been very complacent in our attitude towards IT. This will be very harmful to the profession particularly if we do not reorientate our thinking and actions.”

The first quote was an advice, the second reality. And reality bites!

We are living in rapidly and constantly changing times. Change is around us, about us, within and without us. There is today a need to rethink and update the traditional and time- tested approaches in favour of newer techniques and methodologies to help understand and meet the challenges posed by the increased use of information technology in all facets of our lives and learning.

Education plays a key role in bringing about change. A change which has to ensure a departure from rote learning to the concept of learning to learn. A change which has to incorporate the extensive knowledge and impact of Information Technology on our lives, learning, relationships, environment, health, medicine, business, trade and every other aspect of life for the purpose of bringing about a sorely needed improvement in the living standards of nearly 25 per cent of the world population inhabiting the area referred to as SAARC.

Those who understand the need for education must therefore be geared to adapt themselves to the new challenges, techniques and emerging opportunities for advancement in life. In so far as the developing countries of the world are concerned, it should be clear that the road to development lies through education alone. It is time that a much greater percentage of the respective SAARC country budgets are devoted to educating the people in partnership with the private sector. The use of Information Technology in furthering the cause of education and literacy is clear.

Tradition-bound Accountancy Profession is under threat. The threat, in an IT environment, comes from non-accountants, whether business graduates with IT skills or IT experts. These competitors are now the preferred employees of the accountancy firms worldwide. In the SAFA region too as Business, Finance, Trade and even Governments move forward to adopt IT as a mode of conducting their business, the professional accountant is only able to hold his/her own provided he/she exhibits necessary knowledge, expertise and skill in IT.

The profession of accountancy is no longer bookkeeping or auditing or filling out of tax returns. The first and the last activity are now being performed by IT professionals and any one with business knowledge, whilst auditing has changed in character from good old ticking, casting and vouching to Computer systems audit, security audit, risk assurance and on line audit. The management consultancy assignments, systems and procedures development, financial analysis and advice are today incomplete without an in-depth knowledge and skill of IT and requisite expertise in use of the tools available to work in the new environment.

Globalization and in its wake the expanding business and capital markets, e-commerce, internet and various other developments have caused a complete change in the hitherto traditional markets enjoyed by the Professional Accountants. The traditional money earning activities are no longer valid; particularly when we are informed that nearly 60 per cent of the Gross Revenue earned by the big five in the USA is being earned from IT-related work.

Professor Boritz in an update paper on IEG – 11 states: “Whereas business entities in IT domain live by slogans such as ‘only the paranoid survive’ many accounting academics and practitioners do not seem to have grasped the importance of IT’s transformational power in our society and the role of professionals in that transformation, especially information – oriented professionals such as accountants. Decades of complacency in connection with IT have left some of our professional bodies, practitioners and students unprepared to cope with IT as users or business advisers. The end result of this will be a reduced role and reduced influence in society compared to what it has been and what it might be.”

Having outlined very briefly the changed environment, the questions that need to be answered are:

i) What steps have the Regulatory bodies of the Accountancy Profession in the SAFA region, taken to meet the challenge?

ii) What are the causes of this slow changeover or inaction?

iii) What should be done on a regional and individual country level to overcome the situation?

The SAFA region comprises eight member bodies. The importance given by them to IT in their respective syllabuses, notwithstanding any recent developments, is reflected in that:

Only one of the five Chartered Accountant bodies in the region introduces the students to IT at the foundation stage. Three teach the subject at one of the professional stages. The three Cost and Management Accounting bodies touch upon various aspects of the subject at different study levels. Nearly all member bodies require basic knowledge of IT and usage skills in spread sheet and word processing. None of the Institutes has declared IT as a core subject and given it the same status as Accounting, Auditing or Taxation. Nearly all member bodies have set up IT Committees tasked with the objective of redefining the IT syllabus and examinations in accordance with IEG-11.

Barring one or two members the general emphasis, at the moment, appears to be establishing the Accountant as a user of IT, the minimum prescribed by LEG-11. This position may be based more on the expediencies of a practising firm rather than much else.

The IEG-11 defines three other roles, namely, designer, manager and evaluator. And it is one of these roles that one would expect the Professional Accountant to adopt in order to retain its market as a business consultant. However, a mere reproduction of IEG-11 in the syllabuses will not solve the problems as the ground realities that face us in the SAFA region, generally, demand a different approach. These realities in my opinion are:

1. The General Education System does not offer students a formal introduction to the subject of IT, therefore the onus on member bodies to ensure basic IT education.

2. The majority of the student body does not either have access to computers or afford to go to IT schools because of relatively high cost.

3. The faculty required to impart IT knowledge with reference to accountancy subjects is in short supply, if not scarce.

4. Academics with Accountancy and IT knowledge and expertise, to carry out essential research and work in adopting the integrated approach, are virtually non-existent.

5. The traditional conceptual and strategic approach in imparting accountancy education has to change in favour of a technical approach, a must, keeping in view the market requirements and expectations of a Professional Accountant.

6. With the position as stated for the majority of the student intake, the changeover challenge for the member bodies and their respective IT Committees in the SAFA region is daunting. So what should be done?

In the words of Professor Boritz: “Member bodies must adopt an appropriate vision for the future and take leadership roles in their areas, assess the current state of affairs, help develop a plan to address the problems and obstacles in implementing LEG – 11 and a monitoring programme to encourage progress.”

