Effects of exposure to the International Education Standards on perceived importance of the global harmonization of accounting education among Japanese accounting academics

Advances in Accounting, incorporating Advances in International Accounting 27 (2011) 382–389

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Advances in Accounting, incorporating Advances in International Accounting journal homepage: www.elsevier.com/locate/adiac

Effects of exposure to the International Education Standards on perceived importance of the global harmonization of accounting education among Japanese accounting academics Satoshi Sugahara a,⁎, Greg Boland b, 1 a b

Hiroshima Shudo University, Faculty of Commerce Sciences, Asaminami-ku, Hiroshima, 1-1-1, Japan University of Canberra, School of Business and Government, Canberra ACT 2601, Australia

a r t i c l e

i n f o

Keywords: International Education Standard for Professional Accountants (IES) Accounting Education

a b s t r a c t This exploratory study empirically examines the degree to which the Japanese accounting academics is exposed to the IESs and explores their perception of the importance of global harmonization in accounting education in terms of ensuring quality global control of the accounting profession. Responses from 76 questionnaires found that accounting staff, particularly in the post graduate Accounting Schools, have a basic understanding of the IESs and view this global harmonization as favorable whereas staff who teach at undergraduate level or at ordinal postgraduate level in tertiary schools have a much lower understanding and perception. This is of concern to the accounting profession as it is in these undergraduate schools and ordinal postgraduate schools from where the majority of successful CPA examinees graduate each year. The findings also indicated that the IESs can be effectively used as a benchmarking tool within the Japanese accounting academics. © 2011 Elsevier Ltd. All rights reserved.

1. Introduction In December 2009, the International Accounting Education Standards Board (IAESB) publicly released the amended “Framework for International Education Standards for Professional Accountants” (Framework). The primary purpose of this revised Framework was to update the International Education Standards (IESs) for Professional Accountants. These standards were originally prepared and released by the International Federation of Accountants (IFAC) in 2003 and they were taken over by the IAESB in 2008. The desired IESs outcomes of this new Framework were to (1) increase the global mobility for accountants and (2) reduce international differences in the requirements of becoming a professional accountant together with his/her ongoing professional development (IAESB, 2009). Against this latest IESs exposure it has been noted that significant gaps exist between the IESs and the actual development of education programs across a number of countries. To address this concern, Karreman, Ahern, Kuijl, Marrian (2007) investigated the outcomes of accounting education programs that 32 professional accounting and auditing bodies from around the world had instigated in the previous five years and their perceptions for the ensuing five years. The collected

⁎ Corresponding author. Tel.: + 81 82 830 1150; fax: + 81 82 848 9450. E-mail addresses: [email protected] (S. Sugahara), [email protected] (G. Boland). 1 Tel.: + 61 02 6201 2327; fax: + 61 02 6201 5238. 0882-6110/$ – see front matter © 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.adiac.2011.08.008

data was analyzed in terms of initial education, training and assessment procedures, and the mandatory continuing professional development for each country's members. With the survey results based on educational standards and other issues from each country, the authors found limited influence of the IESs with regard to the development of pre-and post-qualification programs. According to the results, direct linkages only appeared, on average, in four out of the eight standards. The vexing question arises as to why these gaps exist. One possible reason may be that IESs have failed to involve a wider range of important stakeholders who would normally be expected to have a strong influence on the development of global accounting education. That is, the 2003 IESs and the 2009 Framework limited its target audience to IFAC bodies and their respective members (IAESB, 2009; IFAC, 2003). In such circumstances the IESs and Framework will only become effective, if, at the pre-qualification stage of accounting education, the accounting professional body/ies have a strong association and engagement with the actual accounting curriculum in tertiary institutions. This is the case in Australia for instance where accounting courses in selected universities and colleges receive accreditation by professional accounting bodies such as CPA Australia and the Institute of Chartered Accountants in Australia (Mathews, 2004). Under this scheme, potential entrants to the accounting profession are required to complete an accredited bachelor's degree, which has been endorsed by the relevant professional body. Compared to Australia, professional bodies in some other countries have little direct influence in this process of assisting curriculum development in tertiary accounting education. In the USA, the American Institute of Certified Public Accountants (AICPA), as a

