SAICA, accountants and academic freedom
I’ve had countless conversations with accountants, inside and outside the profession, about their jobs, and specifically about the training they receive at universities across South Africa. I’ve also written about it before, and received positive as well as critical and dismissive feedback. There I basically argued that an Accounting degree should not be the default option for most of South Africa’s brightest kids.
Others have echoed my sentiments. Here’s Sizwe Nxasana, CEO of FirstRand, saying that Chartered Accountants (CAs) need to improve their problem-solving skills: “They sometimes have a narrow view of the world and are unable to deal with high levels of complexity.” (He said this at the SAICA – the South African Institute for Chartered Accountants – conference.) Nxasana claims that the current Accounting syllabus does not allow students to develop the skills necessary for top-level managers.
So, without labouring the point, my advice would be to carefully consider your options when choosing a degree. There are many for whom Accounting is a passion. They enjoy technical challenges and have the ability to remember copious amounts of information. Let thou go forth and become Accountants! But there are many, many kids who study Accounting because they are bright and want to make a lot of money, kids who see Accounting as a stepping-stone to something bigger. This is where I think there are other stepping-stones worth considering. Take the road less-travelled, I say, a road that will allow you to aim higher, go farther, and enjoy the journey a lot more. (There’s also this from Political Scientist Chris Blattmann on whether you should study accounting. And the short answer is at the bottom of this post.)
But it is not only students that need to reconsider. I think Accounting departments in South Africa are perfectly positioned to help deliver students capable of thinking outside-the-box. Some of the most brilliant South Africans arrive at their doorstep, eager to be filled with knowledge and scholarship and all those wonderful things universities offer. But the reason that Sizwe Nxasana complains about accounting students’ “narrow view of the world” is that the accounting profession strictly follows a narrow rules-based compliance philosophy in education, whereas universities generally follow a broader principles-based approach. There is a good reason for this: Accounting departments in South Africa are heavily influenced by a professional body, SAICA. An excellent paper, The accounting profession’s influence on academe: South African evidence, by two accountants, Elmar Venter (University of Pretoria) and Charl de Villiers (University of Waikato, New Zealand), shows the heavy-handedness of this body on academic Accounting departments across South Africa. To sum it up: SAICA runs Accounting departments. They set the syllabus, they determine the criteria necessary to be employed, they even pay the salaries. The authors cite interviews with heads of department (HODs) which state the following: “It doesn’t help to resist them (SAICA). They have a complete stronghold on what happens at universities”, or “I would say that 90% of my focus is on the CA (SAICA) programme”.
This was not always the case. Until the 1950s, accounting education was offered mostly by technical colleges and correspondence. In an agreement between universities and the profession, accounting was introduced with examinations accepted by SAICA. South Africa’s apartheid isolation meant that international professional bodies were unwilling or unable to compete with SAICA – which is also the reason that SAICA affiliation today is not really helpful abroad. According to Venter and De Villiers, “the incorporation of CA education into universities’ programmes was initially controversial in South Africa, because vocational training had no academic standing at the time. Nevertheless, the profession was successful in moving its professional training into universities and thereby taking advantage of state-subsidized university training.” And later they note: “The legal status indirectly given to SAICA to accredit universities resulted in the creation and maintenance of new rules and structures within academe.” These rules and structures limit what Accounting departments can teach, and even who is allowed teach. If Accounting departments veer away from what SAICA wants them to do, they lose their accreditation. “This means that all Accounting departments follow the SAICA syllabus to the letter and emphasize technical aspects, virtually ignoring any broader, research-led, fundamental, or conceptual accounting issues.” One Accounting HOD even said: “Students are trained like race horses”.
Why don’t scholars in Accounting departments resist this influence? Why don’t they set their own course content and research programmes? Why don’t they heed Sizwe Nxasana’s call and change the curriculum?
Because SAICA pays. Here’s Venter and De Villiers on the subject:
SAICA’s education fund also provides direct subsidies (called subventions) of academic salaries to assist universities in attracting and retaining lecturers. These subsidies are not available to academics who are not involved in the CA programme. Hence, CA academics who are involved only in non-CA activities in a department, such as graduate programmes, supervision and research, do not receive any subvention. The education fund is funded through levies from training providers, mainly the “big four” accounting and auditing firms. At each university, a committee that includes a SAICA representative decides on the distribution of the subventions to individual CA academics. Although subventions are not part of the employment contracts between the universities and academics, CA academics are well aware of this incentive and the fact that they are entitled to it.
Venter and De Villiers’ paper is enlightening and terrifying at the same time. SAICA is the reason generations of accountants will be trained without a broader understanding of complexity, problem-solving or trends in the global economy. SAICA is the reason that accounting scholars have little incentive to do research, even though they may be keen and capable, and the contribution to society would be much greater. SAICA is the reason that there is an unnecessary tension between Accounting and other departments at South African universities, a tension that arise because academic freedom is butchered for the benefits of the Big Four.
This academic interference may have severe consequence for the accountants of tomorrow. Expanding the range of academic choices for accountants – providing the skills Sizwe Nxasama and other decision-makers demand – may be increasingly necessary not only for their success in the job market, but also for their survival. New evidence published by The Economist this week suggests that accounting degrees may be less sought-after in the future. Above I copy a table which ranks the jobs that are least likely to be replaced by computers over the next two decades: spot the accountants and auditors just above the telemarketers at the bottom of the list. To interpret: there is 94% likelihood that some accounting jobs will be replaced by computers or robots. Add to that the fact that many accounting jobs in developed countries can now be outsourced to poorer regions – like Zambia, who pays their British-qualified accountants a fraction of the South African equivalent – and there is the serious possibility that the demand for South African auditors and accountants in future may decline. The only way to remain competitive, for accountants and many other professions, is to begin to add value in areas where computers are useless: strategic thinking, creativity, in short, thinking outside-the-box.
The situation is not yet dire, but it would require academic accountants, like Venter and De Villiers, to take a stand and reject the status quo. When the status quo also pays the salary, change seems unlikely.