Curriculum Tools for Tax Educators

Editor: Annette Nellen, CPA, Esq.

A completely revised Model Tax Curriculum and a new website with content from the AICPA’s Next Generation Task Force are among the new tools available to tax faculty seeking to modify their course offerings and to help prepare students to enter the accounting profession.

Revision of the Model Tax Curriculum

The AICPA’s Model Tax Curriculum (MTC) was first developed in 1996 and was modified in 1999; in 2007 it was completely revised. The original MTC was created because the AICPA’s Tax Education Committee was concerned with the topical coverage in the undergraduate tax curriculum, particularly the first tax course. Traditionally, the first tax course emphasized individual taxation while the second focused on business entities. The committee was concerned that if students took only one tax course, they would not be exposed to important business taxation topics. Although the original task force’s charge was to develop a model tax curriculum for both the undergraduate and graduate levels, it was to specifically focus on developing content recommendations for a single, stand-alone undergraduate tax course that might be a student’s only exposure to tax.

Both the original MTC and the 1999 version were very prescriptive, suggesting a list of technical topics and a recommended number of classroom hours for each topic. These early versions included recommendations for an introductory undergraduate tax course and an advanced tax course, as well as a detailed list of recommended topics for an MBA course, for a Masters of Accounting with tax emphasis, and for a Masters of Science in Taxation program.

Since the early versions of the MTC were developed, there have been a number of changes both in accounting education and in the profession. First, the AICPA released its Core Competency Framework, defining a set of skills-based competencies needed by all students entering the accounting profession. The framework is an online resource (see www.aicpa-eca.org) that educators can use in curriculum reform to help students develop the skills necessary to succeed in the accounting profession. These competencies are arranged into three broad categories:

1. Functional (including decision modeling, risk analysis, measurement, reporting, research, and leveraging technology to develop and improve functional competencies);
2. Personal (including professional de-meanor, problem solving and decision making, interaction, leadership, communication, project management, and leveraging technology to develop and improve personal competencies); and
3. Broad business perspective (including strategic and critical thinking, industry and sector perspectives, international and global perspectives, resource management, legal and regulatory perspectives, marketing and client focus, and leveraging technology to develop and enhance a broad business perspective).

Second, the implementation of the 150-hour requirement in more states affected the accounting curriculum, as did the introduction of the new computer-based CPA examination (see Dennis-Escoffier et al., “Preparing Students for the New CPA Examination,” 34 The Tax Adviser (February 2003): 108). The new online exam, and in particular the simulations, are intended to assess the skills required for entry-level CPAs. The skills tested on the CPA exam are shown in Exhibit 1, along with their related core competency.

Third, accreditation standards shifted from an input-driven model to a more flexible mission-driven model in which outcomes are evaluated. The Association for the Advancement of Collegiate Schools of Business (AACSB International) added an assurance of learning approach that requires programs to articulate their learning goals and to demonstrate through outcome-based assessments that students are meeting those goals.

Finally, the Enron and WorldCom bankruptcies and the enactment of the Sarbanes-Oxley Act expanded the knowledge base expectation of tax practitioners to include generally accepted accounting principles (GAAP) as they apply to tax accounting (see McGill and Outslay, “The GAAP in Tax Education: Integrating Tax and Financial Accounting in the Tax Curriculum,” 38 The Tax Adviser (February 2007): 118). The implementation of FIN 48 has made it more important than ever for tax students to have a good understanding of the relationship between financial accounting and tax.

To address this changing environment, the AICPA’s Pre-certification Education Executive Committee organized a joint task force of American Taxation Association (ATA) and AICPA members to revise the MTC. The task force surveyed all ATA members on the content and structure of their accounting curriculum’s tax component. The survey results (reported in Kern and Dennis-Escoffier, “Current Status of the Tax Curriculum in Accounting Programs,” 35 The Tax Adviser (November 2004): 712) indicated that the first tax course had little or no coverage of tax research, tax planning, business entity taxation, or the interaction between taxes and financial reporting. The results were discussed during a session at the ATA’s 2004 midyear meeting.

After considering input received at the meeting, the task force drafted a revised version of the MTC. This version was sent to all members of the ATA and the AICPA’s Tax Division for their input. Once changes were made, a revised MTC was sent to the ATA Board of Trustees and to the AICPA’s Pre-certification Education and Tax Executive Committees for their feedback and approval. The complete new MTC can be downloaded from here.

The primary objective of the new MTC is to help students understand taxation’s role in business decision making and financial reporting and to build a foundation for future learning in the tax field even if they do not plan to become tax professionals. The new MTC is significantly different from the earlier versions in that it does not prescribe the amount of time to be devoted to specific topics for each course. Instead, it begins with learning objectives and outcomes that a student should achieve before entering the profession. These are followed by a matrix, which maps the recommended learning outcomes to the AICPA core competencies and technical tax curriculum content. The technical content is based on the AICPA’s tax content specification outlines for the CPA exam, with some slight modifications.

