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Practice What You Teach: Accounting Program, Firm, Faculty, Classroom and Student Benefits From a Scholar-in-Residence (SIR) Program Frank M. Messina,

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Presentation on theme: "Practice What You Teach: Accounting Program, Firm, Faculty, Classroom and Student Benefits From a Scholar-in-Residence (SIR) Program Frank M. Messina,"— Presentation transcript:

1 Practice What You Teach: Accounting Program, Firm, Faculty, Classroom and Student Benefits From a Scholar-in-Residence (SIR) Program Frank M. Messina, DBA, CPA J. Steve Grice, PhD, CPA ACIS Chair and Professor Associate Professor Department of Accounting & Information Systems UAB School of Business Slides available at then click on Dr. Messinas Website.

2 The World is Flat UAB (entrepreneurial faculty– internal audit/forensics) involvement in the professional groups – practice-based mission to prepare students for our careers in accounting. Steve & my background (our old professors) Is Accounting an Art or a Science? Constant Changes Jon Wergin at the Sunday session discussed – The Wisdom of Practice and how important practice-based research has and continues to become. He stated there is too large a gap between academia and the real-world and we need an intentional connection between the two Microsofts Asian University research – practice-based – things are happening in real world faster than academia can keep up Right Brain/Left Brain (Accounting) Skills – Left brain skills moving across the oceans because it is cheaper.

3 CPA Journal, December, 2007

4 Scholar-in-Residence Program Medicine, optometry, nursing, and engineering are examples of professions that have exemplified the practice what you teach mentality toward education. Universities with strong academic programs in these fields are likely to have faculty who not only teach and research in the confines of the ivory tower but also actively engage in the practice of their profession. These can work together and not against each other. Great atmosphere for this at UAB. NOT FOR EVERYONE! Academic institutions may even provide practice facilities to support the faculty. Arguably, there is no better way for faculty to remain current in their profession than to be engaged in its practice. This discussion describes how a growing regional CPA firm, accounting program and two accounting faculty members are reaping the benefits of a scholar- in- residence (SIR) program.

5 Scholar-in-Residence Program Faculty members understand that accounting graduates will be working in a self-regulated profession. Preparing their students to be competitive in the profession is certainly one objective of most accounting programs. Most accounting faculty members have been actively involved in the professional accounting community. We agree (of course) that serving as an SIR at CRI has provided us an opportunity to work inside the firm, which is a tremendous benefit to our classroom teaching. Serving as an SIR allows faculty to experience current practice and integrate that experience into lectures and classroom discussions. The SIR program has improved our quality of teaching by helping us maintain an updated and challenging curriculum, which has in turn prepared students for the marketplace.

6 Carr, Riggs & Ingram (CRI) Carr, Riggs, & Ingram, LLC, (CRI) began a campaign to expand through mergers in the late 1990s. Over the last nine years, CRI has emerged as the fourth largest regional public accounting firm in the southeastern United States and is currently ranked 36th in Public Accounting Reports top 100 firms in the nation. CRI has 15 offices, spread across Alabama, Georgia, Florida, Mississippi, and Tennessee, and employs more than 400 professionals. You can see the change in the world in accounting – how do small business compete with Wal-Mart (coop model)

7 CRI Mission Statement The present and future of CRI embraces professionalism, integrity, compassion, and a passion for our profession. Our workplace, our work product, our staff and our partners will be held to the highest standards in our profession. We have a responsibility for growth to provide a future for our staff, ourselves, and our firm. No amount of growth will compromise the high standards we have set for our firm.

8 Scholar-in-Residence Program Initiated Bill Carr (managing partner) initially focused on identifying a person who could provide QC oversight for the firms accounting and auditing (A&A) practice. He believed that this individual should have public accounting experience, be active in the profession, be technically sound, and be a strong communicator, among other attributes. Carr approached the then-director of the Troy University School of Accountancy, Dr. Steve Grice, about his serving as the firms SIR for the A&A practice. For several years prior, Grice had worked with CRI to develop and deliver staff training courses. Carr and the executive committee wanted to use the SIR role to communicate a consistent message throughout the entire A&A practice.

