Traditionally, technical skills was seen as a crucial element for career success in the eyes of many accounting graduates (Rebele, 1985). However, as time went by, recent research findings show that it is no longer enough for accounting graduates to only have technical skills and that many employers in the area of accounting prioritize generic skills above technical skills when recruiting graduates (Abayadeera and Watty, 2016). There is evidence that a huge gap exists between the development of skills in an Accounting degree and the requirement of skills of employers in the accounting profession (Jones, 2014). “Accounting graduates asserted that the generic skills required by employers were being insufficiently taught and developed in their Accounting degree” (Jackling and Lange, 2009). According to Crawford, Helliar and Monk (2011), generic skills refer to the skills that are transferrable and are skills that are required for employability, whereas technical skills can only be used to perform specific tasks. The purpose of this essay is to explore the generic skills that employers in the area of financial accounting look for and demonstrate how the work I have done in my Accounting degree has enabled me to achieve these skills. The essay will firstly identify and describe the skills that employers require in the area of financial accounting, then explain how the work I have done in modules taken in the area of financial accounting has helped me to acquire three of the skills described, and finally discuss whether I think that these skills should form a greater part of an Accounting degree than has been my experience.
Generic or professional skills that employers require in the area of financial accounting
Jackling and Lange (2009) stated that one of the generic skills that employers require in the area of financial accounting is analytical skill. It is particularly important for auditors to have these skills because analytical procedures remain a very crucial part in the audit process. Auditors should be able to analyse the information of a company and determine whether the financial statements are fairly presented. Employers in the area of financial accounting also emphasized that listening skills are required when recruiting students (Stone and Lightbody, 2012). Listening skills are concerned with the ability to correctly listen, understand and interpret messages. Accounting graduates should also be able to listen attentively and responsively as they are the most important components of listening skills (Gray and Murray, 2011). Besides, Jones (2014) asserted that employers in the area of financial accounting want to look for students with teamwork skills. Teamwork skills refer to the ability to communicate well with other members in a team. Accountants should also provide a significant level of reliability and respectfulness while working with others. For example, every member of the team should complete their tasks in accordance with instructions within their specific deadlines. According to Durrani and Tariq (2012), employers in the area of financial accounting also want to recruit students with numeracy skills. Accountants with numeracy skills should be able to “process and analyse financial and other numerical data” (Quality Assurance Agency, 2016). For example, they should be able to determine a company’s liquidity and profitability based on the company’s financial statements. They should also have the capability to “appreciate statistical concepts at an appropriate level” (Quality Assurance Agency, 2016).
Furthermore, employers in the area of financial accounting want to employ graduates with critical thinking skills (Abayadeera and Watty, 2016). Critical thinking skills are concerned with the ability to critically synthesize, analyse and evaluate arguments and evidence (Quality Assurance Agency, 2016). For example, they should be capable to evaluate an opinion to determine how solid or substantial it is. These skills also refer to the ability to form judgements with logical reasoning. Crawford, Helliar and Monk (2011) stated that employers in the area of financial accounting want to look for graduates with self-study or research skills. These skills refer to the ability to undertake “independent research and self-managed learning” when completing a task (Quality Assurance Agency, 2016). Communication skills are also skills that employers require in the area of financial accounting when recruiting students (Gray and Murray, 2011). These skills include both oral and written communication, which are concerned with the ability to “present information, together with analysis, arguments and comments, in an appropriate form to the intended audience” (Quality Assurance Agency, 2016). Accountants with good communication skills should also be able to interpret messages correctly to avoid errors from occurring. For example, messages would not be transmitted correctly as intended if they are being interpreted incorrectly. Moreover, employers in the area of financial accounting want to recruit students with problem-solving skills as they believe that these skills are important to career success (Abayadeera and Watty, 2016). Problem-solving is concerned with the process of defining a problem, finding possible alternatives, choosing the best strategy and then implementing it. Accountants should also demonstrate determination and patience when solving problems. Other generic skills that employers require in the area of financial accounting include presentation skills and information collecting skills (Crawford, Helliar and Monk, 2011).
