Submission Number 114

Joint Submission:

Review of Higher Education Financing and Policy

24 April 1997

Summary of Key Points

Philosophy

The ASCPA and ICAA recognise that universities are dynamic institutions focused on a culture of discourse, learning and research. It is our contention that the universities themselves are best placed to determine and implement the detail of their future direction.

Theme 1: the role of higher education

• It is recognised that higher education confers benefits on the community and the individual, and that the individual can reasonably be expected to make a contribution to his/her future advantage. However, the community, through the government, should also make an investment in human resources, especially as the wealth of the community will be increasingly generated by knowledge workers.
  
• The ASCPA and ICAA welcome a commitment on the part of the government to the development of an overall strategy for higher education. This strategy should encourage quality, diversity and innovation.
  
• We consider it essential that the government explicitly state its goals for the higher education sector.
  
• The professional accounting bodies will strongly resist any attempt to downgrade university accounting education, especially if based on the misleading argument that the area is purely vocational in orientation.
  
• Given the major changes affecting the accounting profession, it is vital that business education equips graduates to initiate and manage change.
  
• The higher education sector has a responsibility to provide both a specialist education in a specific discipline and a broad-based education to enhance life-long learning.
  
• Capable graduates need to be encouraged to progress to higher education levels. It is proposed that additional government funding should be provided for the encouragement of postgraduate study if Australia is to effectively compete on the international stage.
  
• It is important to the professional accounting bodies that business disciplines be seen as legitimate research areas, worthy of the same level of support and resources as other fields of study.
  

Theme 2: factors affecting demand for and provision of higher education

• The professional accounting bodies encourage a diversity of approaches to the design of university accounting and business related courses.
  
• The concept of lifelong learning as encouraged by the professional accounting bodies will increase the demand for various university courses.
  
• The professional bodies are concerned that the accounting courses offered offshore by Australian universities continue to provide high quality education to ensure that the high demand for these courses is maintained.
  
• Government action and policy should ensure that Australia continues to be perceived as a safe and popular choice for full-fee paying overseas students.
  

Theme 3: regulatory and administrative framework for higher education

• Universities must remain independent institutions.
  
• The professional bodies require that high quality education standards are maintained. Erosion of standards through undue emphasis on cost effectiveness and efficiency considerations must be avoided.
  
• Universities should implement procedures to monitor and enhance the quality of their educational programs and administrative practices.
  
• The ASCPA and ICAA strongly support a partnership approach between the professional bodies and universities.
  
• Theme 4: financing higher education teaching and research training
  
• Access to tertiary education should be available to all who have a reasonable chance of success.
  
• The professional accounting bodies consider the HECS scheme to be an innovative and equitable way of ensuring the individual funds a proportion of his or her own education.
  
• HECS differentials based on potential earning capacity across different professions are not considered to be appropriate.
  
• We propose that government should assume funding responsibility for the basic infrastructure of the universities, for initiating the processes of change and addressing inequities.
  
• A comprehensive scholarship system should be introduced as a supplement to the existing HECS system.
  

Theme 5: funding of higher education research

• The business community should be actively involved in research projects with universities.
  
• The government should adopt policies to encourage greater collaboration between the business sector and universities on research projects.
  

Australian Society of Certified Practising Accountants

The Institute of Chartered Accountants in Australia

Joint Submission:

Review of Higher Education Financing and Policy

24 April 1997

Preamble

The Australian professional accounting bodies welcome the opportunity to contribute to the Review of Higher Education Financing and Policy. The future direction of university education in Australia is seen by the Australian Society of Certified Practising Accountants (ASCPA) and The Institute of Chartered Accountants in Australia (ICAA) as of critical importance for the accounting profession in Australia and the promotion and maintenance of the profession in the Asia Pacific region.

There are over 8,000 graduates of Australian university accounting courses entering the workforce every year. They find work in all sectors of the economy and in rural, suburban, city locations and internationally. The total active membership of the ASCPA and ICAA is over 100,000. These members work primarily in the four industry sectors of commerce and industry, public practice, government and education.

The ASCPA and ICAA would welcome a commitment on the part of the government to the development of an overall strategy for higher education which encourages quality, diversity and innovation. We consider it essential that the government explicitly state its goals for the higher education sector.

We make the following submission to the Review, seeking to address the submission guidelines in terms of our expectations for university accounting and business education.

Introduction

The ASCPA and ICAA recognise that universities are dynamic institutions focused on a culture of discourse, learning and research. It is our contention that the universities themselves are best placed to determine and implement the detail of their future direction.