9 Tax Side of CRI After several years of operating with the SIR for the A&A practice only, Carr and the executive committee made a decision to provide similar QC oversight for the firms tax practice. Once again, Carr looked to the academic community and engaged Dr. Frank Messina, chair of the Department of Accounting and Information Systems at the University of Alabama at Birmingham (approved by Provost, Dean, Advisory Council, faculty, etc). As the SIR for the tax practice, Messinas immediate charge was to enhance standardization and consistency throughout CRIs tax practice. Messina used web-based questionnaires to gather information about the tax practice within each office. The survey results were evaluated by Messina and the tax QC committee to develop a comprehensive QC and policy document for the tax practice. Available to all staff online, this document contains checklists, questionnaires, and other items pertinent to the tax practice and serves as a benchmark for standardized tax compliance across offices. Development of committees in tax made up of partners and managers known as the Tax Development Team (QC, Visionary, & Education).

10 KeyRationale SIR reports directly to and receives directives directly from the executive committee (7 members). Also, the performance of the SIR is evaluated by the executive committee. QC oversight should be unbiased. The direct reporting between the SIR and executive committee mitigates the risk of any particular office, partner, etc. exerting undue influence over the SIR. QC committees (A&A and tax) are comprised of at least a partner/manager from each office and the SIR. The committees meet regularly during the year and each partner is responsible for reporting the meeting results to their respective office. Communication of a consistent message to each office is critical. Since each office is represented on the QC committees, the decisions of the committees are communicated consistently to each office. The executive committee empowered each QC committee with the authority to set policies for the A&A and tax practices. Service on one of the firms QC committees is time consuming. Since the QC committees are comprised of partners from every office, it was critical to allow the committees to directly affect change in A&A and tax practices. Various Duties

11 SIR holds on-site QC meetings at each office at least once a year plus conference calls/ webinars. Ensures a consistent communication of any changes to the QC process and provides a forum for professionals to communicate concerns about the firms methodologies to an independent source. SIR shares the concerns that were raised during on-site visits with the respective QC committee. Often the concerns of one office are present at other offices as well. This allows the QC committees an opportunity to address these concerns and set firm-wide policies when necessary. SIR maintains a firm-wide (written/intranet) QC document with input from the respective QC committee. This document addresses each of the elements of QC. Maintaining a written document, with any changes approved by the QC committee, significantly aids in the standardization and consistency of the QC process. SIR maintains a firm-wide Policy Handbook that contains policies established by the respective QC committee. The QC committees have the authority to set policies for the A&A and tax practices that are outside the scope of the QC document. This handbook provides a place to capture these policies in a common source. Various Duties

12 AreasActivities Accting/Tax (Technical) Research and provide technical consultation on complex accounting and tax issues related to specific clients Auditing (Technical) Research and provide consultation related to auditing issues associated with specific engagements Continuing Professional Education (CPE) Serve as a resource for the firms CPE committee Prepare and deliver A&A/Tax updates to ensure that firm professionals remain technically current Design and deliver staff and senior level training courses Policies and Procedures Assist in identifying areas where firm policies and procedures are needed Assist in drafting formal firm policies and procedures Quality Control Serve as an arm of the QC committee to communicate QC related matters throughout the firm Routinely evaluate the firms QC document and provide updates as needed Participate in the firms monitoring process to evaluate the elements of QC Assist the firm in preparing for AICPA peer review, PCAOB inspections, and voluntary tax review Various Duties

13 AACSB Guidance AACSB Internationals Business Standards note that the faculty should maintain intellectual qualifications and current expertise to accomplish the College/Schools mission. The relationship of the facultys professional interaction and practical experience with their teaching and research assignments is established and documented. Professional interactions include, but are not limited to, professional organization activities, attendance at continuing professional education programs, and personal meetings with practicing professionals. Relevant practical experiences for faculty may include, but are not limited to: work in public accounting, private industry, government, and not-for- profit organizations; developing and presenting continuing professional education activities; field-based research, internships, and consulting engagements. To be relevant, experiences should relate to the facultys teaching areas and be sufficiently recent to provide insights into issues related to current practice.