S. Sugahara, G. Boland / Advances in Accounting, incorporating Advances in International Accounting 27 (2011) 382–389

member body of IFAC is the enforcement agency that promotes the IESs, but has little or no control in curriculum design or examination certification in tertiary institutions (Needles, 2008). Similar to the situation in the USA, the Japanese Institute of Certified Public Accountants (JICPA), which is the domestic professional body of IFAC in Japan, has weak links with the educational community. Of particular concern in Japan is at the pre-qualification stage, when the CPA Law allows any school leaver or other non-graduate to apply for CPA membership. It is here that potential CPA candidates are allowed to sit for a CPA examination regardless of any prior accounting education. Accordingly neither the JICPA nor its members have little opportunity to incorporate the essential elements of the IESs into the prequalification stage of accounting education in Japan. In 2003, new professional postgraduate schools, commonly known as Accounting Schools, were established in Japan in order to attract potential CPA candidates. These institutions, originating from the Certified Public Accountant Law (CPA Law) Amendment in 2003, were designed to integrate IESs with the domestic accounting educational structures (FSC, 2002, 2003). They were intended to reflect and incorporate IESs into the country's national education structure. However, statistical data in 2008 has indicated that potential CPA examinees studying within these postgraduate Accounting Schools consisted of only 155 current students or graduates (4.27%) from a total of 3,625 students. This data also reflected the fact that the majority of successful CPA examinees were either current undergraduate students or recent graduates from an undergraduate degree only (3,133; 86.42%) (CPAAOB, 2008). The latter were mainly holders of a business or accounting related undergraduate degree. It should also be pointed out that individual lecturers and/or curriculum designers in these tertiary schools have certain autonomous discretion on whether or not they wish to reflect the spirit of IESs into their curriculum and specific course content. In theory, the Framework prescribes that the primary target audience should be IFAC bodies and its members, but technically it encourages a wider range of other stakeholders including consumers, regulators and providers of accounting education to get involved in the IESs (IAESB, 2009). With the results of an online survey administered by the IAESB in 2008 (IAESB, 2008a), the Framework avoids directly targeting these other stakeholders but rather only encourages them to understand the workings of the IAESB (IAESB, 2009). As stated above, a strong call has been made for the accounting academics to be included as a primary interest group to enable the successful introduction of the IESs but in reality this has not occurred. Increasingly there has been a strong public interest in adopting the International Financial Reporting Standards (IFRS) in Japan. Simultaneously, accounting academics have openly discussed the importance of, and the necessity for, the global harmonization of accounting education. In support of this trend, the Japanese Association of Accounting Education and Research (JAAER) was established in February 2009 to address accounting education issues including the global convergence relating to the IESs. However, it is not clear if Japanese accounting academics are familiar with the IESs, or whether they have a favorable perception of the international harmonization of accounting education that has been introduced through the IESs. Given the above background, the main purpose of this study is twofold. Firstly it investigates to what degree the Japanese accounting academics are exposed to the IESs and secondly it explores their perceptions of the importance of global harmonization in accounting education to ensure quality global control of the accounting profession. In addition, this study also attempts to identify the role that certain attributes may have in contributing to the academics' perception of the global harmonization of accounting education. Following this introduction the next section reviews previous studies in order to develop the research hypotheses. This is then followed by the questionnaire development and data collection in the research methodology section. The results of the empirical research are then analyzed and interpreted.

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The paper concludes with discussions of the findings, together with implications and limitations.

2. Literature review Previous research has focused on one's perception toward accounting in relation to the increasing globalization of business. This line of research has attempted to identify a variety of perceptions relating to the implementation of international accounting including how accounting standards should be harmonized (e.g. Huang & Mintz, 1992; Mintz, 1980; Sherman, 1987), how accounting faculties can be motivated (e.g. Adhikari, Flanigan, & Tondkar, 1999; Cohen, Pant, & Sharp, 1991) and what should be taught in the classrooms (e.g. Ashcroft, Chevis, & Smith, 2008; O'Connor, Rapaccioli, & Williams, 1996; Sands & Pragasam, 1997; Smith & Salter, 1996). More recently, Ashcroft et al. (2008) investigated the perceived importance of various international accounting issues that had been studied by accounting researchers from around the globe. With a questionnaire based survey distributed to worldwide American Accounting Association (AAA) members, the results revealed a basic overall agreement in favor of the highest-ranked issue, i.e. accounting convergence, between US and non-US respondents. Joshi, Bremser, and Al-Ajmi (2008) also endeavored to explore perceptions of convergence issues in the context of the International Financial Reporting Standards (IFRSs). This study examined the perceptions relating to the implementation of a single set of global accounting standards among accounting and auditing professionals in Bahrain. Given a questionnaire-based survey, the authors found that the convergence of accounting standards by the IFRSs was viewed as a worthwhile objective that can be fairly, but gradually accomplished. Although this prior study dealt with accounting professionals rather than the accounting academics, the results successfully indicated individuals' perceptions on convergence issues from another perspective. Compared with these previous studies, little research has been completed to date that highlights global convergence issues relating to accounting education. Among this limited literature, was a study by Parmod, Cummings, and Patel (2009) that examined the effects of national culture and education on the judgments of tertiary accounting students. Using data collected from undergraduate accounting students of either Australian or Chinese descent, the study attempted to identify whether this cultural dichotomy influenced the interpretation and application of uncertainty expressions that are used as recognition and disclosure thresholds within IFRSs. The outcomes of the study are very important as significant differences in the judgment of accounting students could have serious implications on the future convergence of accounting standards. It demonstrated that despite where students study, national culture has a significant impact on the judgments of accounting students when they interpret and apply selected IFRSs that contain uncertainty expressions. The results from this study also imply that IFRSs adoption will depend on cultural traits of students whose judgment is also highly influenced by the IESs. In terms of international accounting education, Zajkowski, Sampson, and Davis (2007) attempted to ascertain how accounting academics in Australia and New Zealand perceive the continuing program development (CPD), with which all professional body members are required to comply with under the IESs. The academics who participated in this study were asked their annual number of CPD hours together with the type of activities they undertook and their views on the benefit of undertaking such CPD. The findings focused on respondents' views on how they perceived CPD as a benefit tool for teaching practice. In contrast to these prior studies, it is not clear if and to what extent the Japanese accounting academics agree with the global harmonization of accounting education in the context of assuring a high quality competent profession. To date no study has been conducted in Japan that directly addresses the perceptions of the accounting academics in terms of the international harmonization of accounting education.

