The Current State of Financial and Accounting Education in Latin America Taiki Hirashima Independent...
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Transcript of The Current State of Financial and Accounting Education in Latin America Taiki Hirashima Independent...
The Current State of Financial and Accounting Education in Latin America
Taiki HirashimaIndependent Consultant
CReCER Regional ConferenceMexico D.F., June 2007
THE WORLD BANK
Disclaimer
The findings, interpretations, and conclusions expressed in this
presentation are entirely those of the presenter. They do not
necessarily represent the view of the World Bank, its Executive
Directors, or the countries they represent.
Background
Lack of other filters for entering the profession: undergraduate degree is often the only prerequisite for entering the profession
Most countries do not require professional experience or passing of professional qualification examination prior to registration as a public accountant (except Mexico and Brazil).
DemographicsTrends in education: lack of convergence (different policies, models, institutions, quality approaches across countries and even within the same country).
Challenges in accounting education in Latin America
Background
Research paper under construction.
This presentation summarizes our preliminary findings.
About this study
Methodology
Sources of information
Primary data: survey sent to 43 universities throughout Central/South America and MexicoSecondary sources
World Bank ROSC programIFAC compliance assessmentBrazil case study through papers, thesis and other accounting educations diagnosis
This is a first attempt aiming to analyze such a complex matter across Latin America, which inherently contains
overwhelming challenges and difficulties.
Presentation of preliminary results
Outline
Today’s presentation will cover the following topics, always trying to analyze strengths and opportunities of Latin America countries towards global accounting convergence:
Accounting curriculaAccounting facultyAccounting studentsSummary and tentative conclusionsNext steps
Preliminary results
Low adherence to the International Education Standards (IES). Heterogeneity among universities (most countries do not have minimum requirements).Relatively low insertion of International Financial Reporting Standards (IFRS), International Standards of Auditing (ISA) and ethics disciplines. Very low coverage of topics in economics, business and corporate governance.However, survey suggests a positive and recent trend regarding international convergence:
Almost 70% of respondents declared having plans for improving or implementing IFRS disciplinesExisting IFRS disciplines are offered on average for the past 4 years.
But lack of financial resources for convergence and low faculty qualification are a constraint.
Curricula
% of covered subjects in accounting fields of study
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Corporate Governance
International business and globalization
Economics
Accounting Information Systems
Advanced Financial Accounting
Business and Commercial Law
Professional Values and Ethics
Basic Accounting
Audit
Financial Accounting and Reporting
Management Accounting and Control
Taxation
Finance
Preliminary results
Includes topics in IFRS
adoption
Preliminary survey results on curricula
% of insertion of "International Accounting" discipline in accounting undergraduate curricula
0%
5%
10%
15%
20%
25%
30%
Mid-west Northeast North Southeast South
0%
5%
10%
15%
20%
25%
Case study - BRAZIL
Curricula – Case Study Brazil
Source: Weffort (2003)
National Average
Preliminary results
Age of faculty members – seems that we have the “perfect” balance between experience and sustainable efforts to face convergence challenges.Low wages: less than US$1,200 per month for full-time positions in average. Most of faculty members are part-time (65% on survey).Low level of international certification and exchange.Research, despite positive trend, still needs significant improvements, to prepare talented and updated faculty.English language skills are a constraint.
Faculty
Preliminary results
Includes topics in IFRS
adoption
Faculty age: promising human capital for future challenges
Average age of faculty members
0% 10% 20% 30% 40% 50%
<30 years old
31-40 years old
41-50 years old
51-60 years old
61-70 years old
>70 years oldBalance between experience and remaining working time
Source: Survey
Preliminary results
Includes topics in IFRS
adoption
Faculty: hard to retain and even harder to attract members
Source: Survey
Perceptions on faculty wages in Latin America
0% 10% 20% 30% 40% 50% 60%
Wages are adequate to retain but notto attract new members
Wages are very low, i.e. hard to retainand attract members
Wages are adequate to retain andattract faculty members
Preliminary results
Includes topics in IFRS
adoption
Research as knowledge bank for quality education – perspectives must be improved
Survey so far has shown that accounting research is incipient:Low engagement in research, since 65% of faculty, in average, are part-time.Less than 50% of faculty is engaged in publishing accounting papers or books.Only 10% of faculty engages in international academic exchange.
Brazilian case also shows need for improvements in preparing qualified faculty:
Graduate Programs in Brazil (2006)
13
5062
17
16
2
0102030405060708090
Accounting Economics BusinessAdministration
PhD
Master
Source: CAPES
Preliminary results
Low ratio of applications / admissions (ranging from 1.2 to 2.5 so far in survey).Steady growth in actual admissions (Brazil case). Survey indicates stable demand (last 10 years) for more than 50% of respondents.Survey indicates that pass rate is lower compared to “hard sciences” (e.g. engineering) and around the same compared to other social sciences. However, rates are decreasing in time (slightly).
Attracting high-caliber students
Preliminary results
Survey suggests an overall adequacy of infrastructure:67% declared to have enough relevant textbooks available.69% declared that university library is updated.71% declared that their students have access to materials from other libraries.63% declared to have enough PC’s and internet access for accounting students in the university.
However, availability of translated IFRS, ISA and Code of Ethics seems to be a constraint.
Attracting high-caliber students
Environment for attracting high-caliber students needs improvements
% of respondents that indicated avalilability of the following materials:
0% 10% 20% 30% 40% 50% 60%
Translation of ISA
Translation of IFRS
Translation of Code of Ethics (IFAC)
English version of IFRS
English version of ISA
English version of Code of Ethics (IFAC)
Source: Survey
Preliminary results
Applications / Admissions ratio
-
0.50
1.00
1.50
2.00
2.50
2001 2002 2003 2004 2005
Accounting
Economics
B. Administration
Brazil case
Source: MEC/INEP
Oversupply
Case study - BRAZIL
Brazil case: failure in certification exam
Source: Conselho Federal de Contabilidade (Federal Accounting Council)
186
592333
10
332368
97 72
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2004 2005 2006
Absent
Failed
Approved
HeterogeneousCurricula
Low QualityEducation
Failure inCertification
Exam+ =
Case study - BRAZIL
Summary
Trends in accounting academic education are generally positive.
Average age of faculty members is balanced for future challenges.IFRS is becoming more present in accounting curricula across Latin America.Research is growing – the knowledge bank for quality faculty.Demand for accounting degrees seems to be stable, which is consistent with other social sciences.Academia seems to be relatively well connected and committed with audit firms, companies, professional bodies and government.
Summary and tentative conclusions
Summary
However, qualification (including English language) of both students and faculty are a currently constraint for global convergence.In general terms, accounting in companies is not a profession to be “proud of” (low wages, low competition in application processes, low level of full-time faculty, high concentration of hires by audit firms).Part-time faculty
Faculty position as a complementary job. Research still incipient.Accounting Curricula
Heterogeneity in an increasing sophistication environment.Low adherence to IES.Low presence of IFRS and ISA.
Governments should stand more actively regarding surveillance of accounting education (e.g. prevent oversupply, monitor quality, examine before practice), probably with assistance of qualified bodies.
Summary and tentative conclusions
Summary
Survey enrichment through a more representative sample is a major goal:
Questionnaires sent to 43 universities. Replies so far - 12 universities.
Conclusion of the study expected to happen in the upcoming months.
Research paper will be included in the World Bank publication based on CReCER Conference (to be issued late 2007/early 2008).
Next steps