How the work I have done in modules taken in the area of financial accounting has helped me to acquire three of these skills
The Accounting and Finance degree in Oxford Brookes University does not adopt the approach of emphasising on development of technical skills. Several modules and assessments in this course focus on the acquirement of generic skills. This section will explain how I acquired three of the generic skills through the work I have done in my modules.
One of the skills that I have acquired in modules taken in financial accounting is teamwork skills. In the module U50004, Introduction to Accounting, I had to do a group presentation task, with working productively as a team being one of the learning outcomes. During the process of working together, I demonstrated a high level of reliability by completing my work in accordance with instructions within the deadlines given. I also learned that communicating with each other is vitally important when working as a team as it helps to prevent conflicts. For example, when we had difference in opinions, we expressed each other’s idea and came to a mutual conclusion instead of ending up in a disagreement. Through this task, I also learned that working with others in a team improves productivity and produces higher quality work as it combines individuals’ strengths into a single unit. In the module U50025, Auditing Practice, I had the opportunity to work with three other people to audit the financial statements of a company. As we were completing the task, I learned to engage and contribute my ideas to the rest of my team members. As a team, we also exchanged ideas, communicated well and supported one another during the process. For example, I provided assistance to the other members of the team when they were having difficulties in completing their tasks. Particularly in this task, we were cooperative with one another and were respectful to each other although we had roles of different levels. As a result of completing the above tasks, I managed to acquire the skills of working with others in a team and gain knowledge on the importance of teamwork.
A further skill that I have acquired in my accounting degree is self-study or research skill. In the module U50081, Financial Accounting Theory, I had to write an essay with understanding the function and operation of Accounting by undertaking research in the discipline being one of the learning outcomes. During the preparation process, I learned to undertake research independently to gain knowledge about the topic of the essay. In the module U50035, Financial Accounting and Reporting, I had to write an essay regarding the inadequacy of human capital reporting in the typical annual report. I learned to study and do research on articles related to the topic of the essay in order to provide a detailed understanding and analysis. I also learned how to extract and analyse information from relevant high-quality sources and provide appropriate referencing without any supervision in both these tasks. Additionally, in the module U50040, Research in Accounting, I had to undertake self-study and research on accounting topics as we were asked to write a journal regarding different topics every week. I learned to study material resources and extract the most relevant information regarding my work. Upon completing these tasks, I realized that self-study or research requires a lot of discipline and enables me to understand a topic better. Hence, I am confident that I am able to undertake independent research on any tasks that I am given in future.
Besides, the work I have done in my Accounting degree has enabled me to acquire critical thinking skills. The module that has played a significant role in helping me to acquire this skill is U50026, Auditing Theory. Every audit case is a challenge, therefore it is important for auditors to have critical thinking skills in order to be able to analyse evidence and make rational opinions. This module has given me an insight on how to critically evaluate arguments and evidence in the auditing discipline. This module has enabled me to develop a critical awareness of conflicting views over the role of the auditor and the quality of the auditor’s work by understanding the main reason behind the conflict – role issues, where auditors audit the financial statements but management prepare the accounts. It has also given me the ability to critically evaluate contemporary theories and empirical evidence in auditing by understanding the criticisms of the regulation of auditing. In addition, in the module U50040, Research in Accounting, I had to do a literature review on whether ABC or traditional costing is more appropriate for hospitals. During the process, I learned to critically analyse and interpret ideas from researchers that are relevant to this topic and form judgements with logical reasoning based on the information that I have found. This task has also helped me to obtain the skills of evaluating a point of view to determine how solid or substantial it is. I also learned that I have to provide structured reasoning and support on arguments I want to make. By completing these tasks, I learned that critical thinking is important as it is only appropriate to accept arguments with logical and reasonable judgements.