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The positive perception of academics toward global harmonization of accounting education could be viewed as a good starting point, where successful implementation of the IESs should be used as an effective benchmarking tool. Both current and proposed Frameworks confirm that IESs are expected to serve as international benchmarks against where IFAC member bodies can measure the gaps from the actual developments in accounting education (IAESB, 2009; IFAC, 2003). Using IESs as the benchmark, stakeholders can identify strengths and weaknesses in the professional qualification of accountants and auditors, and this will ensure progress over time toward sustainable institutional capacity (Needles, 2008). Anecdotally, Karreman et al. (2007) observed that significant gaps exist between IESs and the actual development of accounting educational programs across various countries. This latter study did not simply recognize the gaps but urged future researchers to measure these gaps by using the IESs as a benchmark and provide suggestions for the narrowing of these gaps in the future. An opposing view was found in a comment letter on the proposed Framework that criticized benchmark methodology, which suggested that the objective of IESs was that they should provide minimum requirements to assure global integrity and consistency rather than diminishing differences in international certification requirement (Stocks, 2009). 3. Research hypotheses Previous literature has not empirically tested the Japanese accounting academics to determine its perception on whether IESs are an effective benchmark that will assist in the international harmonization of accounting education. To address this issue, the research focus of this paper investigates possible relationships between the academics' IESs exposure and its perception of global harmonization of accounting education. If the academic is familiar with the IESs then it is conceivable that it will have a favorable view toward international harmonization and would be willing to use IESs as an effective benchmark in the development of accounting education. To examine this relationship, the following hypothesis was developed in a null form. H1. There is no significant difference in the perceived importance of harmonization of accounting education between Japanese accounting academics that are exposed to IESs compared to those who are not. With respect to acceptance of the global harmonization of accounting education, the prominent issue at present is how to deal with IFRSs in the accounting curriculum (e.g. Hashimoto, 2009; Munter & Reckers, 2009; Thomas, 2009). By adopting IFRSs, the accounting educator is fostering the exposure of IESs. Smith and Bergen (2009) for example pointed out that training and education for a principled-based system accommodated by IFRSs should include learning how to apply strategic judgments to identify the substance of economic events without the guidance of bright-line accounting standards. These types of skills, including judgment skills, are categorized as generic skills and prescribed by the IESs in order to achieve high quality competencies for accounting professionals at the pre- and post-qualification stages (IAESB, 2008b; IFAC, 2003). Along this inquiry line, it should be considered that the impact of IFRSs on accounting education can be restricted to research areas involving external reporting or could be extended to the integration of external and internal reporting. Jones and Luther (2005) pointed out that European managers were always confronted with choices between comprehensive integration or separation of external and internal reporting in the development of their information systems during the conversion to IFRS. To investigate this phenomenon, Jermakowicz and Gornik-Tomaszewski (2006) empirically examined listed EU traded company thinking and found that the majority of respondents in the study implied that the usage of IFRS-based financial statements would be for the integrated reporting systems. Notwithstanding evidence of

this IFRSs' perception, no study has been undertaken to determine the role that perceptions of specific research areas in accounting academics may have on the international harmonization of accounting education. The impact of IFRSs on harmonizing accounting education may be limited to the research areas related to external reporting and simply ignore broader research areas. It is unlikely a academic specializing in management accounting would have a strong acceptance of the IESs based on their belief that internal and external reporting should be integrated. To address this issue, the following hypothesis was developed. H2. There is no significant difference in perceived importance in the international harmonization of accounting education between Japanese accounting academics who research in external reporting areas compared to those who study in other research areas. Along a similar vein, the academic level that lecturers teach in tertiary schools could be a crucial factor that determines the level of a faculty's exposure to IESs and their perception of accounting education. As previously mentioned, Accounting Schools were established in 2003 to help integrate IESs' concepts with the domestic educational structures in Japan (FSC, 2002, 2003). The CPA Law Amendment in 2003 also assisted with this integration. Given this structure, it is assumed that academics teaching in Accounting Schools are more exposed to the IESs compared to those who teaching at the undergraduate or ordinal postgraduate level (e.g. Hashimoto, 2005; Satake, 2004). However it is obscure as to whether this attribute of academic level is associated with a their perception of the international harmonization of accounting education. Accordingly, to address this research question, the following hypothesis was developed. H3. There is no significant difference in the perceived importance of international harmonization of accounting education between Japanese accounting academics who teach in Accounting Schools compared to those who teach in the undergraduate or ordinal postgraduate schools. Furthermore, a possible inference could be raised on the academics' exposure to the IESs and its perception of global harmonization of accounting education by virtue of membership of an accounting professional body. The Framework clearly defines that IFAC member bodies should comply with the IFAC Statements of Membership Obligation 2 (SMO2) and notify their members of all IESs and other guidelines released by the IAESB (IAESB, 2009; IFAC Board, 2006). This implies that the members of JICPA, which is an IFAC member, are expected to understand the IESs by implication via SMO2. Since some accounting faculties in Japan have either present or previous practicing Certified Public Accountants, their CPA Work Experience may affect their IESs exposure and their perception of accounting education. Consequently the following research hypothesis was also formulated in null form to address this issue. H4. There is no significant difference in the perceived importance of international harmonization of accounting education between Japanese accounting academics that have CPA Work Experience and those who do not. 4. Research methodology 4.1. Questionnaire development The present study developed a questionnaire to address the research hypotheses described above. The questionnaire administered in this research consisted of three sections. The first section contained four self-developed survey items that sought respondents' exposure to the International Education Standards (IESs). These questions are displayed in Table 1. The subjects were asked to

