|NITA J. CLYDE, CPA, is a partner of Clyde Associates, an executive consulting firm in Dallas. A member of the AICPA board of directors, she chairs the CPE standards subcommittee and serves on the strategic planning committee.|
Somewhere along the way, mandatory CPE for CPAs ceased to be associated with learning. CPE became hours I get to keep my license; learning became what I do to survive. Current CPE is input-based; learning is output-evident. Confronted with the necessity to meet regulatory measurement (how many hours?), classification (was it technical or nontechnical?) and appropriateness (what counts?), CPAs have focused on compliance rather than competency.
In order to fix CPE, the number-one priority must be the learning process itself. The real issues are fundamental and compelling:
- What do today's CPAs know and what will they need to know in the future?
- How do CPAs gain the professional knowledge they need for day-to-day achievement?
- How can they acquire the knowledge, skills and abilities they will need to prosper in the years ahead?
- What can be done to help them achieve their goals?
CPAs who participated in the CPA Vision Project identified continuing education and lifelong learning as core values essential for professional survival during the next 15 or so years. Therefore, we need to provide adequate opportunities for CPAs to obtain the knowledge, skills and abilities they will need in the future using the most effective and efficient methods possible. If technology affords opportunities that did not exist just a few years ago, we should exploit those changes and applaud the improvements. When traditional learning methods are appropriate, we must reevaluate course contents for relevance and be diligent in making revisions or adding new topics to established curricula.
|A competency-based model would allow CPAs to experience two of the core values identified by those who participated in the Vision Project: life-long learning and continuing education.|
From past experiences and observations, it seems clear CPAs benefit from direction in developing and following lifelong learning plans. Such plans must be dynamic, realistic and an integral part of every professionals career planning.
In summary, there must be a concerted effort to seek regulatory approval of both traditional and nontraditional methods through which CPAs can improve and demonstrate improvements in their professional competencies.
THE LEARNING PROCESS
Jack Stack, the author of The Great Game of Business, attacked what he called the training myth in the August 1998 issue of Inc. He observed: We think people wont learn unless you take them off the job, sit them down and put them through a step-by-step instruction program. Stack cited a study conducted by the Center for Workforce Development that said up to 70% of what employees know about their jobs was learned informally from the people they work with. He illustrated his point:
I can tell you all there is to know about bass fishing. You can read every fishing magazine, study every fishing book and watch [a fishing show] on Saturday morning [television]. But it won't mean much until you go out on a lake and start throwing a lure.
Is Stacks point applicable to CPAs? Can CPAs increase their competence through informal learning experiences and on-the-job activities? The quick answer is yes; the most frequent response is yes, but
- If you don't count hours, what will you count?
- Isn't there a risk that some experiences will be double counted for compliance purposes?
- What if somebody cheats?
The right answer is that CPE is about being constantly competent. And competent professionals both acquire and demonstrate their knowledge, skills and abilities in a multiplicity of ways.
INPUTS-BASED OR OUTPUT-EVIDENT?
KPMG Peat Marwick LLP offered the following observation to the AICPA CPE standards subcommittee following release of the subcommittees 1996 exposure draft, Report on CPE Outcomes Assessment:
The term education is more open to the notion of input measurement than the term learning. Teachers are educators; practitioners should be learners. They should be acquiring increments of learning.
The AICPA and NASBA have jointly endorsed a Statement on Standards for Continuing Professional Education (CPE) Programs . These rules, however, have not been adopted universally by regulators (each of the 54 jurisdictions that license and regulate CPAs has separate rules regarding CPE), nor do they currently address many measurement and reporting issues.
An examination of the standards illustrates the disparity between inputs-based CPE and output-evident learning. According to current standards, credit is recommended
- Only for those training programs that maintain or increase competence.
- Based on units of 50-minute contact hours.
- Equally for group programs and interactive self-study but only one-half credit for noninteractive self-study programs requiring the same time to complete.
Although CPAs should select activities that maintain or improve competencies under any standards, varying regulatory schemes have led many to resort to what might best be described as a scavenger hunt for qualifying hours. The result may not make much sense, but it does allow one to win the game, that is, satisfy regulatory requirements.
