Creating Strategic Responses to Critical Risks Facing Accounting Education
Barsky, Noah P., Catanach, Anthony H., Jr., Kozlowski, Bette M., Issues in Accounting Education
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. …