BSA Students' Academic Achievements Audit Competence · BSA Students' Academic Achievements vs Audit Competence Teresita Nadurata Accountancy Department De La Salle University-Manila

BSA Students' Academic Achievements vs Audit Competence

Teresita Nadurata Accountancy Department

De La Salle University-Manila

How graduates fare in the actual world of work and in professional examinations are concerns of an educational institution. Past researches show gaps between academic competence and workplace competence. Foreign accountancy journals mention similar competence gaps. These observations and remarks have led to the recommendation that the academe and the workplace jointly find means to bridge the gap between academic preparation and practical application.

How do Accountancy graduates of De La Salle University (DLSU) fare in so far as competence in audit work is concerned? Has their accounting education at DLSU adequately prepared them to cope with various practical situations of audit work and the CPA board examinations?

This study was undertaken to analyze and predict the performance of DLSU Accountancy graduates in auditing firms and in Auditing Theory & Auditing Problem in the CPA board examinations.

Objectives of the Study The study was designed to analyze and to determine the

significant predictors of the performance of the DLSU accountancy graduates in auditing firms and in CPA Board Examinations.

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58 Academic Achievements vs Audit Competence

Specifically, this study sought to answer the following questions: 1. What is the level of audit competence of DLSU accountancy

graduates 1.1 as perceived by the auditing firms? 1.2 as measured by CPA Board Examination results in

Auditing Theory and Auditing Problems? 2. Which of the following are significant predictors of audit

competence? a. general knowledge b. business knowledge c. accounting and accounting related knowledge d. information technology knowledge e. Grade Point Average (GPA) f. CPA exam grade in auditing theory g. CPA exam grade in auditing problem

Theoretical Framework One significant guideline issued in 1991 by the Education

Committee of the International Federation of Accountants (IFAC) was the guideline on Prequalification Education, Assessment of Professional Competence and Practical Requirements of Professional Accountants. This was revised in 1996. Based on the revised guidelines, the goal of accounting education and experience was to produce competent professional accountants capable of making a positive contribution over their lifetimes to the profession and society in which they worked. The education and experience of professional accountants was to provide a foundation of knowledge, skills and professional values that would enable them to continue learning and adapting to change throughout their professional lives.

The IFAC guidelines of 1996 provided the elements of accounting education as presented in the Goal and Structure of Prequalification Education and Experience of Professional Accountants (see Figure 1 ).

General Education Knowledge General education knowledge focuses on the development

of general knowledge, intellectual skills, interpersonal skills, and communication skills through a broad range of subjects

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Teresita Nadurata 59

Professional Values •Professional ethics and values

/ -----------Entry requirements General education Professional education Assessment Experience requirements

Figure I. Goal and Structure of Prequalification Education and Experience of Professional Accountants

that provide students with a grounding in the arts, the sciences and humanities. General education is the foundation of broadbased knowledge for individuals who think and communicate effectively and who conduct inquiry, carry out logical and critical thinking and exercise good judgment (I FAG Guidelines, 1996). This is sometimes known as the liberal arts model (Rezaee, 1994) which focuses on broadening general education knowledge and skills through advanced and writing courses.

The general education knowledge core provides the student with basic knowledge of human behavior; experience in inquiry and evaluation of quantitative data; an appreciation of art, literature and science; ability to carry out logical, critical thinking



and judgment; experience in making value judgments (IFAC Guidelines, 1996).

Organization and Business Knowledge Organization and business knowledge provides the context

in which professional accountants work. It provides a broad knowledge of business, government, and non-profit organizations-how they are organized, financed, managed, and the environment in which they operate. It provides prospective professional accountants with knowledge of the environments in which the employers or clients work (IFAC Guidelines, 1996). This is sometimes known as the business model (Rezaee, 1994 ). This puts emphasis on knowledge and technical skills on courses related to business administration.

Organization and business knowledge provides the students with a knowledge of macro- and micro-economics, application of quantitative methods and statistics to business problems, group dynamics, methods of creating and managing change, personnel management, operations management, organizational strategy, marketing and international trade and finance.

Information Technology Knowledge The information technology knowledge core provides

students with the knowledge and skills to evaluate information technology and systems and to provide input into the design and management of these systems. It provides the prospective accountant with a knowledge of hardware and software products, information system operations and management processes, and the skills required to apply these products and processes to the task of information system development, management and control.

Accounting and Accounting-Related Knowledge The accounting and accounting-related knowledge core

develops and integrates the knowledge, skills and professional values from general education and other core areas into the accounting subject areas. It provides students with the theoretical and technical accounting knowledge and professional ethics and values sufficient to pursue careers as professional accountants. It should include: (a) history of the accounting

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profession and accounting thought; {b) content, concepts, structure and meaning of reporting for organizational operations; (c) national and international auditing standards; (d) financial management; (e) environmental factors; (f) ethical and professional responsibilities; (g) concepts, methods and processes of control; {h) nature of auditing and other attest services; and (i) financial statement analysis {IFAC Guidelines, 1996). This is sometimes known as the accounting model (Rezaee, 1994 ). It provides additional knowledge, technical skills, and specialization in accounting.