Methods through which many CPAs learn most effectively often do not meet their states mandatory CPE requirements. Regulators may allow credit for activities that are part of a formal program of study while discounting the acquisition of similar or superior knowledge through on-the-job training or self-directed study. Computer courses, especially fundamental courses in word processing, spreadsheets and presentation packages, may be exempted from formal CPE recognition. Tell the CPA who's finally mastered a new software program being implemented in his or her company that this new skill isn't job relevant!
CPAs also are dismayed by the practice in some states of requiring a number of CPE hours in accounting and auditing for all licensees, regardless of what they do. Regulators may refuse to grant credit for so-called soft courses in communications or personnel management even if the CPAs affected are primarily engaged as managers. Similarly, language studies may not qualify as CPE. CPAs completing basic foreign language courses to communicate effectively with international customers and/or clients may be denied credit unless the formal course is directed solely at business Spanish for Financial Planners , for example.
Consider also the current hours-based measurement and reporting. What is the correlation between seat time and learning? That hours are a verifiable measure and a reasonable surrogate for learning is not a satisfactory answer.
A competency-based structure would direct attention to learning rather than an accumulation of hours. Ideally, this system should
- Identify a compendium of competencies, knowledge, skills and performance abilities, needed by CPAs whether they work in public practice, business and industry, government or education.
- Provide a methodology for comparing a CPAs current level of competency with that desired for the CPAs area of practice.
- Assist CPAs to prepare individualized CPE plans and to participate in learning activities that maintain or increase competencies in their desired practice areas.
- Offer a means of measuring whether their programs of learning helped the CPAs achieve their desired levels of competency.
- Be acceptable to regulators who must evaluate competency of licensees.
An outcomes-based approach to CPE would reduce or eliminate
- Attitudes that CPE is a requirement, not a learning opportunity.
- Selection of CPE based on maximum hours for minimum effort.
- Choice of courses, seminars and workshops on the basis of convenience, timing, cost or location.
- Awarding of credit toward mandatory CPE requirements for technical topics with no relevance for what a CPA does or may do.
- The disconnect in CPAs' minds between mandatory CPE and real learning.
Some forward-thinking state boards of accountancy already are examining outcomes-based systems. Concerned with protection of the public interest, some are considering encouraging CPAs to develop multiyear learning plans with periodic reporting to the state as to the progress being made toward maintenance or attainment of professional knowledge or both. Other states have said they may ask licensees to sign off that they are engaged in an ongoing program of learning without requiring specific evidence of achievement unless they get in trouble or are questioned during a routine CPE audit.
When evidence of learning is mandatory, CPAs may demonstrate their new knowledge, skills and abilities through a variety of methods, including (but not limited to) the following:
- Direct observation of performance.
- Supervisor reports.
- Client-customer evaluations.
- Peer review.
- Performing self-administered assessments.
WHAT THE AICPA IS DOING
Following a mandate from the AICPA board of directors, the AICPA CPE standards subcommittee about three years ago began a comprehensive examination of the current state of CPE. After extensive research and interviews with firms, academics and other professionals, it issued the exposure draft Report on CPE Outcomes Assessment mentioned earlier. This report focused on new ways in which learning activities could be employed, measured and reported, using outputs (what did you learn and how can you demonstrate it?) rather than inputs (how long did you sit in class?) as the primary criteria.
Respondents to the EDCPAs, state boards of accountancy, accounting firms, professional organizations and state CPA societies generally agreed the current system was flawed, but specific proposals for remedying the problems were few. The subcommittee decided to develop guidelines to benefit both CPAs and the entities that regulate them.
THE COMPETENCY ASSESSMENT TOOL
Since the idea of choosing CPE based on competencies is foreign to many CPAs, the subcommittee devised a pilot study using a technology-based competency resource. This new competency assessment tool (or CAT, as it is called) incorporated four key elements
- A competency self-assessment instrument.
- A gap analysis of the difference between current and desired competencies.
