Dawn of a new era: building capacity in accountancy through competency-based education reform

Building capacity includes the development of new on-ramps to our profession, given the emergence of sustainability reporting and the obvious need to include additional disciplines into accounting.

One of the most effective ways to achieve this is through comprehensive accounting education reform and the adoption of a competency-based approach. The days of a singular reliance on a tertiary model of post-graduate education and formal proprietary teach-and-examine style education is not keeping pace with employer and community expectations.

This article explores how new strategies can enhance the skills and capabilities of accountants, ensuring they are well-equipped to meet the demands of the modern financial world.

The need for accounting education reform

The work of International Federation of Accountants (IFAC) work in exploring and sharing knowledge in the future of accounting education, including the revisions to the international education standards, should be applauded.

However, traditional accounting education has often been criticised for its heavy reliance on traditional learning frameworks that have not kept pace with employer needs and community expectations.

Put simply, there is an expectation gap between the quality of graduates delivered by education institutions and the quality of graduates that employers are seeking. While foundational concepts are essential, the rapidly changing business environment requires accountants to possess a diverse skill set that includes analytical thinking, technological proficiency, and strong ethical standards.

Accounting education reform aims to address these gaps by integrating practical skills, validation of acquired competencies and real-world applications into the education framework. This shift involves not only updating the content but also transforming the pedagogical (learning and teaching) methods used to deliver this content.

For instance, incorporating verifiable assessment of recognition of prior learning and competencies. This reflects the competencies acquired throughout the working life of the professional for experienced entrants or comprehensive modular micro-credentials that are stackable to demonstrate competence. This blends assessment modes to include hands-on experience that mirrors the challenges they will face in their professional careers. Of particular importance are the assessment modes that explore the ability of learners’ competencies to integrate knowledge, skills and the impact of uncertainties.

Ultimately we must make a critical paradigm shift away from the traditional mode of education and professional certification, which assess your ability to sit an exam or be directed towards a predetermined narrowly focused assessing regime. We must opt for a model where a student or candidate can demonstrate they can do the work – i.e., a demonstration of competence as opposed to demonstration of examination skill.

Moreover, reform efforts should emphasise the importance of lifelong learning. As new technologies and regulations emerge, accountants must continuously update their knowledge and skills. Educational institutions and professional bodies must therefore create pathways for ongoing professional development and certification ensuring that accountants remain relevant and competent throughout their careers.

The competency-based approach

A competency-based approach to accounting education focuses on developing frameworks to demonstrate proficiency across a range of competency areas.

The Institute of Public Accountants (Australia) and the IPA Group have spent the last two years undertaking a comprehensive review of its education framework. It has developed a complete revision to pathways and mapped over 19,000 units of competence drawn from IFAC Education Standards to statutory obligations to traditional units of accountancy.

International sources of competency frameworks of adjacent and related disciplines have been reviewed. This has clustered the 50 microcredentials and competency areas into three broad domains – Technical (Accounting) Competencies, Professional Competencies and Trans-disciplinary Competencies. These competency domains are then stacked into five Certificates, the culmination of which is the Global Certified Public Accountant (GCPA) program.

In addition, the IPA has developed a model for a comprehensive online, verifiable recognition of prior learning system that will quickly and easily assess the competence of an applicant against the new global competency framework. Importantly, most of this framework is universal and the IPA is keen to share this information with any IFAC member body.

Unlike traditional education models that prioritise theoretical knowledge, competency-based framework is outcome-oriented, meaning it is designed to ensure that students can demonstrate the competencies required for our profession.

One of the key advantages of a competency-based approach is its flexibility. It allows learners to progress at their own pace, moving on only once they have demonstrated mastery of a particular competency. This personalised learning experience can accommodate different learning styles and paces, making education more accessible and effective. This builds trust with employers and confidence the community can have in the ongoing relevance of the profession.

The IPA Group Competency Framework incorporates the expected competency in ethics, financial and management accounting, risk assessment, finance, auditing and taxation. The professional skills incorporate teamwork, leadership, problem solving, autonomous learning and well-being, critical thinking and communication. Trans-disciplinary competencies include emerging fields such as cybersecurity, digital acumen, data analytics and the critical area of sustainability. These areas of competencies will continue to be evolved and updated as the accountant continues to remain the trusted advisor to the community.

Implementation strategies

Implementing these reforms takes courage, but we don’t have time to wait. If we do not step up and lead this discussion, other professions will, and we risk irrelevance. These reforms are difficult, but councils and boards of professional accountancy organisations must prioritise innovation in accounting education.

Innovation means doing new things, not just doing the same things in new ways. To effect this change we need to build strong partnerships with stakeholders including universities and colleges, regulators and consider investment appetite in information and communication technology.

The IPA example is important to reflect on as it implements the new competency framework and the GCPA program; it will run in parallel with traditional pathways. This will take time to deliver and cement, so we need to act with speed to implement, but be patient for it to take effect.

The benefits

When assessing the benefits, the question to consider is what the downside is.

By responding to market demands we demonstrate and reinforce our relevance. By developing new pathways, we grow our pipeline of members, viability and PAO sustainability in a managed way. By implementing competency models for admission and certification we will force change in traditional models of accountancy education.

This will ultimately result in enhanced relevance of our qualifications. For students, reform provides a more engaging and relevant learning experience, better preparing them for the demands of the profession. For employers, it ensures that graduates possess the necessary skills and competencies to contribute effectively from day one.

A longer-term benefit is that the reform allows for fresh thinking towards a convergence of disciplines, alongside the fast evolving nature of technology.

In conclusion, building capacity in accountancy through education reform and a competency-based approach is essential for meeting the challenges of the modern financial environment.

By focusing on practical skills and real-world applications, and ensuring that learning is continuous and adaptable, we can prepare a new generation of accountants who are not only knowledgeable but also competent and ready to drive the profession forward.

As the sun rises on this dawn of a new area, the question is: do you embrace the light or do you seek to shelter from it?

Professor Andrew Conway FIPA FFA is the CEO of IPA, and a member of the IFAC PAO Development and Advisory Group.

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