The members bodies should request and prevail upon their respective governments to:

1. Take up the issue of introducing the subject as a mandatory requirement at the school and college levels.

2. Providing higher budget allocations for the purpose of setting up computer laboratories and creating awareness, knowledge and usage skills in IT. This may take some time given the overall financial constraints of most governments in the region.

3. Ensure that suitable level of expertise in the subject is made mandatory for promotion in the civil service and more particularly for all officers in the Audit and Accounts service.

4. Grant exemptions from import and other levies on the hardware and software as well as communication facilities deemed necessary for the promotion of Accountancy education.

The Accountancy bodies have, notwithstanding efforts of the respective governments, their work cut out for them with time posing the greatest challenge. The strategy being proposed as follows to meet the challenge shall have to be adopted and applied by the member bodies individually and by SAFA as the regional body working for the uplift of the profession in the region:

First, all member bodies in the region should adopt and declare IT as a core subject. This may require a change in the existing weightage given to other subjects and may even result in discarding certain topics which continue to be part of the syllabuses notwithstanding their relevance to the modern day business environments. This would also entail redefining the IT syllabuses to incorporate the minimum prescribed in LEG- 11 with addendum to include the latest developments in the field, for example, Web and Sys Trust assurance and E-Commerce. Examinations at the Foundation stage and each of the Professional levels will need to be conducted to examine the various aspects in some detail. Hands on training must be mandatory and should be subject to an examination conducted by the Regulators before certification.

Second, the member bodies may consider to offer an option to the students at the professional stage in that they may elect to stick to the normal IT (as laid down in IEG – 11) route or choose a more specialized path leading to a specialization as a designer, evaluator or manager of IT systems. If the option is made the student would have the right to drop one of the other subject having similar weightage.

Third, the IEG – 11 requirements are meant as much for the qualified member as they are for the Accountancy student. The qualified members, in particular those in practice, must acquire the, in-depth knowledge and expertise in IT to be able to continue offering their services as a ” Complete Business Consultant.” Accordingly, the member bodies may introduce a two- year programme, leading to proper certification, under the C.P.E. programme, specifically aimed at the qualified members with the objective of achieving the minimum standards in IT education prescribed in IEG-11.

Fourth, the member bodies may, in view of the particular shortage of IT faculty well versed in the accountancy subjects, introduce a teacher training programme. The trained teachers may form the core of a distance learning programme and be available for research and developmental work, which without doubt, will have to be undertaken on a regular basis in view of the rapid developments in IT.

Fifth, all member bodies, must under the guidance of their respective IT Committees, set up fully equipped computer laboratories for the use of students, generally, and qualified accountants, particularly, in each of the cities that they have a presence in. These laboratories would be staffed by suitably qualified persons who could impart the technical knowledge required under the various programmes outlined (in three) above. Further more, they could act as the coordinators for any distance learning programme that may be launched by a member body.

Six, distance learning programmes are, in my opinion, the best method of reaching out to the maximum number of students and members and ensuring that the level of knowledge required to be imparted by the Regulatory body is in fact delivered uniformly to all in a cost effective manner. The member bodies are recommended to consider the use of distance learning programmes to deliver not only IT but also other subjects to the student. This would also help in reducing the dependence on the classroom syndrome and hopefully achieve the objective of creating a ‘learning to learn’ habit.

Seven, member bodies must allocate a percentage of their gross annual revenues for the purposes stated (in five and six) above. They may ask the major accounting firms in the country to contribute to the total funding requirements as well as making efforts to raise funds from international donor agencies or local sponsors.

Eight, the member bodies may also review the current criteria for training in firms, as IT usage and skills advancement must form an important part of the training henceforth.

Nine, SAFA, as regional body, must immediately announce the setting up of a SARA IT Committee, whose responsibilities would include:

a) Ensuring that each member body in the region has redefined the IT urricula in accordance with IEG- 11;

b) Ensuring that each member body has installed a proper system of examining the IT knowledge imparted and the practical experience required;

c) Offering technical guidance and assistance to all those member bodies who may need help in either redefinition of syllabuses or setting up the examination system;

d) Setting up a Regional IT examination and certification programme acceptable to all member bodies;

e) Setting up or providing assistance in setting up a distance learning programme to be used by each member body to supplement their own education programmes;

f) Undertaking research and developmental projects in the field of IT and liaisoning with the IFAC IT Committee on matters of mutual interest.

g) Establish on a cross border basis a core IT faculty which would be involved in achieving the objectives set out in (e) and (f) above. h) Pursue the International and Regional Funding / Donor Agencies for grants and financial aid for the purposes of setting up the distance learning programme and the promotion of IT knowledge, skills and usage among the accountancy profession in the region.

i) Undertaking the task of reviewing the accountancy curriculum from the point of view of integrating IT with the other core subjects.

These are some of the suggested tasks that SAFA and the member bodies will have to undertake immediately in order to meet the emerging challenges not only of Information Technology but also globalization. It is necessary to state here that the Regulatory bodies owe it to our future generations to adopt a forward looking approach, a visionary approach, to ensure that the stature of the accountancy profession grows and that the profession is continued to be considered as the most prominent business solution advisor in the world of Information Technology. The time to act is now for the sake of a prosperous tomorrow. Let us not procrastinate but start building a better future.

Mujahid Eshai is a chartered accountant and a council member of ICAP. He represents Pakistan on the IFAC-IT committee and co-chairs the SAFA WTO committee.