Shivaram Rajgopal, a Columbia Business School professor, suggests in Fortune a solution to the gap between starting salaries in accounting and those in finance.
Rajgopal explains that his solution to this problem, a sticking point in the accounting profession, is to “make accountants more like MBA graduates.” He means equipping accounting students with the skills to comprehend business context without removing their foundations in accounting.
He writes, “The great CPAs and accounting undergrads usually have an amazing skillset.” He enumerates these skills, including a good comprehension of information business flows and processes, knowledge of money and value distribution in the various business areas, measuring economic theories, translating these concepts to practice, and making informed decisions at the highest level. He said that the curriculum used should not compromise on the traditional strengths of an accounting degree, but it can do more.
Rajgopal calls his “fix” simple, clarifying that it is informed by his career as a teacher and counselor of both MBAs and CFOs at Columbia and Duke University, aside from his over 15-year stint teaching undergraduates at the University of Washington and Emory. His stance is also informed by his status as a chartered accountant educated in India 30 years ago, when the separation between the accounting and finance job functions was not as defined as in the U.S.
His solution involves training accountants differently. He said he believes that much of the current curriculum is designed to train accountants as auditors, but he expects that audit will never be a growth market. Audit firms, he writes, devised a way to audit their clients during the pandemic with less manpower, and this trend is likely here to stay. Two things could happen to lower-skilled audit jobs: they could be outsourced to other countries, or automation, such as artificial intelligence, will limit their creation.
Given this reality, he suggests that universities train accounts for business, not just audit jobs, by shifting their curriculums toward consulting work, whether in audit firms or consulting firms. For example, he suggests training accounting students to learn the business intuition behind financial accounting. That means teaching accounting students more about transactions and why their permutations evolved. He also suggests teaching accounting students an MBA-like core and electives program on topics such as "micro and macroeconomics, asset pricing, corporate finance, applied statistics and optimization."
His "preferred" new curriculum would include a "high school economic class" that covers topics such as the production function of a firm, demand and supply curves, price elasticity, consumer and producer surplus and other basics of economics. Then it would "take these ideas to a modern financial statement describing a firm’s performance and appreciate how woefully inadequate the financial reporting model really is for our multi-billion-dollar market cap companies."
He also suggests that accounting programs teach statistics and limitations of data, make students tech aware, insist on a rigorous minor in either economics or finance or computer science, train students to zoom out and synthesize, place undergrads in financial planning and analysis jobs, include a year of field training, and teach true integrated reporting.
In sum, Rajgopal says that his recipe could transform accountants into more useful assets to their employers, thus increasing the wage rates that they command.