• Changes currently affecting the accounting profession include :
• the increasing technical complexity of accountancy and financial management generally;
• internationalisation of world markets;
• rapid developments in information technology;
• rising community expectations and an increase in litigation;
• increasing complexity of business arrangements and transactions;
• growing concern about the environment;
• growing government and public scrutiny of the professions; and
• privatisation of public services and utilities.
  

Accelerated change is also taking place in public sector accounting precipitated by government change and the adoption of private sector practices.

The professional accounting bodies require a university degree as a minimum qualification for initial Associate level membership of the ASCPA and enrolment in the CPA Program or entry to the Professional Year Programme (PY) of the ICAA. The ASCPA and the ICAA have a long and extensive involvement with the accreditation of courses of study in accounting undertaken in all Australian universities. Both professional bodies are also involved in the delivery of higher education through the postgraduate CPA Program (ASCPA), PY (ICAA) and continuing professional development programs.

Australian undergraduate business degrees form the foundation for professional accounting studies. The professional accounting bodies have also played a significant role in the accreditation of off-shore offerings by Australian universities. The ASCPA has substantial branch offices operating in Hong Kong, Malaysia and Singapore. Both professional bodies offer their postgraduate professional education courses in Asia.

The ASCPA and the ICAA, in conjunction with the Accounting Association of Australia and New Zealand (AAANZ), have recently undertaken an extensive review and revision of the professional bodies' policies and processes for the accreditation of university accounting courses. The revised Guidelines for Joint Administration of Accreditation of Tertiary Courses by the Professional Accounting Bodies (copy attached) were developed following an analysis of the requirements which will be placed on the profession by business and society in the twenty-first century. This document underpins much of the thrust of this submission and it is relevant to quote from the mission statement:

"The Australian Society of Certified Practising Accountants (ASCPA) and The Institute of Chartered Accountants in Australia (ICAA) are committed to encouraging excellence in accounting education and effective cooperation with tertiary institutions in the process of professional accreditation. To pursue this mission, guidelines have been formulated based on the following principles:

1. Professional education is a partnership between tertiary institutions and the accounting profession and is an integral part of a continuous quality improvement process.
   
2. Professional accreditation seeks to assess the suitability of graduates to take an entry role in a field of accounting practice by reviewing the educational process that has prepared them for entry.
   
3. The accounting profession needs graduates from diverse backgrounds and with a range of abilities. It requires all graduates to have the capacity for inquiry, abstract logical thinking and critical analysis in addition to oral communication and interpersonal skills. The profession expects these capacities and skills to be gained and/or enhanced through accounting as well as general education.
   
4. The accreditation process is predicated on an outcomes approach, with tertiary institutions needing to establish the objectives they want to achieve in accounting education and the means to their achievement. Particular quantitative and qualitative information is sought to enable tertiary institutions to demonstrate how they have achieved these objectives. Institutions may choose to report additional information to show how they have performed against their own objectives."
   

1. Theme 1: the role of higher education

The professional accounting bodies have made a significant investment in the process of accreditation of university courses. A university education is highly valued, not only, or even primarily, for the technical and professional knowledge and skills imparted to students. The personal and intellectual breadth and depth of development provided by a university education is advantageous to the community, the student, the profession and the business world. The specialist technical knowledge and skills of accounting and business graduates need to be balanced by a broad perspective on society, its needs and problems if these graduates are to be adequately equipped to play a role in broader community decision making, as well as a responsible role in wealth creation. The professional accounting bodies will strongly resist any attempt to downgrade university accounting education, especially if based on the misleading argument that the area is purely vocational in orientation.

The expectations of performance placed on future accounting graduates will be complex and demanding as the business world they are entering is itself increasingly complex and subject to accelerated change. It should be recognised that professional accountants are key decision makers in the business world. Accounting graduates will need to do more than apply old solutions to old problems. They must have the capacity to identify new problems and to develop new solutions for both old and new problems. A university education should prepare graduates to initiate change rather than simply react to it.

All higher education students need an exposure to the liberal arts, and to scientific and technological ideas if they are to act in the interests of the whole community once they assume positions of responsibility in society. An understanding of the business world is also essential if they are to have some idea of the desirable conditions for wealth creation and distribution. The higher education sector has a responsibility to provide both a specialist education in a specific area and some broader insight into other vital fields which necessarily affect all those areas.

Research in the business disciplines should be given a much higher profile. Business graduates trained in applied research skills and a research orientation within business disciplines in universities will enhance the business sector's ability to understand, explain and ultimately predict the changes that are taking place in world markets and in firms that compete successfully within these markets. Research in universities contributes directly to innovation and change in commerce, industry and government sectors. Collaborative arrangements with industry should be strengthened. Further collaborative research would ensure relevance to the business community.