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respond to each of four questions by selecting either “Yes” or “No”. The first three questions (REC1, REC2 and REC3) asked the participants the degree to which they have been exposed to the IESs. Of these questions, REC3 sought the respondents' deepest exposure followed by REC2 and REC1 which was the least, or only surface exposure to the IESs. REC4 on the other hand asked respondents if they understood their professional obligations to IESs (Statements of Membership Obligations: SMO 2) as prescribed by IFAC. In the second section of the questionnaire, subjects were asked their perceptions on the importance of harmonizing accounting education in an attempt to obtain competent accounting professionals across the globe. A five-point Likert scale was used to measure subjects' responses, which were anchored one for strongly disagree and five for strongly agree. Although no previous studies have been undertaken to explore perceived importance of global harmonization of accounting education among accounting academics, it was found that some previous studies attempted to address one's own perception toward the importance of international accounting and IFRSs (e.g. Ashcroft et al., 2008; Joshi et al., 2008). The present study applied these previous question items to investigate a academic's perception. In the final section of the questionnaire, subjects were also asked demographic information including their age, gender, current career position, research interests or subject, academic level, and CPA work experience. 4.2. Data collection Data for this exploratory research was collected from the academics who teach accounting related subjects in the tertiary schools of Japan. The authors posted hard copies of a questionnaire in July 2009 to 300 members of the Japanese Accounting Association (JAA) randomly selected from the JAA members' Directory. The JAA is the biggest accounting academic association in Japan with more than 1900 members (as at 1 September 2009). Of the 300 questionnaires initially distributed, 76 responses were received by the end of September in 2009. However nine of these questionnaires were eliminated due to incompletion. As a result, data used in this research consisted of 67 responses (22.33% effective response rate). Demographic information of the effective data is shown in Table 2. The majority of the respondents were males (95.5%), with females totaling only three (4.5%). This gender bias is in proportion to the total JAA membership population. Of the 67 respondents 56.7% were professors, with the remainder being either associate professors, lecturers or associate lectures (TIT). In terms of Research Interest or subject (SUB), 56.7% of respondents were mainly researching topics related to “Financial Accounting”. Other research interests included “Bookkeeping” (7.5%), “Management Accounting” (13.4%) and “Auditing” (10.4%). The remaining minor research topics for respondents were classified as “Others” (12.0%) and these included three “Environmental Accounting”, two “Public Accounting” and three non-responses. As for academic level (LEV), 68.7% of total subjects were teaching at the undergraduate level, while 16.4% were teaching at the postgraduate level. From the latter 14.9% reported that they were teaching accounting in the Accounting Schools. With respect to CPA Work Experience (EXP), it was also found that 38.8% of respondents had or are currently participating in CPA Work Experience while the majority did not have such CPA experience (61.2%).

Table 1 IESs exposure survey item. Item

Question

REC1 REC2 REC3 REC4

Have you heard about the International Education Standards (IESs) before? Have you seen or read about the IESs before? Do you know the actual contents of IESs? Do you know that all IFAC members (including Japanese Institution of Certified Public Accountants; JICPA) are expected to comply with IESs?

385

5. Results 5.1. Descriptive analysis result Respondents' perception toward the importance of International Harmonization of Accounting Education (IIHAE) is measured and reported in Table 3. The mean score from 67 responses for the question about IIHAE was 3.48 with a standard deviation of 1.206. Table 4 exhibits the results of the descriptive questions (REC1, REC, REC3 and REC4) regarding IESs' exposure among Japanese accounting academics. The initial results showed that a academic who had heard about the IESs totaled 52.3% of the sample while those who had not, totaled 47.8%. This indicates indifference in frequency of responses for the REC 1 question. In contrast, Table 4 reports greater differences in the frequency of responses for the questions of REC2, REC3 and REC4. It was found that a academic who had previously seen or read about the IESs was 25.4% of the sample while academic who had not was 74.6%. Further, 82.1% of the accounting educators did not know about the actual contents of the IESs (only 17.9% of educators indicating familiarity with the IESs). In addition, when subjects were asked about IFAC (JICPA) member's obligations (SMO2) in REC4, only 37.3% understood the fact that all IFAC (JICPA) members are expected to comply with the IESs, with 62.7% of academics not knowing about obligation. Table 5 displays the frequency of descriptive information in responses to REC1, REC2, REC3 and REC4 in terms of Research Interest or Subject (SUB), Academic Level (LEV) and CPA Work Experience (EXP). Chi-square tests were performed and the results report that frequencies of subjects' responses for all four questions were not equally distributed over the five categories of SUB. The results were χ2 = 9.381 (pb .1), χ 2 = 11.035 (pb .05), χ 2 = 10.549 (pb .05) and χ2 = 12.772 (pb .05) for REC1, REC2, REC3 and REC4 respectively. The result also displays that frequency of responses for all four questions are not equally distributed over the three categories of LEV. These results are χ2 = 11.054 (pb .01), χ2 = 18.847 (pb .01), χ 2 = 21.693 (pb .01) and χ2 = 19.753 (pb .01) for REC1, REC2, REC3 and REC4 respectively. However, no significant differences were found in frequencies of responses in terms of EXP. 5.2. Statistical analysis result A t-test analysis was conducted to address the difference in mean scores of perception in IIHAE between academics who answered “Yes” and those who answered “No” regarding REC1, REC2, REC3 and REC4. These results are displayed in Table 6. According to the analysis, significant differences were found in the mean scores for perception of IIHAE between these two academic groupings in terms of REC3 and REC4. The mean score for the “Yes” group for REC3 was significantly higher than that of the “No” group and this was statistically significant at the 0.1 level (t = − 1.941, p b .1). The mean score for the “Yes” group for REC4 was also significantly higher than that of the “No” group with statistical significance at the 0.01 level (t = − 3.372, p b .01). In contrast, no significant differences were found in the mean scores of the perceived importance of IIHAE between the two academic groupings in terms of REC1 (t =− 1.239, p = .220) and REC2 (t = −.962, p = .346). Additionally, statistical analysis of the IIHAE perception was performed using the demographics of Research Subjects (SUB), Academic Level (LEV) and CPA Work Experience (EXP) to address the research hypotheses. Table 7 provides the outcomes of this analysis. A ttest and One-Way Analysis of Variance (ANOVA) were applied in an attempt to compare the differences in IIHAE scores in terms of SUB, LEV and EXP. The findings indicate significant differences in the mean scores for IIHAE among the groups of SUB (F= 3.056, p b .05) and LEV (F= 6.713, p b .01). The Least Square Difference t-test (LSD) technique was also applied to investigate multiple comparisons of means by using a One-Way ANOVA. The result of LSD revealed in the SUB variable