Competence Competence is based on action, behavior or outcome in a

form that is capable of demonstration, observation and assessment as defined by Maclure and Nories (1991 ). It is determined by the graduate-employees and employers and seen as a structure of abilities with potentials for development.

Audit competence is viewed as the average rating by auditors or auditing firms of their staff based on the performance appraisal guides that specifically include areas like technical and professional competence, understanding business, facilitating teamwork, developing relationship, and self-development.

Audit competence is also measured by the ratings of the graduates in the CPA board examinations in Auditing Theory and Auditing Problems.

The study hypothesized that level of audit competence in auditing firms would be affected by independent variables like grade point average in college and CPA grades in auditing theory and auditing problems. The relationship between the different variables is shown in Figure 2.

The paradigm substantially shows the hypothesized relationship between the graduates' academic performance in the different components of the accounting curriculum at DLSU and their audit competence as perceived by their employers in selected auditing firms and their performance in the CPA Board Examinations. Independent variables in the school include the graduates' performance in terms of the overall grade point average and the graduates' performance in terms of individual grades in general knowledge, business knowledge •. 'accounting and accounting-related knowledge and information technology knowledge.

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DEPENDENT VARIABLES INDEPENDENT VARIABLES

Audit Competence Student's Academic Achievement

• Performance in Auditing Firms • Overall GPA ~ Knowledge • Individual Grades

• Professional/ • General Knowledge Technical Competence • Business Knowledge

• Understanding Business ' • Information Technology ~ Skills Knowledge

• Facilitating Teamwork • Accounting and Accounting ~ Values Related Knowledge

• Developing Relationships

• Self-Development

• CPA Exam Grades ~ Auditing Theory ~ Auditing Problem

Figure 2. Relationship Between the Different Variables

The dependent variables, on the other hand, refer to the audit competence of the graduates in selected auditing firms based on the analysis of performance appraisal by auditing firms and the CPA board examination grades. The areas covered in the performance appraisal are professional and technical competence, understanding business, facilitating teamwork, developing relationship and self-development.

In line with professional competence, the auditing firm expects the staff to develop strong basic skills in accounting and audit, business and financial controls, and other technical areas; understand the reasons for the tasks to be performed; learn the firm's policies and methodologies; become knowledgeable about the firm's resources and use them; gather, summarize, and examine data or information; identify implications of the examination and document findings; develop an understanding of micro-computer and related technology and to apply this knowledge; and develop an awareness of business ethics.

In the area of understanding the business, the auditing firm expects the staff to develop good basic business skills and appropriate industry knowledge; look for opportunities to be creative and innovative in serving clients; ask questions to gain a better understanding of issues and concerns; listen for needs; learn about the client's business and industry; become familiar

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with technical issues specific to the client and apply a healthy skepticism to information received and the results of work performed during the course of an engagement.

The staff is expected to facilitate teamwork by contributing to team effort, sharing responsibility for team results, and exhibiting a positive attitude; understand what is expected of the staff on the engagement team; meet and try to exceed the expectations of the client, manager, and senior; seek additional work during available time at the client site or at the office and help peers with their work when possible.

In the area of developing and maintaining relationships, the staff is expected to demonstrate a caring and enthusiastic attitude about the client's people and the client's business; take an interest in the client and recognize the role of the staff in maintaining client relationship; use good listening skills to build rapport and good working relationship with peers in the client's organization.

In line with self-development, the staff is expected to take responsibility for the development of their own skills; set annual personal and professional goals and measure themselves against these goals; build and maintain a habit of continuous learning; learn to manage their own time effectively; analyze specific feedback on performance and act upon it; take responsibility for personal training by attendance and active participation in training meetings; build and cultivate strong personal relationships with peers in the organization and in the business community; seek opportunities for increased responsibility and challenging assignments; work toward obtaining appropriate professional certification and demonstrate English language skills.

The CPA Board Examination is a means of determining the audit competence of the graduates in the area of Auditing Theory and Auditing Problems. The CPA syllabus for Auditing Theory covers topics on an overview of auditing; the professional practice of accounting; the CPA's professional responsibilities; the audit process; the internal control structure; audit objectives, evidence, procedures and techniques; audit working papers and sampling; auditing in the EDP environment; completing the audit and audit reports and other services of a CPA. The CPA syllabus for Auditing Problems covers topics on audit process and audit planning; test of controls of the revenue and collection cycle, expenditure cycle, financing and investment cycles; substantive tests of asset



accounts, liabilities, stockholders' equity, and income statement accounts, and completing the audit and audit report.