- Illustrations of learning methods that might be selected to close gaps.
- A learning log to track, evaluate and document the CPAs activities.
|A Self-Assessment: |
Would You Measure Up?
SEC Chairman Arthur Levitt was discussing the SEC's recent search for a new chief accountant. Asked to describe the type of individual for which he was looking, Chairman Levitt's first descriptor was creative. He went on to say he also expected the successful candidate to be a good communicator and to have a grasp of the global business environment.
1. Assume you were interested in the chief accountant's position, confident of your technical ability but uncertain whether your creativity or communication skills (or both) were sufficient. How would you go about improving these competencies?
2. Participating in panel discussions, serving as a discussion leader for a professional gathering or making a presentation to your company's annual shareholders meeting are all activities that might increase your confidence and communication skills. These activities generally are viewed as nontraditional or informal learning activities and are not acceptable to regulators as CPE. Should they be?
CPA volunteers were solicited to test a beta version of the CAT beginning in December 1997 and continuing over a three- to four-month period. Despite this unrealistically brief period during the traditional busy season, about 65 CPAs completed the pilot study.
Choosing a Model. Pilot study participants were asked to assess themselves against a selected competency model (a collection of competencies that describes the knowledge, skills and performance abilities needed by an individual with respect to a particular position or job). A Competency Model for the New Finance Professional, previously developed by the professional development subcommittee of the AICPA business and industry executive committee, was one of two models included in the pilot. A second model, the audit-assurance model, also was developed within the AICPA.
Because of the brevity of the pilot study, only participants with current or desired responsibilities in industry or audit-assurance were selected for the initial study. Other models will be incorporated as the CAT is enhanced.
The original models included four broad categories of competencies:
- Personal and professional attributes.
- Leadership qualities.
- Broad business perspective.
- Functional expertise.
The industry, finance and audit-assurance models tested in the pilot were broad and comprehensive, covering a wide range of skills and abilities. As other models are added, the likelihood that CPAs in all areas of the profession will be able to identify a model closely aligned with their current or desired positions increases. Within a specific firm or industry, it will be possible to delineate competencies even more, taking into consideration the needs of the entity as well as the uniqueness of the individual CPA.
Several groups within the AICPA already are in the process of developing competency models for their constituencies. It appears to be desirable to maintain consistency in presentation while at the same time preserving the uniqueness of each model. The specific competencies included in the personal and professional attributes and leadership qualities categories of both models tested were universal, comprising the knowledge, skills and abilities needed by CPAs regardless of their employment. As a result, AICPA groups currently working on other models have been encouraged to focus on the last two categories, broad business perspective and functional expertise, where there will be differentiation among disciplines.
Future competency models most likely will
- Incorporate the same listings of personal and professional attributes and leadership qualities that are found in the finance-industry and audit-assurance models.
- Vary somewhat in the third category, broad business perspective.
- Differ significantly in each of the functional expertise groupings.
Competency. The knowledge, skills and performance abilities required to perform a job effectively.
Competency model. A collection of competencies that describes the knowledge, skills and performance abilities needed by an individual with respect to a particular position or job.
Learning activity. An individual activity that a CPA might participate in that will contribute toward the development of a particular competency.
Learning plan. A series of activities that a CPA might engage in over time to develop identified competencies. It could include traditional CPE activities (such as seminars or self-study courses) or nontraditional activities (such as mentoring programs, recommended readings, independent research, or certain work-related activities).
Performing an Assessment. Within the models, each competency category is subdivided into three proficiency levels, basic, intermediate and advanced. CPAs in the pilot study evaluated their current competencies in each category and then decided whether their current proficiency levels were appropriate for the responsibilities they possessed or desired to assume. Thus, a CPA might gauge his or her level of proficiency in leading a small group discussion as basic and then decide that the most appropriate level was intermediate or advanced. Because the disparities between current and desired levels represent areas for improvement, participants were encouraged to identify and select learning activities that would help close these gaps.
Although it was designed for self-assessment, the evaluation instrument also can be used as a means of selecting goals and objectives through interaction between CPAs and their supervisors. Several pilot study participants mentioned the potential for including this resource as part of their firm's professional assessment and development process.