Government should play a primary role in the funding of higher education because of the benefits graduates bring to society as a whole and to ensure access for all levels of the community. It should also provide an overall vision and strategy for higher education which encourages quality, diversity and innovation. Detailed government regulation or narrow prescriptions should be avoided.

Theme 2: factors affecting demand for and provision of higher education

Business education makes extensive use of modern technology in both the classroom and library facilities. It should be recognised that technological advances are also breaking down the barriers between universities and other institutions and between universities and the community.

Accountancy is a knowledge based profession which must be well placed for the information age economy. The growth of knowledge based industries will lead to escalating demand for graduates equipped with the attributes of enquiry, capability and imagination. A broader, more general undergraduate accounting degree is encouraged by the profession. The profession needs graduates with diverse backgrounds with the capacities for research, abstract logical thinking, critical analysis, creativity, theoretical knowledge and technical skills. In addition, skills in areas such as oral communication, personal presentation and interpersonal skills as well as an appreciative knowledge of other cultures are considered increasingly important.

The professional accounting bodies encourage a diversity of approaches to the design of university accounting and business related courses. An undergraduate accounting degree should desirably provide a broad foundation of general education, an introduction to the environment and skills relevant to a career in business and a treatment in depth of selected key aspects of professional education. An undergraduate degree must also support the development of the ability for life long learning.

The ASCPA and ICAA consider an undergraduate degree to be the beginning of a professional education. Trends in an information based society are increasing the value and frequency of postgraduate study. Capable graduates need to be encouraged to progress to higher education levels. It is proposed that government funding should be targeted at the encouragement of postgraduate study if Australia is to effectively compete on the international stage. It is imperative to the professional accounting bodies that business courses be seen as part of a legitimate research discipline, worthy of the same level of support and resources as other fields of study. The further consequences of a lack of involvement of government in the funding of postgraduate study will be a heightening of the inequities already apparent between different socio-economic groups, men and women, and rural and city based candidates.

Flexibility, utility and mobility will be expected of accountants working in all sectors. There will be a demand for people who have a generalist rather than a specialist approach, people who are multi-disciplined with a range of workplace experiences. Integrating workplace experience and higher education study would address part of this expectation. Another way to address student demand, and community and industry needs, is to give consideration to the U.S. concept of the "junior college". In this model, a student gains a generalist education in two years at "junior college" and goes on to complete a more specialist education at university.

Professional accountants are playing a significant role as the Australian economy becomes more highly integrated with the Asia Pacific region. Accountants are increasingly involved in providing services for our Asian neighbours or in work related to investment from Asian sources. Australia is a leading player in the international accounting world. If the Australian profession is to maintain this position, it is essential that the standard of accounting education in Australia be internationally recognised as high quality and value for money.

A growing proportion of the membership of the professional accounting bodies is from the South East Asian nations of Hong Kong, Malaysia and Singapore. Accounting and business education is a major export of Australian universities. The ASCPA in particular involves itself in the accreditation of offshore courses and the following comments are based on its activities and the input of its Asian Division.

The overseas demand for accounting and business related courses is largely due to the inability of the South East Asian region to meet domestic demand. However it is an increasingly competitive market and there is pressure placed on the Australian providers to compromise standards. This pressure comes from local agents and from pressure within universities to maximise financial returns. The ASCPA and ICAA's Accreditation Guidelines state:

"In the establishment of offshore courses, Australian universities are expected to ensure that the quality of educational provision is equivalent to their Australian campus(es). Of particular concern to the professional bodies is that there be an equivalence of curriculum and quality of instruction, and the same reliability of assessment"

The quality of offshore courses must be maintained if they are to continue to enjoy their current success. It is essential that the integrity, vitality and progress of our universities is improved if we are to maintain this market. Accreditation by the professional accounting bodies endorses these courses as being of appropriate quality. The refusal to accredit a course or the withdrawal of accreditation would most likely lead to the failure of the course in the market place.

To enhance the attractiveness of Australian courses offshore, universities must address specific regional needs. In recent years the approach has been to offer offshore those programs which are offered domestically. Australian universities have not developed educational 'products' specifically for the offshore markets. University education for business professionals is no longer only country specific. Rather, it needs to be more generic in terms that address fundamental problems and challenges that face all societies. This suggests that those likely to capture the largest share of the international education market in future will need to deliver their educational services in ways which meet this need.

A major attraction for overseas students studying in Australia is access to a well rounded education and exposure to (and experience of) life overseas. Australia is a popular choice for Asian students. Government action and policy should ensure that Australia continues to be perceived as a safe and popular choice.