Although only three skills are described above, my Accounting degree at Oxford Brookes University has also helped me to acquire most of the other generic skills that are required in the accounting profession through a huge number of tasks with learning outcomes that are relevant to achieving these skills. Therefore, I think that it has formed a significantly sufficient part of my Accounting degree particularly in my experience.
In conclusion, it is of increasing importance for accounting graduates to have generic skills rather than technical skills in order to achieve career success. This is because there is evidence that employers prefer to look for graduates with generic skills rather than those with technical skills when recruiting. Generic skills are more useful as compared to technical skills because generic skills can be transferred from one job to another whereas technical skills can only be used to perform specific tasks. The generic skills in the accounting profession include analytical skills, listening skills, teamwork skills, numeracy skills, critical thinking skills, self-study or research skills, communication skills and problem-solving skills etc. As mentioned above, the Introduction to Accounting and Auditing Practice modules have enabled me to gain teamwork skills as I am confident that I am able to work collaboratively and effectively with others in a team to complete a task. Also, the Financial Accounting and Reporting, Financial Accounting Theory and Research in Accounting modules that I have studied has helped me to acquire self-study or research skills as I am confident that I am able to undertake independent research and self-managed learning in any tasks that I am given. In addition, the Auditing Practice and Research in Accounting modules have helped me obtain critical reasoning skills as I am capable to critically evaluate information and form reasonable judgements with logic. My studies have given me an insight on the importance of the generic skills an accountant should have. From my personal experience, I do not think that the generic skills should form a greater part of an Accounting degree.
Abayadeera, N. and Watty, K. (2016) ‘Generic skills in accounting education in a developing country: Exploratory evidence from Sri Lanka’, Asian Review of Accounting, 24(2), pp. 149-170.
Crawford, L., Helliar, C and Monk, E. A. (2011) ‘Generic Skills in Audit Education’, Accounting Education: an international journal, 20(2), pp. 115-131.
Durrani, N. and Tariq, V. N. (2012) ‘The role of numeracy skills in graduate employability’, Education Training, 54(5), pp. 419-434.
Gray, F. E. and Murray, N. (2011) ‘‘A distinguishing factor’: Oral Communication Skills in New Accountancy Graduates’, Accounting Education: an international journal, 20(3), pp. 275-294.
Jackling, B. and Lange, P. D. (2009) ‘Do Accounting Graduates’ Skills Meet The Expectations of Employers? A Matter of Convergence or Divergence’, Accounting Education: an international journal, 18(4-5), pp. 369-385.
Jones, R. (2014) Bridging the Gap: ‘Engaging in Scholarship with Accountancy Employers to Enhance Understanding of Skills Development and Employability’, Accounting Education: an international journal,23(6), pp. 527-541.
Quality Assurance Agency (2016) Subject Benchmark Statement: Accounting. Available at: http://www.qaa.ac.uk/docs/qaa/subject-benchmark-statements/sbs-accounting-16.pdf?sfvrsn=b4f8f781_14 (Accessed: 17 October 2018).
Rebele, J. E. (1985) ‘An Examination of Accounting Students’ Perceptions of the Importance of Communication Skills in Public Accounting’, Issues in Accounting Education, 3(1), pp. 41–50.
Stone, G. and Lightbody, M. (2012) ‘The Nature and Significance of Listening Skills in Accounting Practice’, Accounting Education: an international journal, 21(4), pp. 363-384.
Financial Accounting Standards Board (FASB) and International Financial Reporting Standards (IFRS)
This research paper is about two particular accounting standards, and how they will emerge to give better guidance for all public and private entities. This paper will address some of changes and issues faced during the process of convergence for both of these accounting standards. There are two separate convergence processes that took place. One is between The Financial Accounting Standards Board (FASB) and International Financial Reporting Standards (IFRS) and they are converging the reporting standard for revenue recognition. This is because different countries and different industries tend to report information much differently than each other. Its making it difficult for regulation when everything is reported differently. These changes will help all entities involved to have more guidance and report information more uniformly.