Selecting Learning Activities. Once gaps that represent learning opportunities are identified, examples of ways in which to gain needed competencies become useful. For purposes of the pilot study, a small sampling of traditional and nontraditional learning activities appropriate for various competencies was included. When the technology-based resource is available through the Internet, the suggested learning activities included within the CAT will be limited to nontraditional activities, although users will be able to link directly to traditional AICPA and state society CPE offerings. (A thorough illustration of the CAT is scheduled for inclusion in a forthcoming issue of the Journal .)
The AICPA has begun the process of identifying its workshops, seminars and self-study offerings in relation to specific competencies outlined within the models. Other CPE providers also may design and market their courses to make it easy for CPAs to locate relevant opportunities for learning. A CPA who needs to improve proficiency in a particular competency should be able to chose readily from a variety of methods, whether it is through involvement in a work- or profession-related activity or a traditional workshop, seminar or self-study course.
Does Learning Equal CPE?
C PAs Ann and Jeff are considered resident experts on FASB Statement no. 133, Accounting for Derivative Instruments and Hedging Activities, at their respective places of employment. After they both had participated in a panel discussion on derivatives for a business group, Jeff, impressed with Ann's knowledge, asked her how she had become so familiar with the new statement on the subject.
Ann, an industry CPA involved in financial reporting, said, I always monitor the FASB Web site for the timing of new statements that affect what I do at work. I had read the initial discussion memorandum and the exposure draft on derivatives, so it was easier to understand the final statements requirements. I also had read a number of articles in various publications but still had a lot of questions. Finally, I talked with a couple of CPAs in my office who deal directly with our company's derivatives. They explained some of the issues they had confronted and I could see how the new statement addressed those. By the time they got through, I felt I had a pretty good grasp.
Jeff, who was an auditor in public practice, couldn't help but compare Ann's learning methods with his own. He had gained much of his initial knowledge by attending an intensive training session taught by one of his firms CPAs and was working hard to apply what he had learned from class to meet his clients' needs.
A third CPA who overheard the conversation between Ann and Jeff commented, Am I glad I don't have to deal with derivatives, even though I do have CPE credit for a course about them! Kevin went on to explain he'd found a self-study course that was a really easy way to get eight hours of CPE credit fast for only $49! He added that it had taken only about an hours work to pass the test accompanying the exercise but admitted it was good thing he didn't need to know anything about derivatives, because I sure didn't learn anything.
Q: Which CPA can claim CPE credit for recent learning activities related to FASB Statement no. 133?
A: Both Jeff and Kevin likely would be granted credit for their classroom and self-study courses, respectively. Ann, because her newly acquired competence was derived outside a formal course of study, would have a hard time getting mandatory CPE credit from most state regulators. Self-directed learning activities and on-the-job training are rarely recognized as sufficient for awarding CPE credit.
Q: Which CPAs have improved their competence relative to accounting for derivatives?
A: Jeff and Ann; Kevin admits he didn't learn anything.
Q: Is something wrong with this scenario?
Evaluating Results. A majority of the CPAs who participated in the pilot study
- Found the competency-based approach more valuable than the current hours-based system.
- Thought the CAT would be valuable to both themselves and their organizations.
- Would use the process on an ongoing basis.
Although they were given no guidance in the selection of relevant learning activities other than the abbreviated listing of potential ones, most pilot study participants claimed they had identified activities that were at least somewhat relevant. About 80% of the group thought the nontraditional activities they chose were the most effective, although two out of three also gave high marks to traditional seminars, workshops and self-study courses.
Asked to evaluate the advantages of the CAT, participants most frequently mentioned flexibility, more relevant targeted development and the ability to personalize the process to individual needs. Disadvantages mentioned were difficulty of measuring results, potential for inaccurate self-assessments and the possibility of abuse.
One pilot participant shared an insightful observation:
I am worried about our ability to see the changes necessary for our profession to remain valuable to our customers. If our assessments are based on what we needed in the past, rather than on what we will need to remain useful in the future, training will be ineffective and CE should be discontinued.