It is also suggested that Australian students be encouraged to complete a portion of their studies in an overseas educational institution, building international links with a global community. This would heighten cultural awareness, facilitate the development of ideas and theories and provide a comparative experience. The government has a role in establishing and funding such an exchange program. Further, stronger links should be established between Australia and other countries through increased mobility of academics and encouragement to learn Asian and other foreign languages and cultures in Australia.

Theme 3: regulatory and administrative framework for higher education

Universities are a valuable community resource. The partnership approach adopted by the ASCPA and ICAA is a model for the establishment of relationships between universities and other stakeholders. This approach ensures that quality is considered in purely abstract terms but in the real terms of the graduates' ability to function at a high level, both in the short term and/or long term. Excessive monitoring of performance by government and detailed reporting requirements may be counter-productive. It is proposed that universities should be able to make ordinary business decisions in program development and delivery to respond creatively and flexibly to change.

Effective commercial or market oriented accountability measures include :

• attracting the most capable students;
• employability of graduates;
• success in obtaining funding for research projects (or for endowments);
• appointing and retaining quality academic staff;
• attracting fee paying students; and
• offering short, fee paying courses or non-award courses.
  

There is a role for the government to collect and disseminate informtion regarding future human resource needs and labour market trends. This information should be available to universities and prospective students to assist with planning and choice of courses.

The ASCPA and ICAA do not accept that competition between universities, in itself, will lead to quality programs. Conflicting performance measures could mean that high quality education programs and standards are eroded through undue emphasis on cost effectiveness and efficiency. Universities should remain independent institutions with responsibility for implementing procedures to monitor and enhance the quality of their educational programs and administrative practices.

Theme 4: financing higher education teaching and research training

The ASCPA and ICAA see an advantage in a variety of students from diverse backgrounds participating in a university education and, in particular, undertaking higher degrees. The professional accounting bodies believe the business world benefits from intellectual resources shaped by a variety of human experience. Furthermore accountants must increasingly operate in a rapidly changing environment. It is recognised that higher education confers benefits on the community and the individual. While the individual can reasonably be expected to make a contribution to his/her future advantage, the community through the government, should also make an investment in human resources, especially as the wealth of the community will be increasingly generated by knowledge workers.

Given the broad community benefits which flow from university education, it is not appropriate for all students to pay full fees. The professional accounting bodies consider HECS to be an innovative and equitable way of ensuring that the individual funds a proportion of his/her own education. There is support for HECS charges based on the differential costs of providing various courses. However, we do not support HECS differentials based on potential earning capacity across different professions. Income earning capacities vary widely within each profession.

The professional accounting bodies are concerned at the continued inadequate funding of university accounting education. In comparison with other disciplines, accounting has been funded at the lowest levels under the relative funding model. Neither government nor universities have been prepared to adequately address the issue of the funding of accounting programs. The consequences of inadequate funding of what are very popular programs have been :

• large classes and reduced contact hours;
• a reliance on the lecture mode for the transmission of knowledge;
• a lack of innovation and an inability to utilise new technology;
• an inability to attract and retain suitable academic staff; and
• the inevitable raising of serious questions about the quality of graduates.
  

In developing a new policy for funding and financing university education, it is essential that the committee recognises the need for a process for monitoring the quality of educational provision and equity between the treatment of different disciplines.

Given the community benefits derived from a well educated population, major responsibility for funding of the university sector should reside with the government. We propose that government should assume funding responsibility for the basic infrastructure of the universities, for initiating the processes of change and addressing inequities. Through the HECS system (or some other equitable arrangement such as vouchers or scholarships) individuals can be expected to fund a proportion of their studies.

Access to tertiary education should be available to all who have a reasonable chance of success. A comprehensive scholarship system should be introduced as a supplement to the existing HECS system. Appropriate incentives should be developed to encourage the business community to contribute to these scholarships. Under the full-fee paying changes recently introduced by the government, there is a risk that candidates of lower academic achievement may gain places over financially less well-off students of higher academic achievement. This could have a negative effect on business seeking leaders from graduates and the acceptance of Australian graduates abroad.

Theme 5: funding of higher education research

The business community should be actively involved in funding research projects with universities. Collaborative research in other disciplines such as medicine and engineering has been highly effective in delivering positive benefits to the community. This collaborative research has not traditionally characterised university research in business disciplines.

It is essential that the allocation of public funds for accounting and business research should reflect relevant business needs. Mechanisms for encouraging collaboration between business and universities could include :

• joint funding of research scholarships/grants; and
• interchange of research personnel between the two sectors.

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