Method The study used the descriptive-correlational research

method to analyze the relationship between auditing competence as perceived by auditing firms and as measured by the CPA board examinations and the students' academic achievement indicated by the grades in their transcript of records. For students' academic achievement, GPA, general knowledge, business knowledge, accounting and accounting-related knowledge and information technology knowledge were components that were described based on the DLSU curriculum. For performance in auditing firms, professional competence, understanding business, facilitating teamwork, developing relationships and self-development were described based on the staff career continuum. For CPA Board Examination results, the coverages of Auditing Theory and Auditing Problems in the CPA syllabus were presented. The correlational method using canonical correlation and multiple regression was used to correlate the relationship between the performance in auditing firms and performance in the CPA Board Examinations and the students' academic achievement in the different components of the accounting curriculum. This method was also used to determine the significant predictors of audit competence.

Graduates of DLSU employed as of May, 1998 in four selected auditing firms in Makati were subjects of this study. The study included 132 graduates, 1 03 of whom were employed in Firm A, 9 in Firm B, 15 in Firm C and 5 in Firm D. These firms were selected based on the recruitment list of the DLSU Office of Career Services and on the files of the Accountancy Department. There were nine listed auditing firms. Of these nine, only the firms which had five or more DLSU graduates with staff and supervisory positions were included in this study. These 132 subjects graduated within the years 1991 to 1997. These who graduated within the years 1991 to 1993 were covered by department policies of SY 1987 to 1990 while graduates from 1994 to 1997 were covered by department policies of SY 1991-1993. The principal sources of data were documents such as Transcript of Records, PRC Records of Grade in Auditing Theory



and Auditing Problems and the results of the performance appraisal done by auditing firms. The transcripts of record of the graduates were requested from the University Registrar. The grades of students were grouped into the following categories: general knowledge, business knowledge, information technology knowledge, and accounting and accounting related knowledge. CPA board examination grades in Auditing Theory and Auditing Problem were traced from the files of the Accountancy Department and files of the Professional Regulation Commission (PRC). Performance appraisal forms were provided by the selected auditing firms. The performance appraisal form is an instrument used by auditing firms in evaluating the over-all performances of their staff in terms of abilities, skills and attitudes. The ratings indicate whether the staff meets expectations of auditing firms in relation to clients specifically assigned to them. The researcher summarized the different areas covered in the firms' appraisal forms namely professional competence, understanding business, facilitating teamwork, developing relationship and self-development.

Photocopies of the Transcripts of Record of the DLSU graduates employed in the firms were requested from the University Registrar. These became the bases of the GPA and individual grades. The subjects in the transcripts of record were grouped into general knowledge, business knowledge, information technology knowledge and accounting and accounting-related knowledge. The average for each of these four components was then computed and used, together with the GPA, as the bases in measuring the students' academic achievement.

The ratings of these DLSU graduates in Auditing Theory and Auditing Problems were picked out and such ratings measured the level of audit competence in the CPA Board Examinations. The results from the performance appraisal forms used by the selected auditing finms were derived in this manner: Finm A, where 103 subjects were employed, allowed the researcher to summarize the results in working papers prepared within the auditing firm's premises. The other three firms sent only the summarized results to the researcher based on the five areas of professional competence, understanding business, facilitating teamwork, developing relationship and self-development. The ratings were used to determine the level of competence as perceived by auditing firms.



To measure the level of competence as perceived by auditing firms and as measured by the CPA Board Examinations, the study used the descriptive method. This method utilized means and standard deviations. To determine the relationship between students' academic achievement in general knowledge, business knowledge, information technology knowledge and accounting and accounting related knowledge and performance in auditing firms and in the CPA Board Examinations and to determine the significant predictors of audit competence, the study used canonical correlation and multiple regression. Canonical correlation analysis was used to study the interrelationships among sets of multiple criterion variables: levels of competence in auditing firms and in the CPA board examinations and the multiple predictor variables general knowledge, business knowledge, information technology knowledge and accounting and accounting related knowledge. Multiple regression was used to determine the significant predictors of the criterion variables.

Results and Discussion An examination of the results of the study on the graduates'

levels of audit competence and on correlates and predictors of their audit competence as perceived by auditing firms and as measured by the CPA board examinations, together with a discussion of implications of the study for the improvement of the accounting program in the respondent school, is presented.

1. Level of competence as perceived by auditing firms. Performance in auditing firms is measured by ratings on

professional competence, understanding business, facilitating teamwork, developing relationship and self-development shown in Table 1.

Findings on the level of competence as perceived by auditing firms show that the graduates' performance mean is 3.923, a rating which highly meets expectations of clients and auditing firms. Appraisal criteria on developing relationships, facilitating teamwork and self-development were rated higher than professional competence and understanding business. These means that theories/concepts learned in the classroom were applied well in the workplace.



