The Aspen Institute Corporate Governance and Accountability Project: MBA Curriculum Reform in the Accounting Discipline Supported by the Alfred P. Sloan Foundation Presented by: Jane Cote, PhD Associate Professor – Accounting Washington State University
Accounting Measurement for Leaders Preparing MBA students with tools they will need as future business leaders.
Course Theme “What should be measured and How should it be measured?” • Accounting as a measurement discipline. • Builds on traditional accounting concepts to emphasize the consequences that choices made in the process of accounting measurement have on strategic direction, stakeholder commitments, and performance expectations.
Curriculum Design Philosophy • Focus on a few topics to be explored in depth, rather than exposure to a broad set of topics. • Students enter course with basic understanding of financial accounting. • WSU MBA program uses stakeholder theory as organizing framework for curriculum. • Faculty using these course materials can choose the extent to which they want to emphasize stakeholder issues.
Curriculum Design Philosophy – Continued • With a student population comprised mainly of mid-career professionals, class is enriched by encouraging them to bring their organizational issues into the classroom. • Live case format encourages students to identify important issues they are facing and create solutions using class framework. In essence, students are creating their own case studies.
WHAT IS IT THAT BUSINESS LEADERS NEED TO KNOW ABOUT MEASUREMENT? The course materials are presented in 6 modules. Professors can choose all or some of them to build their own course. • Causality and Measurement • Non-financial Performance Measurement • Internal Control and Risk Assessment. • Cost Behavior and Decision Making • Planning and Analysis • Activity Analysis
Causality & measurement • Primary Learning Goal: Demonstrate an understanding of causality with particular emphasis on how to identify causal linkages between inputs and outcomes. • “Freakonomics” by Levitt and Dubner serves as the primary reading. It demonstrates the concepts of causality and measurement using everyday language.
Non-Financial Performance Measurement • Primary Learning Goal: Develop a casual framework that demonstrates how to measure progress in achieving strategic goals can be measured. • The Balanced Scorecard is the tool used in this module. • Stakeholder issues take center stage in this module
Internal Control & Risk Assessment “History will be kind to me, for I intend to write it” – Winston Churchill • Here we change the focus from information relevance to reliability. • Primary Focus: Creating quality control environments. • Viewed through organizational & individual lens.
Cost Behavior & Decision Making • This is the first of the more traditional quantitative accounting topics. • Choices made about appropriate cost structure for a firm have long and short term consequences for risk and opportunities.
Planning & Analysis “One’s philosophy is not best expressed in words; it is expressed in the choices one makes” - Eleanor Roosevelt • This module provides many opportunities to look at how resource allocation decisions affect various stakeholder relationships. • The social and cultural dimensions of budgeting are also explored in this module.
Activity Analysis • Using the Activity Based Costing framework, we explore causality and measurement again. • Key takeaway is to understand how to determine which inputs lead to observed outputs. • Focus is on customers and customer profitability.
Summary This is but a quick snapshot of the teaching materials develop in this project. Themes running through this curriculum effort are: • Understanding causality is the key to meaningful measurement systems. • Measurement system design influences stakeholder relationships. Materials are available at http://www.caseplace.org/references/references_show.htm?doc_id=682995 and I would enjoy conversations with you about this project. You can contact me at firstname.lastname@example.org