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Table 2 Demographic data. Variable

N

Missing

Max.

Min.

Average

Std. dev

Age (AGE)

65

2

10.865

67

0

Career Title (TIT)

67

0

Research Subject (SUB) 8 (12.0%)

67

0

29 Female (%) 3 (4.5%) Others 29 (43.3%) Financial Accounting 38 (56.7%)

46.80

Gender (GEN)

70 Male (%) 64 (95.5%) Professor 38 (56.7%) Bookkeeping 5 (7.5%)

Management Accounting 9 (13.4%)

Auditing 7 (10.4%)

Academic Level (LEV)

67

0

67

0

Accounting Schools (%) 10 (14.9%) With experience (%) 26 (38.8%)

Other graduate (%) 12 (16.4%)

CPA Work Experience (EXP)

Undergraduate (%) 46 (68.7%) Without experience (%) 41 (61.2%)

a

Othersa

Others consists of three for Environmental Accounting; two for Public Accounting; three for non-respondent.

that the mean score of IIHAE for “Auditing” group had a significantly higher score than “Management Accounting” group (pb .05) and “Others” group (pb . 01). Further, the “Others” group had a significantly lower mean score of IIHAE than “Bookkeeping” (pb .1), “Financial Accounting” (pb .05) and “Auditing” group (pb .01). The LEV variable, was also found to have a significantly higher mean IIHAE score for Accounting School group compared to the Undergraduate group (pb .01) and Postgraduate group (pb .01). However, no significant differences were found in the IIHAE scores in terms of EXP. 6. Interpretation Firstly, this study investigated to what extent the Japanese accounting academics agreed with the implementation of global harmonization of accounting education (IIHAE). The 3.48 mean score obtained for this research question as shown in Table 3 reveals that overall, the Japanese accounting academics view this implementation as favorable. However, the results in Table 4, found that only 17.9% (REC3) and 37.3% (REC4) of academics know the actual contents of the IESs and what obligations should be made to these standards respectively. These results indicate that although 52.2% of academics have heard about the IESs, the majority, as sampled in the study, do not fully understood what the IESs are all about. Secondly, Table 6 displays a significant difference in the mean scores of IIHAE between academics respondents with and without IESs exposure in terms of REC3 and REC4. These results indicate that the accounting academics who are familiar with the contents of IESs tend to have a more favorable perception toward global harmonization of accounting education than their counterparts who are less familiar with the IESs. Similarly, the academics who understand the compliance obligations (SMO2) being IFAC members (IFAC Board, 2006) are more likely to accept international harmonization of accounting education than those who do not understand these obligations. In contrast, the academics that are not familiar with both the contents and obligations of the IESs tended to have an indifferent perception toward the global harmonization of accounting education. In other words, this result implies that an accounting educators' surface exposure to the IESs, such as taking a fleeting glance over the IESs or knowing what the IESs' acronym stands for does not contribute to formulating in one's mind a clear view of the global convergence of accounting education in Japan. This finding indicates that the IESs can be used effectively as a benchmarking tool within the Japanese Table 3 Perception of IIHAE among Japanese Accounting Academics. Item

N

Mean Std. dev.

67 3.48 Do you agree that it is necessary to harmonize accounting education globally to ensure the high quality of accounting professionals in various parts of the world? (IIHAE)

1.206

accounting academics, because academic staff, who should be the drivers, do hold a favorable perception toward the global harmonization of accounting education. Underpinning this outcome however is the assumption that such staff must be familiar with the specific details and compliance obligations of the IESs. On this basis will the gaps between the IESs and actual development of accounting educational programs in Japan be narrowed. Thirdly, the impact that demographics have over the academics' perception of the global harmonization of accounting education was also explored in the study. For example, in terms of research interests the results in Table 7 report that mean scores of IIHAE for the “Auditing” interest group is the highest, followed by the “Bookkeeping” and the “Financial Accounting” groups. These research theme groupings are regarded as those that are closely related to external reporting. Not surprisingly it was found that, the academics with such research themes or topics tend to be more accepting of the importance of global harmonization of accounting education than those without these themes. This interpretation is however contradicted in a prior study by Jermakowicz and Gornik-Tomaszewski (2006), who found that publicly traded companies in the European Union tended to report using IFRS-based financial statements for the both internal and external purposes. However this equitable treatment of IFRSs at the stage of information system development is not reflected by a academic's perception toward global harmonization issues of accounting education in the present research. In fact, there has been no study in Japanese accounting literature that highlight the associations between management accounting and IFRS adoption. According to the analysis, “Auditing” group tend to hold a significantly more favorable perception of the harmonization issue than “Management Accounting” group. Although not significant, the other two groups, namely “Financial Accounting” and “Bookkeeping” also scored higher than the “Management Accounting” group. This outcome implies that academics whose research interests lie in

Table 4 Exposure of IESs among Japanese Accounting Academics. Item

Question

N

No

Yes

Frequency Percent Frequency Percent REC1 Have you heard about the International Education Standards (IESs) before? REC2 Have you seen or read IESs before? REC3 Do you know the contents of IESs? REC4 Do you know all IFAC members (including JICPA and its individual member) are expected to comply with IESs?