Table 1 Means and Standard Deviations of Graduates' Performance

Ratings in Auditing Firms

Performance in Auditing Means Verbal Interpretation Standard Firms Deviation

Professional Competence 3.907 meets expectations, high .557 Understanding Business 3.867 meets expectations, high .523 Facilitating Teamwork 3.958 meets expectations, high .617 Developing Relationships 3.981 meets expectations, high .645 Self-Development 3.909 meets expectations, high .583 Average 3.923 meets expectations, high

Ratings under the area of Understanding Business had the smallest standard deviation (.523), indicating the relative homogeneity of the employers' ratings as compared with those in the other areas especially Developing Relationships which showed the highest standard deviation (.645).

2. Level of competence as measured by the CPA Board Examinations. Performance in the CPA Board Examinations is measured

by grades in Auditing Theory and Auditing Problems. Findings show that the average level of competence in

auditing as measured by the CPA Board Examination is estimated at 80%. This means that the graduates' performance in auditing in the CPA Board Examinations is satisfactory. The means of ratings of graduates employed in auditing firms can

Table 2 Means and Standard Deviations of Graduates' Performance Ratings in the CPA Board Examination Subjects, Auditing

Theory and Auditing Problems

Performance In CPA Verbal Standard Board Examination Percentage Interpretation Deviation

Auditing Theory 81.598 Satisfactory 11.665 Auditing Problems 79.083 Satisfactory 8.085 Average 80 Satisfactory

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be compared with the performance of all DLSU graduates who took the exams during the years 1991 to 1997 which is 79.83% in Auditing Theory and 76.37% in Auditing Problems as shown in the appendix.

Auditing Theory shows a bigger standard deviation of 11.665 compared to the standard deviation of auditing problems computed at 8.085. Therefore, ratings for Auditing Theory are ratings spread farther apart while ratings for Auditing Problem are ratings close together.

3. Students' Academic Achievement

Table 3 Means and Standard Deviations of Students' Grades in

Different Components of the DLSU Accounting Curriculum

Student's Academic Verbal Standard Achievements Means Interpretation Deviation

GPA 2.488 Satisfactory .420 General Knowledge 2.892 Good .358 Business Knowledge 2.279 SatiEfactory .432

Information Technology Knowledge 2.765 Good .468

Accounting and Accounting-Related Knowledge 2.016 Satisfactory .526

Table 3, which shows the students' academic achievement reflects that the grade point average of DLSU graduates is 2.488 which is described as satisfactory. The means of graduates' grades in general knowledge and information technology knowledge are described as good while the means of their grades in business knowledge and accounting and accounting-related knowledge are described as satisfactory. The mean of their grades in accounting and accounting-related knowledge is the lowest. This may be attributed to the grading system used, difficulty of these subjects, and the department's grade policies.

Accounting and accounting-related knowledge shows the biggest standard deviation implying that grades are spread farther apart. Grades in general knowledge show the smallest standard

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deviation implying that grades are close together. Years 1994, 1995 and 1996 show bigger standard deviations which means that graduates included in the study during these years have grades spread farther apart.

4. Relationship Between Performance in Auditing Firms and Students' Academic Achievement (Specific Areas) The correlation results reveal that the variables that had

significant relationships with professional competence, understanding business, facilitating teamwork, developing relationships and self-development are general knowledge (r = .4194, p.OOO), business knowledge (r = .4006, p.OOO), accounting and accounting-related knowledge (r = .2977, p.001) and GPA

Table 4 Correlation Table of Performance in

Auditing Firms and Students' Academic Achievement

Criterion Variable Predictor Variables

Performance Acctg. & Information in Auditing General Business Acctg.-Related Technology

Firms Knowledge Knowledge Knowledge Knowledge GPA

Professional r.4208 r.4319 r.3356 r.l641 r.4638 Competence P.OOO P.OOO P.OOO P.061 P.OOO

Understanding r.3472 r.3537 r.2735 r.l681 r.3679 Business P.OOO P.OOO P.002 P.054 P.OOO

Facilitating r.3640 r.3500 r.2447 r.0629 r.3477 Teamwork P.OOO P.OOO P.005 P.476 P.OOO

Developing r.3958 r.3724 r.2893 r.0502 r.3694 Relationship P.OOO P.OOO P.OOl P.569 P.OOO

Self- r.4167 r.3558 r.2451 r.l386 r.3823 Development P.OOO P.OOO P.005 P.ll4 P.OOO