The new MTC states that before entering the accounting profession, a student should have the ability to:

• Understand the rationale for tax laws and the multiple objectives of tax policy makers.
• Assess how taxes affect economic decisions for all taxpaying entities (including individuals, partnerships, and C and S corporations) (1) in the amount and timing of income recognition and deductions; (2) related to property transactions that generate recognized, deferred, or no taxable gains or losses; and (3) in choice of entity decisions.
• Analyze how taxes affect financial reporting, including:
  • Comparing and contrasting book and tax differences and how they affect tax-based and financial-reporting-based income statements and balance sheets;
  • Detecting issues under Statement of Financial Accounting Standards No. 109 (FAS 109), Accounting for Income Taxes, including applying the accounting standards for deter-mining deferred tax assets and liabilities;
  • Developing an awareness of internal control issues related to tax reporting.
• Develop a fundamental understanding of the components of taxable income determination across taxable entities so that the student builds a foundation for effectively learning future tax laws in order to implement future tax compliance and planning strategies.
• Draw supportable conclusions regarding tax issues by using research skills (including accessing and interpreting sources of authoritative support) to identify and evaluate strengths, weaknesses, and opportunities.
• Communicate tax conclusions and recommendations in a clear and concise manner to relevant stakeholders.
• Appreciate the professional and ethical obligations as well as community service opportunities for tax service providers.
• Improve his or her interpersonal skills.
• Develop technological skills necessary to undertake tax planning, compliance, and research strategies.

The MTC and the AICPA Core Competency Framework are basically consistent in that both emphasize skill building. They differ in that the MTC is specifically aimed at tax accounting while the framework is designed for accounting education in general. To assist tax educators in adopting the framework in their tax classes, the MTC includes a matrix that contains columns for each of its learning outcomes.

The first part of the matrix lists the competencies in the framework and then indicates which of the learning outcomes are related to each of the competencies. (See Exhibit 2 for a section of the matrix.) For example, the matrix shows that the MTC learning outcome “analyze how taxes affect financial reporting” is related to functional competencies of risk analysis, measurement, reporting, and several other competencies not reflected in the exhibit.

The second part of the MTC matrix relates the learning outcomes to 12 broad technical categories, with topics under each category identifying more specific technical issues (see Exhibit 3, p. 113, for the list of topics). The matrix indicates which of the MTC learning outcomes are related to technical topics that might be used to help achieve the learning outcomes. For example, the MTC learning outcome “analyze how taxes affect financial reporting” is related to such technical topics as tax policy considerations, differences between financial and tax accounting, FAS 109, awareness of internal control issues related to tax reporting, accounting periods, cash versus accrual, inventory methods, and, for C corporations, determination of taxable income and loss, and reconciliation of book income to taxable income. The list provided is not intended to be all inclusive, nor does the revised MTC suggest that all of the listed topics be covered in every program.

The MTC matrix should help faculty examine their curricula to ensure that students can achieve the learning outcomes. For example, to prepare students for the CPA exam, faculty can use Exhibit 1 to identify the appropriate core competencies. Referring to the first part of the MTC matrix then will allow them to identify the related learning outcome. Following the column for the learning outcome to the second part of the matrix will then help identify technical topics that might be used to achieve the desired learning outcome.

The MTC remains a valid and vibrant document that is consistent with today’s thinking as incorporated in the AICPA’s Vision Project and Core Competency Framework. The new MTC provides tax educators with a significant amount of flexibility to determine how they will achieve the recommended learning outcomes. Although the new MTC does not specify the number of tax courses that should be part of the required curriculum, there was general agreement among the task force members that a minimum of six semester hours of tax content is necessary to prepare students for entry into the profession.

Other Tax Education Initiatives

Beyond focusing on curriculum improvements, and consistent with the AICPA Tax Section’s strategic objective to attract qualified individuals, the Next Generation Task Force was recently created to implement additional efforts intended to increase the pool of future tax professionals. Task force members, drawn from both education and industry, are pursuing various initiatives aimed at collegiate-level faculty and students, as well as at new entrants into the CPA profession. These initiatives are intended to ensure that tax practice is presented as an exciting and attractive career choice.

On university campuses, students are exposed not only to fewer tax-specific curricular materials, but often to fewer recruitment and career development opportunities specifically related to tax. Even within the AICPA’s own student-oriented career resources, tax is afforded little specific coverage, as these materials are primarily intended to attract students to the overall field of accounting. One of the task force’s first initiatives has been the development of internet materials to highlight tax careers. Several articles and brochures are available for download and use by tax faculty in the classroom and by tax practitioners in conjunction with college recruiting efforts. Such materials are currently located under the Community section of the AICPA Tax Division website. Efforts are under way to publicize the existence of these new materials and to provide links from the AICPA’s general career web pages. Activities are also under way with Beta Alpha Psi and the AICPA Young CPA Network to develop additional materials to be disseminated electronically and in other forums, describing the benefits and challenges associated with tax careers.

Summary

While not all accounting students will become tax practitioners, all need to have a strong understanding of the relationship of tax principles and rules to GAAP. Thus, it is imperative that undergraduate tax courses have a strong focus on the relationship between tax and GAAP, internal controls related to tax, the role of taxes in business decision making, and the basics not only of individual tax rules but also of business taxation. Faculty members who have not yet reviewed the revised AICPA MTC should do so now and pursue any necessary tax curriculum changes. Faculty should also work with tax practitioners to give students a better sense of the role of accounting in tax work and vice versa, what tax practitioners do, and the opportunities available for accounting students pursuing careers in tax.

Editor Notes
Prof. Nellen (Editor) is a former member of the AICPA Tax Division’s Tax Executive Committee and a current member of the AICPA Tax Division’s Individual Income Tax Technical Resource Panel. For more information about this column, contact Prof. Nellen at anellen@sjsu.edu, Prof. Dennis-Escoffier at sdennis@miami.edu, or Ms. Rubin at jtzrubin@swbell.net.