67 32

47.8%

35

52.2%

67 50

74.6%

17

25.4%

67 55

82.1%

12

17.9%

67 42

62.7%

25

37.3%

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Table 5 Descriptive information of responses in terms of demographics. Demographic variable

SUB

REC1

Bookkeeping Financial Accounting Management Accounting Auditing Others Chi-square test χ2 (Asymp Sig.)

LEV

Undergraduate Accounting School Postgraduate Chi-square test χ2 (Asymp Sig.)

EXP

With Experience Without Experience Chi-square test χ2 (Asymp Sig.)

REC2

REC3

REC4

Total

No

Yes

No

Yes

No

Yes

No

Yes

2 (40.0%) 16 (42.1%) 7 (77.8%) 1 (14.3%) 6 (75.0%) 9.381 (.052)⁎ 25 (54.3%) 0 (.0%) 7 (63.6%) 11.054 (.004)⁎⁎⁎

3 (60.0%) 22 (57.9%) 2 (22.2%) 6 (85.7%) 2 (25.0%)

4 (80.0%) 29 (76.3%) 9 (100.0%) 2 (28.6%) 6 (75.0%) 11.035 (.026)⁎⁎

1 (20.0%) 9 (23.7%) 0 (.0%) 5 (71.4%) 2 (25.0%)

5 (100.0%) 31 (81.6%) 9 (100.0%) 3 (42.9%) 7 (87.5%) 10.549 (.032)⁎⁎

0 (.0%) 7 (18.4%) 0 (.0%) 4 (57.1%) 1 (12.5%)

4 (80.0%) 22 (57.9%) 8 (88.9%) 1 (14.3%) 7 (87.5%) 12.772 (.012)⁎⁎

1 (20.0%) 16 (42.1%) 1 (11.1%) 6 (85.7%) 1 (12.5%)

5⁎ (100.0%) 38 (100.0%) 9 (100.0%) 7 (100.0%) 8 (100.0%)

21 (45.7%) 10 (100.0%) 4 (36.4%)

38 (82.6%) 2 (20.0%) 10 (90.9%) 18.847 (.000)⁎⁎⁎

8 (17.4%) 8 (80.0%) 1 (9.1%)

42 (91.3%) 3 (30.0%) 10 (90.9%) 21.693 (.000)⁎⁎⁎

4 (8.7%) 7 (70.0%) 1 (9.1%)

34 (73.9%) 0 (.0%) 8 (72.7%) 19.753 (.000)⁎⁎⁎

12 (26.1%) 10 (100.0%) 3 (27.3%)

46 (100.0%) 10 (100.0%) 11 (100.0%)

19 (46.3%) 16 (61.5%)

32 (78.0%) 18 (69.2%) .653 (.419)

9 (22.0%) 8 (30.8%)

36 (87.8%) 19 (73.1%) 2.347 (.125)

5 (12.2%) 7 (26.9%)

28 (68.3%) 14 (53.8%) 1.420 (.233)

13 (31.7%) 12 (46.2%)

41 (100.0%) 26 (100.0%)

22 (53.7%) 10 (38.5%) 1.473 (.225)

⁎⁎⁎ Significant at 0.01 level. ⁎⁎ Significant at 0.05 level. ⁎ Significant at 0.10 level.

“Management Accounting” are less likely to agree with the positive association with the global harmonization of accounting education. Vice versa, accounting academics that normally deal with external reporting in their research are inclined to be more sensitive to the international harmonization issue of accounting education. It is also interesting to observe that the mean scores for “Others” that comprised Environmental Accounting and Public Accounting, of which themes are beyond the boundaries of IFRSs, were also lower than those of the external reporting groups. Overall it is interpreted here that the Japanese accounting academics who include IFRSs' related topics in their programs tend to agree with the importance of international harmonization of accounting education compared to those who incorporate non-IFRS reporting topics. The statistical results in Table 5 also show that academics whose research topics include “Auditing” know more about the IESs compared to others such as “Management Accounting” academics who even though have some exposure to the IESs nevertheless they know very little on the specific details of the standards. It is concluded here that

Table 6 Difference in perception of IIHAE in terms of IESs exposure. Item

Question

Mean

t-Test

No (32) Yes (35) t-value (Std. dev.) (Std. dev.) REC1 Have you heard about IESs before? REC2 Have you seen or read the IESs before? REC3 Do you know the contents of IESs? REC4 Do you know all IFAC members are expected to comply with the IESs? ⁎⁎⁎ Significant at 0.01 level. ⁎⁎ Significant at 0.05 level. ⁎ Significant at 0.10 level.

3.29 (1.131) 3.39 (1.096) 3.35 (1.135) 3.12 (1.166)

3.66 (1.259) 3.76 (1.480) 4.08 (1.379) 4.08 (1.038)

Sig.