Average r.4194 r.4006 r.2977 r.l224 r.4141 P.OOO P.OOO P.OOl P.l64 P.OOO

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(r= .4141, p.OOO). Information technology knowledge (r= .1224, p.164) had no significant relationship with the performance in selected auditing firms. This means that the impact of information technology was still growing over the years 1991-1997. The computer applications were required for specific accounting subjects only and the audits of computerized records of clients were limited. The correlation table shows that the variable with the highest significant relationship with professional competence and understanding business is GPA (r = .4638, p.OOO and r = .3679, p.OOO). The variable with the lowest significant relationship with professional competence and understanding business is accounting and accounting-related knowledge (r = .3356, p.OOO and r = .2735, p.002). This means that the overall professional competence of the graduates in the auditing firms depends on the contribution that comes from general knowledge, business knowledge and accounting and accounting-related knowledge. This means further that professional competence in auditing firms is not limited to accounting and accounting-related knowledge. Accounting and accounting related knowledge is strengthened by general knowledge and business knowledge. The findings of the correlational analysis lead to the rejection of the hypothesis that there is no significant relationship between each of the following levels of audit competence, professional/technical competence, understanding business, facilitating teamwork, developing relationship, self-development and the graduates' academic performance in the areas of general knowledge, business knowledge, information technology knowledge, and accounting and accounting-related knowledge.

5. Relationship Between Performance in CPA Board Examinations and Students' Academic Achievement (Specific Areas)

The relationship between performance in CPA Board Examinations and students' academic performance shown in Table 5 denotes a significant positive correlation with general knowledge (r = .3503, p.OOO), business knowledge (r = .4283, p.OOO), accounting and accounting related knowledge (r= .5366, p.OOO), information technology knowledge (r= .2221, p.0111) and GPA (r = .4800, p.OOO). The variable that had the highest significant relationship with students' academic performance is

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Table 5 Correlation Table of Performance in CPA Board

Examinations and Stndents' Academic Achievement

Criterion Variable Predictor Variables

Performance Acctg. & Information in Auditing General Business Acctg. Related Technology

Firms Knowledge Knowledge Knowledge Knowledge

Auditing r.2822 r.3378 r.4102 r.2168 Theory P.OOI P.OOO P.OOO P.Ol3

Auditing r.l878 r.234 r.2839 r.0821 Problems P.OJI P.OOO P.OOI P.351

Average r.3503 r.4283 r.5366 r.2221 P.OOO P.OOO P.OOO P.Oll

GPA

r.3929 P.OOO

r.2383 P.006

r.4800 P.OOO

accounting and accounting-related knowledge. This means that CPA Board Examinations primarily test the graduates' competence in accounting and accounting-related knowledge. The relationship is high because more units of accounting subjects are offered at DLSU as compared with the CHED's requirement. Moreover, the unique feature of offering integrated accounting courses is a preliminary step leading to the regular CPA Review course. Passing the comprehensive examinations in the undergraduate course is a requirement before enrolling in the integrated accounting courses.

The correlation table results show that the variables with significant positive correlation with performance in the CPA Board Examinations are general knowledge, business knowledge, accounting and accounting-related knowledge, information technology knowledge and GPA. This means that a well-rounded curriculum affects the overall performance of our graduates in the CPA Board Examinations in Auditing Theory and Auditing Problems. The variable with the highest significant relationship with performance in Auditing Theory is accounting and accountingrelated knowledge while the variable with the lowest significant



relationship with performance in Auditing Theory is information technology knowledge. Accounting and accounting-related knowledge exhibits the highest significant relationship with CPA performance probably because the CPA questions are based on topics covered by the CPA syllabi which accounting teachers considered in the preparation of the undergraduate accounting syllabi. Information technology knowledge has the lowest significant relationship with CPA performance in Auditing Theory. This may be interpreted to mean that over the years from 1991 to 1997, questions on information technology knowledge were limited and the CPA syllabus requirement on information technology was only fair knowledge of the topic. Dummy 4 had a significant relationship with performance in Auditing Theory. Specifically, those who graduated in 1994 were covered by policies of schoolyear 1991-1992 when the qualifying examination was re-adopted.

The variable with the highest significant relationship with performance in Auditing Problem is business knowledge. This means that the graduates were equipped with an adequate understanding of concepts and practices affecting the business environment. Accounting requires thorough understanding of the clients' business. The variable with no significant relationship with performance in Auditing Problems is information technology knowledge. The summary problems given in the CPA Board Examination subject, Auditing Problems, were problems relating to clients using manual records instead of computerized records.

6. Predictors of Audit Competence in Auditing firms using Multiple Regression

The regression models for the prediction of audit competence in auditing firms are presented as follows:

Table 6.1 Predictors of Professional Competence

Professional b beta Standard Competente MR Coefficient Regression Error of T- Prob

Coefficient Coefficient test

Predictors GPA .4643 .563490 .423557 .104954 5.369 .000 Auditing Problems .4953 .008550 .177350 .003803 2.248 .0263 Constant 1.809278 .358808 5.042 .000



The correlation coefficient between professional competence and GPA was .563490 (F = 35.44, df = 2, p<.01 ). On the other hand, the correlation coefficient between Professional Competence and Auditing Problems was .008550 (F = 20.80, df= 2, p.05). The variable with the highest significant predictor of professional competence was GPA while the variable with the lowest significant contribution was Auditing Problems.