Deciding What Counts. As long as there are mandatory CPE requirements, there will be questions about the types of learning that count as CPE. Take, for example, technology, which has opened doors to new ways of acquiring knowledge rapidly and on demand. To value competencies thus attained by the number of hours spent in the process just doesn't make sense. Nor is it logical to say learning counts if it encompasses difficult topics but not if the knowledge acquired is basic (even though it's new to the learner).
Are there tough issues to be faced? Sure. In each of the following examples, increases in some competencies can occur. The question is whether these increases in competency will or should be counted for regulatory compliance. For example
- What about CPAs surfing the Web, randomly researching a particular topic?
- What about learning that is professional in nature but not directly related to what CPAs do at work?
It may be that the best solution is to accept the suggestion made by KPMG Peat Marwick in the comments cited earlier: When CPAs learn incrementally, it counts.
What About Cheaters? What about CPAs who cheat on their CPE? Won't an outcomes-based system with its vagueness encourage this? The fact is that CPAs cheat on CPE today. Among the most frequent telephone calls I get are these two:
- What's the fastest way I can get eight hours?
- Are you teaching anything in Austin (or Dallas or wherever) during the next month? It really doesn't matter what. I need only eight hours.
Success is being able to motivate CPAs to rephrase their questions:
- I need to get up to speed on FASB Statement no. 150 (or whatever). What's the best way to do that?
- I'm looking for a seminar on (fill in the topic) in Austin next month. Do you have one or can you recommend a good substitute?
Small changes in attitudes can reap big benefits for CPAs and the different groups they serve.
OBSERVATIONS AND NEXT STEPS
Most CPAs and a growing group of those who regulate them are receptive to several observations:
How Do State Boards of Accountancy Deal With CPE?
Of the 54 jurisdictions that license and regulate CPAs, 39 state boards of accountancy responded as follows to a NASBA quick poll:
1. Does your board require CPE reporting as part of license renewal?Yes 35
2. Does your board place limits on technical or nontechnical hours?Yes 24
3. Does your board audit CPE reports submitted with license renewals?Yes 34
4. What are some of the past results of your boards audit process?
Answer: The majority of the states participating in the quick poll reported a low percentage of noncompliance.
- An outcomes-based system centered on learning is preferable to the current inputs-based CPE system focused on hours.
- CPAs can benefit from encouragement and assistance to assess their current competencies, prepare comprehensive career development plans and identify relevant learning activities.
- Technology is a way to offer meaningful CPE on an as needed basis that must be evaluated on its efficiency and effectiveness, not on how long it takes to help CPAs achieve the desired learning. Further, other nontraditional methods of learning similarly must be identified and recognized.
- Regulators must acknowledge traditional and nontraditional methods of acquiring professional knowledge, skills and abilities, thus encouraging CPAs to concentrate on learning, not the clock.
Over the next few months, the AICPA CPE standards subcommittee and its counterparts at NASBA are expected to examine the joint CPE standards and then to propose modifications that reemphasize the original objective of CPE, ascertaining that CPAs are constantly competent to serve the public, while acknowledging that learning can occur in both traditional and nontraditional ways. This joint task force will be asked to identify measurement methods that will satisfy regulators and that will focus on learning rather than hours.
Assuming the joint AICPANASBA task force can agree on modified CPE standards, the process of securing acceptance from each jurisdiction that licenses and regulates CPAs will begin. A number of states already have indicated an interest in being at the forefront.
FUTURE DEMANDS REQUIRE LIFELONG LEARNING
The profession and the public are better served by a proliferation of learning activities that help CPAs gain the knowledge they need to serve clients, customers and employers. Rather than being force-fed unneeded topics, CPAs need to ascertain what knowledge is relevant for their particular needs. The aim of CPE should be learning, not measurement of something that may or may not lead to improvement in performance. We need to provide opportunities for enhancing CPAs knowledge, skills and abilities and to quit worrying about whether CPAs have ticked off the right number of hours.