− 1.239 0.220⁎⁎ −.962

0.346

− 1.941 0.057⁎ − 3.372 0.001⁎⁎⁎

knowledge of IESs contents depends on a academic's research interest. In this case “Auditing” research enables the academics to access IESs contents more frequently and this may further enhance their understanding of concepts behind the international harmonization of accounting education. This stronger acceptance by “Auditing” groups may also have been contributed to by the convergence of Code of Ethics with Professional Accounting body in Japan. In 2006, JICPA partially amended their Code of Ethics in order to integrate the essence of IFAC's Code of Ethics with the domestic JICPA's Code of Ethics (JICPA, 2006). This amendment was also reflected by IFAC and IAESB activities during the time when the Exposure Draft “Approaches to Developing and Maintaining Professional Values and Ethics and Attitudes” was released in September 2006 (IAESB, 2006). Such professional changes may have given a higher exposure and a deeper acceptance of global convergence issues in accounting education particularly among Japanese “Auditing” academics. Fourthly, the analysis in Table 7 also demonstrated that the Japanese Accounting School academics are more likely to agree with the importance of international harmonization of accounting education than those who teach accounting at the undergraduate level or ordinal postgraduate levels in tertiary schools. Academics from the postgraduate schools obtained the lowest mean score of 2.91, which implies academics in this category have relatively neutral opinions regarding their perceptions of the global harmonization issues. The data in Table 5 confirmed that academics in Accounting Schools were more exposed to the IESs than these other two academic groups. This outcome partly provides empirical evidence of the success of the CPA Law Amendment in 2003, which aimed to integrate IESs into domestic accounting educational institutions (FSC, 2002, 2003). It is concluded that IESs' exposure to staff in Japanese Accounting Schools has a positive effect on acceptance of the international harmonization of accounting education. With regard to CPA Work Experience, the t-test results shown in Table 7 report that regardless of whether academic members have CPA Work Experience or not this is not considered an important factor in influencing one's perception on the issue of global convergence of accounting education. In Japan, nearly all CPA professionals who

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Table 7 Difference in perception of IIHAE in terms of demographics. Demographic variable

N

Research Subject (SUB)

67

Academic Level (LEV)

67

CPA Work Experience (EXP)

67

Classifications Bookkeeping (5) Mean (S.D.) 3.80 (1.095) Undergraduate (46) Mean (S.D.) 3.38 (1.134) Without Experience (41) Mean (S.D.) 3.43 (1.196)

Financial Accounting (38) Mean (S.D.) 3.55 (1.265) Accounting School (10) Mean (S.D.) 4.60 (.516)c With Experience (26) Mean (S.D.) 3.58 (1.238)

Management Accounting (9) 3.11 (.601) Postgraduate (11) Mean (S.D.) 2.91 (1.375)

Auditing (7) Mean (S.D.) 4.29 (.756)a

Others (8) Mean (S.D.) 2.63 (1.302)b

t-statistic (ANOVA and t-test) 2.320b (.067)⁎

6.713b (.002)⁎⁎⁎

−.497 (.621)

Least square difference t-test (LSD) technique was applied to adjust multiple comparisons. a Significant for the LSD compared to Management Accounting group (p b .05) and Others group (p b .01). b Significant for the LSD compared to Bookkeeping group (p b .1), Financial Accounting group (p b .05) and Auditing group (p b .01). c Significant for the LSD compared to Undergraduate group (p b .01) and Postgraduate group (p b .01). ⁎⁎⁎ Significant at 0.01. ⁎ Significant at 0.10 level.

work in practice become members of the JICPA. In this sense, although the JICPA is obliged by the IFAC SMO2 to notify IESs to members (IAESB, 2009), it was discovered in this present study that this obligation did not necessarily occur. As mentioned and according to our t-test results, the academics with CPA Work Experience hold similar views regarding the importance of global harmonization of accounting education as those without CPA work experience. Furthermore, the frequency of IESs' exposure is quite similar between these two sets of academics. 7. Concluding remarks The primary aims of this present study were to investigate to what degree the Japanese accounting academics are exposed to the IESs and to explore their perceptions on the importance of global harmonization of accounting education. The outcomes indicated that 52.2% of respondents had previously heard about IESs and of these 25.4% of respondents had previously read about and so were more knowledgeable about the IESs. However it was concluded that such exposures to the IESs do not contribute in any way to develop a academic's clear view on the global convergence of accounting education. In contrast, the findings did indicate that IESs can be used effectively as a benchmarking tool among the academics as long as staff have a good understanding of the specific details that constitute the IESs and its resulting obligations. Of concern here is the fact that only 17.9% of academics understand the contents of the IESs and only 37.3% of academics understand members' obligations of the IESs. Further efforts should be instigated by the IAESB and the JICPA in order to promote IESs for academics to achieve a deeper understanding of the standards and to assist the IESs in becoming a more effective for benchmarking. This study also attempted to identify how particular attributes may affect the academics' perception on the global harmonization of accounting education. Firstly, it was revealed that Japanese accounting academics whose research are IFAC-oriented are inclined to be more sensitive to this global harmonization. In particular, the skewed impact that Japanese “Auditing” researchers have on this issue is interpreted as being due to the incorporation of the IFAC Code of Ethics into the domestic context. This implies that a academic's exposure to the global convergence issue would enhance their favorable acceptance of it. In contrast, “Management Accounting” academics tend to have less IESs exposure and therefore hold more neutral perception of global convergence. This may be caused by “Management Accounting” being perceived a non-IFRS subject, just like “Environmental Accounting” and “Public Accounting” in the “Others” category. Given these interpretations, it cannot be denied that the latest strong call for IFRSs adoption is intended to promote IESs exposure and so enhance a positive perception of the global harmonization issue among academics. This should occur despite the academics' research