Table 6.2 Predictor of Understanding Business

Understanding beta Standard Business b Regression Error of T· Prob

MR Coefficient Coefficient Coefficient test

Predictors GPA .3674 .458731 .367401 .102243 4.487 .000 Constant 2.726380 .257674 10.581 .000

The correlation coefficient between Understanding Business and GPA was .36740 (F = 20.13, df = 1, p<.01 ). The variable considered as the highest significant predictor is GPA.

Table 6.3 Predictors of Facilitating Teamwork

Facilitating beta Standard Teamwork b Regression Error of T· Prob


Predictors General Knowledge .3652 .579845 .335248 .142279 4.075 .0001 Auditing Problems .4014 .009028 .169085 .004392 2.055 .0419 Constant 1.546754 3.111 .0023

The correlation coefficient between Facilitating Teamwork and General Knowledge was .579845 (F = 12.28986, df = 2, p<.01 ). On the other hand, the correlation of coefficient of Auditing Problems was .009028 (F = 19.858, df= 2, p<.01 ). This highest significant predictor of Facilitating Teamwork was general knowledge while the lowest significant contributor to Facilitating Teamwork was Auditing Problems.



Table 6.4 Predictor of Developing Relationships

Developing beta Standard Relationship b Regression Error of T- Prob


Predictors General Knowledge .3973 .718299 .397286 .146085 4.917 .000 Constant 1.905800 .425233 4.482 .000

The correlation coefficient between Developing Relationship and General Knowledge was .718299 (F = 24.17685, df = 2, p<.01 ).

Table 6.5 Predictor of Self-Development

Self beta Standard Development b Regression Error of T- Prob


Predictors General Knowledge .4173 .681677 .417288 .130708 5.215 .000 Constant 1.939080 .380474 5.096 .000

The correlation coefficient between Self -Development and General Knowledge was .681677 (F = 27.19878, df= 1, p<.01 ).

The correlation coefficients between Auditing Theory and Information Technology Knowledge, Accounting and Accounting

Table 6.6 Predictors of Auditing Theory

Auditing beta Standard Theory b Regression Error of T- Prob


Predictors Information .4220 2.769488 .159749 1.357375 2.040 .0434

Technology Accounting &

accounting- .4581 6.082801 .391561 1.212241 4.997 .0000 related knowledge

Dummy 4 (1994) .4847 3.445212 .172550 1.553614 2.218 .0284 Constant 58.525420 4.256296 13.750 .0000



Related Knowledge and Dummy 4 were 2.769488 (F = 12.996, df = 3, p<.01 ), 6.082801 (F = 27.942, df= 3, p<.01 ), and 3.445212 (F = 16.933, df = 3, p<.01 ), respectively. Accounting and accounting-related Knowledge coefficient was highly significant at .01 level while Information Technology and Dummy 4 coefficient are significant at .051evel. The variable with the highest significant contribution to Auditing Theory was Accounting and accounting related Knowledge. The lowest contribution came from Information Technology Knowledge.

Table 6.14 Predictor of Auditing Problem

Auditing beta Standard Problems b Regression Error of T· Prob


Predictors Business .3 t 52 8.434116 .315283 2.235161 3.773 .0002 Knowledge 60.676997 5.591225 10.852 .0000 Constant

The correlation coefficient between Auditing Problem and Business Knowledge is 8.434116 (F = 14.23841, df = 1, p<.01 ).

The results of multiple regression analyses revealed that GPA was the significant predictor of professional competence and understanding business. This substantiates the relative importance of all components affecting students' academic achievements. It revealed further that General Knowledge was the significant predictor of facilitating teamwork; developing relationships and self-development. This stresses the contribution of liberal arts or general knowledge in skills and value building.

7. Predictors of Performance in Auditing Firms and in CPA Board Examinations using canonical correlation analysis

Two prediction models were derived through canonical correlation analysis:

The canonical weights of Auditing Theory and Auditing Problems are correlated with the canonical weights of grade point average, general ~howledge, business knowledge, information technology knowledge



and accounting and accounting-related knowledge (Model 1 ).

The canonical weights of Professional Competence, Understanding Business, Facilitating Teamwork, Developing Relationships and Self-Development are correlated with the canonical weights of GPA, General Knowledge, Business Knowledge, Information Technology Knowledge and Accounting and Accounting Related Knowledge (Model 2).

The first canonical correlation model is the correlation between -0.796562 Auditing Theory -.0.632972 Auditing Problem and -.647905 Grade Point Average + 0.051742 General Knowledge + 0.309204 Business Knowledge - 0.231581 Information Technology Knowledge- 0.667587 Accounting and accounting Related Knowledge.

