ABSTRACT: Recently many accounting programs have simultaneously faced declining enrollments and administrative/practitioner pressures to update curricula. Each of these issues requires accounting educators to carefully consider the strategic direction and operating structure of their programs. This paper illustrates how KPMG's Business Measurement Process (BMP) can be used to identify and manage the major risks affecting accounting education at the college and university level. It also demonstrates the BMP's usefulness in meeting the strategic-planning requirements of the AACSB's new, mission-based accreditation process. The BMP's holistic framework specifically focuses accounting educators on controllable risks and educational processes, and unmasks potentially hidden opportunities to deliver lasting, substantive, and effective curriculum change.
Recent declines in accounting student enrollments have adversely impacted many undergraduate business programs. Several recent high-profile studies document this trend and discuss the potentially distressing implications for accounting education (Albrecht and Sack 2000; Russell et al. 2000). Confronted with this and other difficult issues (e.g., 150-hour requirement, new accreditation standards, etc.), accounting faculty must craft strategies that ensure the future viability and competitiveness of their accounting programs (Nelson et al. 1998). (1) This paper describes how KPMG's Business Measurement Process (BMP) can be used to assess department-level risks and improve existing educational processes and functions. By specifically applying the BMP to the "accounting major decline" issue, this paper illustrates how the model can be used in the strategicplanning process to shape and execute future curricular agendas.
This paper is organized in five major sections. The first section introduces the BMP and discusses its relevance to accounting education. The next three sections demonstrate the usefulness of the framework in identifying strategic, process, and measurement risks. The concluding section illustrates how the BMP can be used in a strategic-planning exercise and offers feasible solutions for managing critical risks.
THE KPMG BUSINESS MEASUREMENT PROCESS
Most major accounting firms have formalized risk assessment models that they use when delivering assurance services to their clients. Bell et al. (1997) describe how one such model, the KPMG Business Measurement Process, is used to analyze risks associated with a client's strategy, key business processes, and performance measurement procedures. The BMP allows KPMG to determine if their clients are adequately monitoring and managing the risks that threaten strategy execution and achievement of business objectives. Although initially designed primarily to assist auditors in meeting their engagement responsibilities, the BMP also is a powerful tool that organizations can use to manage risk and identify process improvement opportunities.
As illustrated in Exhibit 1, the BMP classifies risk into three main categories: strategic risk, business process risk, and business measurement risk. Strategic Analysis focuses on the identification of risks that arise from forces external to an organizational unit (e.g., markets, regulation, competition, etc.). Business Process Analysis addresses the quality of three management activities internal to the organization: strategic, business process, and resource management. Finally, in the Business Measurement phase, the BMP requires users to assess the completeness and credibility of performance measures employed by the organization (i.e., both financial and nonfinancial indicators). The BMP seeks to improve organizational performance by highlighting those risks that management can control and by motivating strategies to mitigate specific risks.
While the BMP was developed primarily to evaluate and manage risks of commercial enterprises, the robust nature of this framework lends itself to application in many noncommercial settings including accounting education. The next three sections of this paper demonstrate how the BMP can be applied in an academic setting to help accounting departments assess strategic, process, and measurement risks in the context of the "declining major" issue.
USING THE BMP TO ANALYZE STRATEGY
The BMP's Strategic Analysis phase is designed to assess the nature of the environment in which an organization operates. For accounting educators, this process can help faculty identify those risks over which they have little or no control. Common strategic risks often result from external forces, markets, alliances, products, and customers. Table 1 summarizes these risks and provides examples of how each can affect an accounting program.
Although accounting departments continue to be impacted by numerous environmental factors, the operating risks associated with the 150-hour requirement and existing and proposed accreditation standards can be used to illustrate the usefulness of the BMP. In recent years, the 150-hour requirement has created significant concern among many accounting educators. In fact, many faculty argue that the requirement provides huge disincentives for students to pursue an accounting education, and ultimately professional certification. (2) The inconsistent and diverse position of individual state boards of accountancy on the 150-hour issue further complicates a student's decision to major in accounting. For these reasons, the 150-hour requirement has been and continues to be the subject of much debate in the accounting education community. Yet, there is little that individual institutions can do to change or eliminate the requirement.
The BMP helps educators recognize the 150-hour requirement (and associated enrollment risks) as an externally imposed constraint. Treating it as an external force redirects faculty discussion from whether the requirement is appropriate to how accounting programs will react to its implementation. In short, the BMP halts the debate and initiates action. To meet its students' educational and certification needs, will an accounting program respond with a five-year-program option, align itself with another institution's graduate program, or retain the status quo? How will these and other potential responses affect accounting enrollments?
The AACSB's standards for accounting accreditation, as well as individual state licensing regulations, also can impact accounting program structure. These standards often impose requirements that affect curriculum flexibility, particularly as they relate to course offerings. As with the 150-hour requirement, faculty at individual institutions generally cannot modify or eliminate these external forces. However, ignoring them can create operating risks for an accounting program. Again, the BMP focuses the debate on how or if faculty will change curricula to address these external influences, rather than on whether these regulations/standards are appropriate or correct.
As with external forces, individual faculty generally cannot control important issues that arise in today's dynamic business marketplace, many of which can influence whether a student will choose accounting as a major. The BMP encourages accounting educators to direct their attention to creating responses to market conditions, rather than simply discussing them. Technology, the economy, recruiting practices, and public perceptions of the accounting profession all challenge faculty in promoting the accounting major. The rising appeal of technology and finance careers certainly has affected students' interest in accounting. While the recent downturn in the economy may have temporarily driven some students back to the major, faculty must determine how advancing technology and growing global employment opportunities will affect their enrollments, program design, and delivery in the long term.
Today's labor markets also can discourage students from pursuing a rigorous accounting program. A casual review of recruiting brochures shows that many accounting and auditing firms do not financially reward students for becoming accounting majors, nor do they even require an accounting background (much less a major) to join many of their consulting-related practice lines. Exacerbating this problem is the growing disparity between what college seniors believe their first accounting job will pay and what employers are actually offering. (3) What strategies will accounting educators use to motivate accounting majors given these short-term economic disincentives?
Finally, many students and their parents simply do not understand how dramatically the role of accountants and their education has changed during the past decade (Barsky and Catanach 2001). Few realize that the accountant's role has evolved from that of financial accounting and tax advisor to one of consultant who offers advice on a variety of management issues, including performance improvement, human resource systems, and other financial matters (IMA 1999). In fact, a recent Harris Poll (2001) on the "prestige of professions" rated accountants 16th out of 17 listed professions. While such perceptions may not seem "fair" to most academics, they are widely held and therefore cannot be ignored. Recent crises in the profession (e.g., Enron and the related Andersen demise) project the image that accounting may no longer be such a stable profession. The related risk of legal liability, criminal prosecution, and pressure for unethical behavior also may dampen student interest in accounting. Ironically, none of these external factors is under faculty control; however, they do create risks for accounting programs and make "selling" the accounting major a formidable task. Clearly, a convincing message must be communicated to students and their parents to dispel the negative perceptions attributed to accounting.
College and university initiatives also impose external constraints that can affect program delivery and even major selection. In fact, administrators may provide incentives for departments (either individually or collectively) to pursue behaviors that adversely affect both accounting faculty and students. For example, deans may introduce new majors or programs of study that clearly fall within traditional definitions of accounting. To promote these …