14 Development to Maintain Qualifications While entry qualifications (academic or professional) are important, the world of business changes very rapidly and faculty members must be involved in continuous development throughout their careers to stay current. Regardless of their specialty, work experience, or graduate preparation, the standard requires that faculty members maintain their competence through efforts to learn about their specialty and how it is applied in practice. Likewise, faculty members must engage in constant learning activity to maintain currency with their fields developing research and theory. Business schools should support faculty development activities that link business practice to the educational experience. The intent is that all students at all levels, in all programs, and across all disciplines, are exposed to faculty members who are well versed in the current practice of business as well as current research and theory. Faculty development activities have value through contributions to the mission. When faculty members are current with the applicability and relevance of ideas and concepts in their field, instruction, practice, and inquiry benefit. The critical factor in determining whether faculty members bring current and relevant information is the impact of faculty members development activities on the mission of the school.

15 AACSB Guidance Expectations of AACSB International Business Standard #10 regarding maintaining qualifications and accounting standard # 36 that all academic unit faculty must demonstrate sufficient ongoing professional interaction to support their role in achieving the academic units mission and each programs educational objectives. Accreditation reviewers will consider all faculty members in determining the currency and relevance of information brought to teaching and learning. All faculty members are expected to demonstrate activities that maintain the currency and relevance of their instruction. Faculty members can maintain qualifications through a variety of efforts including production of intellectual contributions, professional development, and current professional experience. The choice of activities to maintain currency and relevance may change at different times during a faculty members career. The standard provides several examples for academically qualified and professionally qualified faculty members with current professional experience being one of them. Note that there is no intent in the standards to describe a fixed pattern of activities faculty members must follow to maintain their qualifications. Expectations of the school, as well as individual characteristics and circumstances, can guide the choice of maintenance efforts. A scholar-in-residence program should allow those qualified to participate, a great opportunity to meet these requirements.

16 AACSB Guidance Guidance for documentation for this standard includes the following: Provide a detailed record of the professional interaction and practical experience of the faculty, including the nature of work assignments. Explain the role of professional interaction and practical experience in the evaluation of each faculty member. Provide detail of the comprehensive planning process for faculty in place that assures the professional interaction and relevant practical experience of the faculty are consistent with the academic units mission and each programs educational objectives. Accounting Standard #38 states further that where there is a formalized practice of accounting, and when a schools mission indicates that it aspires to have its graduates enter the profession, graduates meet the entry requirements of the accounting profession. Having faculty involved in a Scholar-in-Residence can resolve so many of these critical accreditation standard issues and help ensure having a quality program.

17 Advantages for the Accounting Program Accreditation compliance Connection to the accounting profession Ability for fund-raising/development Classroom training using real-world cases Pipeline for students to the profession Up-to-date curriculum Helps keep faculty members salary at a high level and helps retain them in area (Loss in state revenue fund)

18 Advantages for the Firm Technical expertise close at hand Help in the administration area Help in the continuing education area Great communicators Strategic planning Peer review help Connection to academic community Firms realize they are in a field of lifetime learners and educators can do so much for them

19 CRI On-line University One of only 2 firms in US (beta test) Working with Commerce Clearing House to set- up on-line, on-demand staff training Geographical locations – not easy to meet Upload CCH training and firm created training programs New employees get immediate exposure to firm and operations Extreme positive response – efficiency Firm competitive advantage

20 Advantages for the Faculty Member Real-world current experience to bring to the classroom – so much FUN! Supplemental pay Close connection to the accounting profession Opportunities to work with practicing professionals Improved up-to-date teaching Intellectual contribution opportunities abound (you discover where the problems are and how to help solve them) Ability to consult Service credit

21 Advantages for the Classroom Provides the faculty with timely knowledge and experiences and issues affecting practice which can be integrated into classroom presentations. Firm specific practice aids and policies can be reviewed and discussed to demonstrate how firms implement and document compliance with the technical literature. Access to numerous external speakers ranging from partner to staff classification within the firm.