The Sarbanes-Oxley Act of 2002 was created to discontinue corporate fraud. (thebalance.com) The Public Company Accounting Oversight Board was thus formed and had the initial responsibilities of overseeing the accounting industry. What this law did was “ban company loans to executives and gave job protection to whistleblowers.” (thebalance.com) This act was intended to hold CEO’s responsible for the errors in accounting audits. (thebalance.com) This was an intentional purpose to make sure that all publicly traded companies had independence and financial literacy of corporate boards. (thebalance.com) In this act it gave specific duties and responsibilities to management that had to be upheld in the strictest form of compliance. Management is required to safeguard the organization’s compliance with the requirements of the Act, section 302 and 404. (theiia.org) This act states that support for management is allowed from internal auditors. (theiia.org) “ The internal auditors role in their organization s Sarbanes-Oxley project can be significant, but also must be compatible with the overall mission and charter of the internal audit function.” (theiia.org)
Requirements of the internal auditor include “internal audit activity to evaluate and contribute to the improvement of the organization s risk management, control, and governance processes through consulting and assurance activities.” (theiia.org) The reason this process is completed in such a manner is to provide reasonable assurance with regards to the organization’s “reliability and integrity of financial and operational information, effectiveness and efficiency of operations, safeguarding of assets, and compliance with laws, regulations, and contracts.” (theiia.org) Therefore, the internal auditor’s capacity of allowed help is via “consulting and assurance activities as outlined in the Standards as well as the Practice Advisories.” (theiia.org)
Role of US GAAP and IFRS
In short the US GAAP is supposed to provide a common frame work that managers and accountants can use to report financial information consistently in the U. S. (sec.org) “IFRS are issued by IASB and they specify exactly how accountants must maintain and report their accounts. This method was established so that business and accounts can be understood from company to company and country to country.(fasb.og)
Convergence of U. S. GAAP and IFRS
It has come to the attentions of the FASB that there are different and even conflicting accounting principles that are utilized globally. With many businesses and corporations expanding internationally, it has become more and more difficult for accountants to constantly decipher between all the laws for each respected country. In 2005 the FASB decided to initiate six key initiatives to further the goal of convergence of U.S. GAAP with International Financial Reporting Standards. (fasb.org) These six initiatives are as follows:
Joint projects which consist of the FASB and IASB sharing staff and resources to address Revenue Recognition and Business Combinations (fasb.org)
The actual short term convergence project. This consists of GAAP and IFRS working together to come up with a uniform standards to achieve convergence (fasb.org)
A liaison IASB member physically at the FASB offices. This person is designated to assist information exchange and increase cooperation between FASB and IASB. (fasb.org)
FASB monitoring of IASB projects. (fasb.org)
The convergence research project. “The FASB staff is currently working on a research project related to convergence. This specific project seeks to identify all of the substantive differences between U.S. GAAP and IFRS and to catalog those differences. The project scope includes differences in standards addressing recognition, measurement, presentation or disclosure.” (fasb.org)
Explicit consideration of convergence criteria and materials. The board has to consider 3 major factors (a) the possibility that resolution would increase convergence of standards worldwide,
(b) the opportunities the topic presents for cooperation with other standard setters
(c) Whether appropriate and sufficient resources are available for a joint or other cooperative effort. (fasb.org)
Ultimately the goal is to have all standards across the board to agree on a single, high-quality accounting answer. All of the organizations aim for long term convergence. “However, there is an immeasurable need for the FASB and the International Accounting Standards Board, or IASB, to converge the high-level principles in their standards in the short-term, rather than the long-term, and so, much more needs to be done. We recognize there is a joint IASB/FASB project on accounting for business combinations. In order to achieve convergence in the short-term, however, the FASB and the IASB have to work together more closely than they have to date. To this end, the SEC has encouraged both the IASB and the FASB to re-examine their agendas in order to speed up their short-term convergence efforts.” (SEC.org)
In any industry rather its transportation or sales revenue is an one of the most important factors a business. Therefore, it its also one of the most important “measures used by investors in assessing a company’s performance and prospects.” (SEC.org) As mentioned earlier before businesses are expanding and its imperative that the standards keep up with the changes. Business matters get complicated when countries and different industries us different standards and even verbiage. The standards were in in need of improvement and thus the convergence idea was born. (SEC.org)
What the new Revenue Recognition hopes to achieve is that this new guidance will establish principles to report valuable information to users of financial statements about the nature, timing, and uncertainty of revenue from contracts with customers. (SEC.org) The historical basis for the change is that the FASB wanted to improve inconsistencies and weaknesses, provide a more robust framework, improve comparability of revenue recognition practices across public and private companies and industries. (SEC.org) The standards have complicated the matter because these two separate entities have to come together and figure out how to make everything as uniform as possible. Its been difficulty deciding what information is necessary to report. The goal is to keep the formats simple so that its easier for all parties involved to comprehend the material. Other difficulties faced with the changes are industry specific transaction.