interest because all academic staff have the important role of educating tomorrow's leaders. Secondly, the present study has provided empirical evidence of the impact that the 2003 CPA Law reform attempted to integrate the IESs' conception with the domestic accounting education structure in Japan (FSC, 2002, 2003). The findings indicate that the accounting academics in Accounting Schools are more likely to be exposed to the IESs and therefore appreciate the importance of international harmonization of accounting education compared to staff who teach accounting at the undergraduate level or at ordinal postgraduate level in tertiary schools. This high recognition rate of IESs and favorable view of harmonization issues by academics in Accounting Schools is considered very important as they provide a high quality accounting education through the formal tertiary education stage. Contrary to this favorable outcome, this finding conversely shows a lower perception of global harmonization among academics in undergraduate schools and ordinal postgraduate schools from where the majority of successful CPA examinees graduate each year (CPAAOB, 2008). In such circumstances, these students may not be provided with high quality education across the IESs, because their lecturers are less likely to understand the concepts surrounding the IESs and also possess a relatively neutral perception of the global harmonization movement. Urgent treatment is needed to rectify this discrepancy. Finally, this study failed to find any connection between CPA Work Experience and a staff member's perception of the global harmonization of accounting education. Our research hypothesis initially investigated whether academics with JICPA membership would be notified and thus exposed to IESs and its obligations through IFAC's SMO2, but this was found not to be the case in that such membership had little or no effect on one's perception of the global harmonization issue. This result however must be kept in context with the proposed criteria in the Framework, which does not target a very wide range of interest groups such as consumers, regulators and providers of accounting education, but only encourages these groups to have a basic understanding of the IESs (IAESB, 2009). This is especially applicable in Japan where the accounting professional body does not influence or has any control over curriculum development of accounting education at the pre-qualification stage. Nevertheless the range of target groups should be extended to enable the effective application of the IESs. Although this extension of target groups may produce a jurisdiction issue in terms of compulsory education of the IESs across various countries, future research should support the discussions regarding this issue. Some limitations in this research should be acknowledged. Firstly, this study addressed the function of the IESs at the educational pre-qualification stage only. The accounting academics that participated in the analysis were only engaged with the process of accounting education at this pre-qualification stage. On the other hand, professional bodies such as the JICPA and its members have a particular discretion to participate and develop the process of accounting

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education at the post-qualification stage. These special education programs are provided by JICPA under the auspices of the Continuous Professional Education (CPE) scheme which is beyond the scope of the present study. Secondly, this study successfully captured the significant role of several attributes regarding accounting academics. However, this analysis has failed to comprehensively distinguish the impact between the main effects and interactive effects among these attributes. This limitation is caused by the small data set used in this research, which has prevented the authors from undertaking the Univariate Analysis of Variance technique that would provide more credible results. Further studies are envisaged which will use more data to solve this problem. More advanced questioning techniques should be included in this further research to help determine academics' perception. Regardless of these limitations, this exploratory study was the first experiment in Japan that will assist and contribute to a better understanding of the IESs' exposure and resulting perceived importance of the global harmonization of accounting education among the Japanese accounting academics. References Adhikari, A., Flanigan, M., & Tondkar, R. (1999). A survey of international accounting education in the US and some other countries. Journal of Accounting Education, 17, 175–189. Ashcroft, P., G. Chevis and L.M. Smith (2008) Faculty perspectives on international accounting topics, Advances in Accounting, incorporating Advances in International Journal, 24(1), pp. 139–144. Certified Public Accountants and Auditing Oversight Board (CPAAOB) (2008). The investigation document for successful CPA examinees in 2008. CPAAOB http://www.fsa.go.jp/ cpaaob/english/index.html Accessed on 24th November 2009. Cohen, J. R., Pant, L. W., & Sharp, D. J. (1991). An empirical investigation of attitudinal factors affecting educational course coverage of international topics. The International Journal of Accounting, 26(4), 286–301. Financial System Council (2002). 2002, December 17th. A report of Subcommittee on Certified Public Accountants System: Vitalizing the Certified Public Accountants Audit System (Kohnin Kaikeishi Kansa Seido no Jyujitsu Kyouka). Financial Service Agency http://www.fsa.go.jp/news/newsj/14/singi/f-20021217-1.pdf. (Accessed on 27th, Sept, 2009). Financial System Council (2003). 2003, November 17th. A report of Subcommittee on Certified Public Accountants System: Affiliated activities between accounting education at the graduate schools and certified public accountant examination scheme (Senmonshoku Daigakuin niokeru Kaikei Kyoiku to Kohnin Kaikeishi Shiken Seido tono Renkei nituite). Financial Service Agencyhttp://www.fsa.go.jp/news/newsj/15/singi/f-20031117-3.pdf (Accessed on 27th, September, 2009). Hashimoto, T. (2005). The current trend of the International Accounting Education Standards Boards and the future perspective of the International Education Standards for Professional Accountants (in Japanese) Accounting Profession, 1, pp.131–140. Hashimoto, T. (2009). The impact of International Financial Reporting Standards towards accounting practice and education in Japan (in Japanese). Accounting, 61(8), 33–40. Huang, J., & Mintz, S. (1992). International accounting education: A global perspective. Accounting Educators' Journal, 4(1), 69–85. International Accounting Education Standards Board (IAESB) (2006). Exposure draft, Proposed International Education Practice Statement XX, approaches to developing and maintaining professional values, ethics and attitudes. New York: IAESB. International Accounting Education Standards Board (IAESB) (2008). International Education Standards for Professional. New York: IFAC. International Accounting Education Standards Board (IAESB) (2008). IAESB Framework project survey tabulation of results at closing date. 2008, March 8. http://www.ifac.

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