Academic journal article Management Accounting Quarterly

The Missing Piece in the CPE Pie

Academic journal article Management Accounting Quarterly

The Missing Piece in the CPE Pie

Article excerpt

The accounting profession recently has been faced with an increasingly changing environment that has extended to business sustainability, corporate governance reforms, possible convergence in both accounting and auditing standards, risk assessment, and the emergence of more sophisticated electronic accounting and auditing processes. To meet these challenges, management accountants need to keep pace with the latest advances and update their technical and soft skills.

One way to obtain, secure, and document the required skills is through robust continuing professional education (CPE) programs. Naturally, the effectiveness of CPE programs depends on how well they cover emerging issues that affect the accounting profession. One of these issues is in the area of corporate governance and ethics. The rash of financial scandals at the turn of the century and their persistence in recent years has reinvigorated interest in CG&E. The purpose of this article is to determine how well corporate governance and ethics are integrated into professional CPE programs. We will show this by examining a sample of these programs.


The Institute of Management Accountants (IMA[R]) defines management accounting and management accountants in the following manner:

      Management accounting is a profession that involves
   partnering in management decision making, devising
   planning and performance management systems, and
   providing expertise in financial reporting and control
   to assist management in the formulation and implementation
   of an organization's strategy....

      The role for management accountants has therefore
   shifted in two respects with regard to the information
   value chain: Management accountants (1) provide the
   conceptual framework for converting data into information
   and (2) fulfill the role of enabler and strategic
   business partner along the entire information value
   chain. (1)

Needless to say, management accountants must conduct themselves ethically, serve their organizations to the best of their ability, and act in the best interests of their organizations and the general public. The purpose of continuing education is to enable management accountants to focus on sound, ongoing instruction, which should include ethics and corporate governance. Why is CG&E so important? In addressing accountants' judgment, one should realize that accountants do not work in isolation but are team players, where their work ethics and behaviors are influenced by those of coworkers, superiors, and even subordinates within the company, and, like other human beings, they can be pressured and motivated when the opportunity is given and thus be tempted to engage in unethical behavior (manipulation of financial reports, for example).

It has been argued that CPE programs have not received enough attention in the accounting literature, and their relevance and effectiveness have been questioned. (2) The International Federation of Accountants (IFAC) issued International Education Standard (IES) 7, "Continuing Professional Development: A Program of Lifelong Learning and Continuing Development of Professional Competence," that, since January 2006, has required mandatory CPE for all members of the accounting profession. All accounting organizations--including IMA, the American Institute of Certified Public Accountants (AICPA), and the Institute of Internal Auditors (IIA), among others--require CPE for their practicing members.

These mandatory courses are intended to improve members' professional competency and enhance their knowledge base, but in many cases they focus more on compliance than on real competency. (3) Prior CPE-related literature suggests that: (1) policy issues (ethics, governance) are more relevant than techniques and procedures when it comes to management accounting education; (2) management accounting education should be practical and should include topics that require extensive training in theory, such as ethics and corporate governance; and (3) the number of ethics courses in state CPE programs has grown significantly in recent years. …

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