Table 7.1

STATISTICAL CANONICAL ANALYSIS Canonical Weights. left set

Root Variable Root I Root 2

Auditing Theory ·.796562 ·.605563 Auditing Problems -.632972 .774960

STATISTICAL CANONICAL ANALYSIS Canonical Weights, right set

Root Variable Root I Root2

GPA ·.647909 -1.50459 General Knowledge .05 I 742 -.49824 Business Knowledge .309204 1.90295 Information Tech. Knowledge ·.231581 -.56891 Accounting & Accounting- -.667587 .45543

Related Knowledge

Since the weights were standardized, we could see that Accounting and Accounting-Related Knowledge was the first strongest negative predictor and GPA was the second strongest negative predictor to CPA Board Examination variables (Table 7.1 ).



Canonical Summary Model 1 results imply that accounting and accounting-related knowledge being the strongest negative predictor to the CPA Board exam variables should not be regarded by accounting curriculum planners as the sole predictor. Another implication is the emphasis to be given to accounting and accounting-related knowledge during the CPA review in preparation for the CPA exams.

The second canonical correlation model summarized the correlation between -0.150471 Under + 0.371794 Developing Relationships- 0.105917 Facilitating Teamwork+ 0.628603 Professional Competence + 0.34898 Self-Development = 0.214348 Grade Point Average+ 0.418277 General Knowledge + 0.094477 Business Knowledge - 0.011665 Information Technology Knowledge+ 0.435170 Accounting and Accounting Related Knowledge.

Table 7.2

STATISTICAL CANONICAL ANALYSIS Canonical Weights, left set

Root Variable Root I Root 2 Root 3 Root 4 Root 5

Understanding Business -.I50471 1.35565 .191246 1.78804 -.24181 Developing Relationships .371794 -1.23713 -.820462 .44833 -1.78021 Facilitating Teamwork -.I05917 -.94551 -.126892 -.11854 2.17774 Professional Competence .628603 .67074 -.815975 -.90977 -.03847 Self- Development .348018 .I9147 1.654966 -1.06020 .02600

STATISTICAL CANONICAL ANALYSTS Canonical Weights, left set

Root Variable Root I Root 2 Root 3 Root 4 Root 5

GPA .2I4348 1.196683 -.019480 -3.033I5 .77886 General Knowledge .418277 -.763029 1.273474 .047I81 -.73367 Business Knowledge .094477 -.969856 -.982724 2.020I9 1.09458 Information Technology

Knowledge ·.011665 .813196 .495640 .70082 -.23063 Accounting & Accounting

Related Knowledge .435170 .219194 -.429444 .54058 -1.18105

The above results showed that accounting and accountingrelated knowledge was the strongest positive predictor of the performance in Auditing Firms variable while general knowledge was the second strongest positive contributor (Table 7.2).



Canonical summary Model 2 results show that accounting and accounting-related knowledge and general knowledge are the significant predictors of performance in auditing firms. This implies that the accounting and accounting-related knowledge core develops and integrates the knowledge, skills and professional values from general education.

Conclusions The DLSU accounting graduates are performing well in

auditing firms and in the CPA Board Examinations. The auditing firms consider their performance as above average. Their marks in the CPA Board Examinations are satisfactory. Therefore, the DLSU accounting program prepares its graduates adequately to perform at a level highly meeting expectations of clients and auditing firms. DLSU graduates continue to contribute to the higher DLSU passing percentage in the CPA Board Examinations.

Recommendations Based on the summary and conclusion, the following

recommendations are made: 1. The results of the study show that the level of audit

competence in auditing firms highly meets expectations of auditing firms and that lower ratings have been given by auditing firms to professional competence and understanding business. Since the DLSU Accountancy Department aims to prepare graduates for performance that exceeds expectations of auditing firms, the researcher recommends the follow-up of stronger linkages with industry through: a. Conduct of practicum on simulated or actual audit

engagements with clients using computerized records covered by agreements between the Accountancy Department and the industry. The simulated audit engagement presently adopted by the department uses manual records. The Accountancy Department converted the requirement of the practicum from optional to mandatory.

b. Team-teaching with practitioners on topics like accounting and auditing contemporary issues and trends. The department previously used the seminar approach.

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c. Provision of summer workshops on audit training and audit of computerized records to be conducted by audit firms for faculty. These workshops may be requested again from auditing firms.

d. Revision of practicum syllabus jointly with industry so the syllabus will include inputs of faculty and industry representatives in the light of information technology changes and global competition.

e. The institutionalization of more dialogues between the Accountancy Department and industry representatives to determine strengths and weaknesses of graduates in an attempt to improve their level of competence in the industry.