22 Financial Accounting Courses Business combinations: after obtaining an understanding of the mechanics of business combinations, students can benefit from discussions of the practical experiences associated with evaluating whether a specific entity should be consolidated. Often the practical scenarios are not as clear as those presented in textbook examples. Consequently, the students begin to realize a significant level of judgment is typically necessary to reach a conclusion on whether to consolidate an entity. Financial Statement Presentation and Groupings: after obtaining an understanding of the financial statement format provide in the textbook, students can benefit from discussing different approaches used to finalize the statements. Since accounts are often grouped (and presented as a single line item) based on their nature or materiality, the students learn to further question line items when reading financial statements. This often leads to a discussion of the importance of footnote disclosures. Derivatives and Hedging: after obtaining an understanding of the classifications and criteria associated with hedge accounting, students can gain a more in-depth understanding of the issues that must be addressed when presented with real-world examples of hedging activities associated with specific industries. Students begin to realize the practical importance of understanding the entitys hedging strategy and its impact on the appropriate accounting treatment. Contingencies: after obtaining an understanding of the accounting provisions that govern the treatment of contingencies, students can benefit from discussing actual cases and reviewing the impact on the financial statements and related footnotes. Discussing the individual disclosures will raise the students awareness to the fact that relatively similar contingencies may be disclosed in different levels of detail and still meet the requirements of the professional standards.

23 Auditing Courses Independence: after obtaining an understanding of the general provisions associated with auditor independence, the students will benefit from walking-through actual independence issues addressed within a firm. Discussing actual independence issues associated with immediate family, close relatives, financial interests, and other related areas will broaden the students awareness of potential independence issues. Accounts Receivable: after obtaining a general understanding of the audit issues associated with accounts receivable, students will benefit from a discussion of practical scenarios associated with this audit area. The firms practice aids and methodology used to select specific accounts that should be confirmed and determining the sufficiency of the confirmation coverage will provide the students with additional insights into auditing accounts receivable. Evaluating control deficiencies: after obtaining an understanding of the differences among control deficiencies, significant deficiencies, and material weaknesses associated with internal controls, students will benefit from a discussion of practical scenarios associated with internal control deficiencies. Students will gain an appreciation for the difficulty encountered in practice when trying to properly classify deficiencies and follow the appropriate communication guidance. Client Acceptance and Continuance: after obtaining an understanding of the technical guidance associated with client acceptance and continuance, students will enhance their understanding of the process by discussing firm specific practice aids and methodology. Discussing how the firm practice aids and methodology meet the requirements of the technical literature is very insightful.

24 Advantages for the Students The relationships between the faculty and firms enhance the student placement pipeline to provide opportunities following graduation. Students gain a competitive edge from being exposed to practical insights into the types of A&A and Tax issues they will likely encounter when they enter the work force. Students gain an understanding of how the practicing community develops practice aids and methodologies to ensure compliance with the volume of technical requirements associated with an A&A and Tax practice.

25 Issues Needs to meet the mission and objectives of your institution - #1 responsibility is to accounting program It takes the right faculty member – SIR is not for everyone – audit and tax faculty shortfall (both our areas) Time commitment – only so many hours in a day - good time management University Consulting Rules SIR programs have been with us for years in various shapes and fashions More firms are capitalizing on this resource Possible conflicts to avoid Bill Carr has taken more steps – CRI Leadership Academy (soft skills) and IT Scholar-in-Residence

26 Positive Effects of an SIR Program We have no doubt that our participation in the SIR program will continually improve the quality of our teaching. We have taken many of their real-world projects into the classroom, such as CRIs transition to a paperless office. Our experiences help our accounting program maintain an updated and challenging curriculum while meeting accreditation standards, improving faculty development, advancing intellectual contributions, and preparing students for the marketplace. These benefits have led us to believe that the SIR program is a very positive experience for all of the parties involved. WIN/WIN SITUATION FOR ALL!

27 Welcome any questions or comments!

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