With all the changes the FASB also simplified this new guidance with a core principle. FASB states that “recognize revenue to depict the transfer of promised goods or service to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those good or services.” (SEC.org) In order to do so properly and uniformly FASB has also illustrated the steps to help companies stay in compliance. Those steps are:
Identify the contract with the customer
Identify the performance obligations (promises) in the contract
Determine the transaction price
Allocate the transaction price to the performance obligation in the contract
Recognize Revenue when (or as) the reporting organization satisfies a performance obligation ((SEC.org)
The implementation date of for ASU 2014-09 was May 2014.
The Historical lease classifications were capital lease and operating lease. Under topic 840 the historical lease classification criteria has a few parts ownership transfer, bargain purchase option, lease term and minimal lease payment. (fasb.org) Under ownership transfer, ownership is transferred by the end of lease term. Under Bargain purchase Lessee has the option to purchase at a lower price than the fair value. Lease Term must be greater than 75% of the economic life of the leased property. Minimal lease payment, must be less than 90% of fair value of the leased property. (fasb.org)
The changes that result from this new guidance was made under repeated deliberations. What the board decided was “that lessees should be required to recognize the assets and liabilities arising from leases on the balance sheet.” (fasb.org) Additionally, because the economics of leases can change drastically, those economic changes should be explained in the financial statements. (fasb.org) The Board wanted to include many simple changes because the requirements did not change between topic 840 and Topic 842. (fasb.org) The board also kept the new guidance simple “in order to reduce the cost and complexity of transition to the new guidance.” (fasb.org)
“In addition to simplifications from the previous leases proposals, certain aspects of lease accounting have been simplified in Topic 842 as compared with the previous leases guidance in Topic 840.” Again all these simple changes were made to provide guidance, so that uniformity can be across all industries and other countries. The implementation date for ASU 2016-02 was February 2016. (fasb.org)
Amadeo, K. (n.d.). 4 Ways Sarbanes-Oxley Stops Corporate Fraud. Retrieved August 16, 2018, from https://www.thebalance.com/sarbanes-oxley-act-of-2002-3306254
I A R S 302 U.S. S -OXLEY ACT OF. (n.d.). Retrieved September 02, 2018, from https://na.theiia.org/standards-guidance/Public Documents/Act Internal_Auditings_Role_in_Sections_302__404__FINAL.pdf
FASB, Financial Accounting Standards Board. (n.d.). Retrieved September 22, 2018, from https://www.fasb.org/intl/convergence_iasb.shtml
Testimony Concerning The Roles of the SEC and the FASB in Establishing GAAP. (n.d.). Retrieved October 14, 2018, from https://www.sec.gov/news/testimony/051402tsrkh.htm
(n.d.). Retrieved October 16, 2018, from https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176167901010