2. The study found out that the level of audit competence in the CPA board examination subjects Auditing Theory and Auditing Problems is satisfactory. Aiming at excellent marks of graduates in the CPA board examinations, this study recommends the offering of the CPA Board Examination review class twice a year to meet the needs of the April and December graduates. At present, the Accountancy Department offers the CPA review class only once.

3. The study pointed out that the significant predictor of average performance in auditing firms is General Knowledge. The significant predictor of professional competence and understanding business is GPA. The significant predictor of Facilitating Teamwork, Developing Relationships and SelfDevelopment is General Knowledge. The researcher recommends the development of world-class outlook through updating of the curriculum and the use of an interdisciplinary approach to teaching. Accounting curriculum planners may invite representatives from liberal arts, business and information technology groups during the updating or revision of the accounting curriculum. The overall professional competence of the graduates in the auditing firms depends on the contribution that comes from general knowledge, business knowledge, and accounting and accounting-related knowledge.

4. The results of the present study showed that Accounting and Accounting Related Knowledge is the significant predictor of performance in CPA examination. The study recommends

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that the accounting and accounting-related knowledge courses be strengthened through: a. Periodic review of the integrated accounting courses.

At present, the department offers only integrated accounting courses for financial accounting, advanced accounting and auditing. An integrated accounting course in Management Services is recommended. Integrated accounting courses will serve as a preliminary review course.

b. Earlier exposure of the faculty and students to the CPA syllabi. The CPA syllabi should be considered during syllabi revisions. For example, the CPA level of knowledge requirement on information technology knowledge has been changed from fair to adequate knowledge. More questions on computer applications are now given in the CPA board examinations. Another example is the Auditing Problem emphasis on transaction - cycle approach auditing. The other approach is the financial statement sequence.

c. Continued dialogues with CPA examiners to discuss the salient revisions of the CPA syllabi and to discuss the strengths and weaknesses of CPA candidates. These dialogues will provide inputs on innovations or improvements of the accounting program.

5. The study showed that Information Technology Knowledge had no significant relationship with performance in auditing firms and CPA board examinations. The graduates covered by the study had fewer units in computer applications, conducted audits of clients with manual records and met limited questions in information technology during the CPA exams. The present technological changes and expansion of CPA services warrant the recommendation of computer applications in all accounting and accounting related knowledge. The entry of computerized records and paperless accounting will probably make information technology knowledge significant in relation with performance in auditing firms. Also, the inclusion of more questions on information technology in CPA Board examinations as discussed during dialogues with CPA examiners will possibly change the nonsignificant relationship of information technology knowledge



with performance in the CPA board examination in future studies.

6. The results on students' academic achievement showed the lowest grade for accounting and accounting related knowledge. The researcher recommends the conduct of follow-up studies on the factors affecting low accounting grades, measures to improve the mean of accounting and accounting-related knowledge and other factors that may be attributed to variances of predictands not covered in the study.

7. The correlation results showed that variances of predictands may be due to other factors not covered in the study. These factors may be the subject of future studies.

REFERENCES

Books Wolf, A. (1995). Competence-Based Assessment. Buckingham:

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Mastera/ Theses/Dissertations/Research Incentive Papers Bernados, H. A. (1997). A continuing evaluation of the

performance of DLSU examinees in the CPA Licensure Examination for the period May 1994 to October 1995. Research Incentive Paper, De La Salle University, Manila.

_______ .(1992). The performance of De La Salle University examinees in the CPA Licensure Examination for the period May 1984 to October 1988. Unpublished Masteral Thesis, University of the East, Manila.

------:-::-_.(1992). An assessment of the accounting program of the College of Business and Economics of De La Salle University from May 1984 to October 1988. Research Incentive Paper, De La Salle University, Manila.

McCormack. (1995). A Study of DLSU Alumni's perceived communication competence in the workplace and its implications for Business English syllabus design. Unpublished doctoral dissertation, De La Salle University, Manila

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Study Abstracts Dunn, Marcus, Hall, & Thomas. (1984). An empirical analysis

of the relationship between CPA Examination candidate attributes and candidate performance. The Accounting Review, 59 (4), 674-688.

Higley, W. & Baker, R. (1994). A comparative analysis of professional education and licensure preparation. Issues in Accounting Education, 220-236.

Kanter and Pitman. (1987). An auditing curriculum for the future. Issues in Accounting Educations, Fall, 251-263.

Yavas, U. (1996). Image of auditing as a field of study and a career among college students. Managerial Auditing Journal, 11 (5).

Others 1993 Conference Paper of Farhad Simyar. Prequalification

Education in the Accounting Profession for the year 2000 and Beyond: A Strategic Framework.

1996 IFAC Guidelines on Pre-qualification Education Assessment of Professional Competence and Practical Experience of Professional Accountants.


Documents

BSA Students' Academic Achievements Audit Competence · BSA Students' Academic Achievements vs Audit Competence Teresita Nadurata Accountancy Department De La Salle University-Manila