The Business Activity Model An Experiment in SelfLearning

The Business Activity Model: An Experiment in Self-Learning Anthony H. Catanach Jr. acatanach@msn. com 610 -519 -4825

Seminar Objectives l l Briefly review the Business Activity Model’s (BAM) pedagogy. Describe the formal assessment project funded by the Carnegie and Pew Foundations and the AAA. Discuss the study’s preliminary results. Comment on future directions of the instructional approach and study. Please ask any questions as they may arise.

The Business Activity Model Hopes to Treat Three Educational Maladies Lee S. Shulman in Taking Learning Seriously, 1999. l l l Amnesia - forgetting what learned in class. Fantasia – illusory understanding or persistent misconceptions. Inertia – ideas are not used or applied. So how does the BAM work?

The Business Activity Model l Seeks to motivate students for the accounting profession, promote technical competency, develop life-long research skills, advance critical thinking, and foster communications skills. Over two semesters, students mimic the accounting and financial reporting processes found in the “real world” by conducting analytical reviews, soliciting information from clients, preparing correcting entries, and drafting financial statements. Allows technology (CD ROM, Internet, Electronic Libraries, Email) to be incorporated in the classroom (instruction, administration, etc. ), but technology is purposefully kept in the background so as to focus on the model’s objectives.

General Approach l Confront students with “real life” business contexts. – Introduce ambiguity (e. g. relatively obscure hydraulic maintenance services industry). – Require students to provide a full range of accounting, tax, and consulting services as members of a professional services team (i. e. group work). l Place greater reliance on “Socratic Method. ” l Focus on financial statements and disclosure.

Specific Approach l l l Students are introduced to accounting issues as they are encountered by a fictitious company during the first seven years of its life cycle. Groups progress from compilations and reviews (years 1 and 2) to audit services (last 5 years). For each year, students recommend “correcting entries, ” and prepare complete sets of financial statements including all note disclosures.

Primary Classroom Activities l l Prior to Day One - Students are provided with clientprepared financial statements and records. Day One - Students ask the client questions that allow them to determine whether the financial statements are in accordance with GAAP. Groups also must solicit information that is needed for “correcting entries” and financial statement disclosures. Day Two - Students present correcting journal entries. Day Three - Groups present complete sets of financial statements and note disclosures.

Unique Course Characteristics l l Class time devoted to critical thinking and communication skills: issue identification, resolution of ambiguity, etc. (not information delivery). Delivery of technical information shifted outside the classroom: replace lectures with client analytical review exercises and detailed take-home research projects. l No CPA exam focus. l Course revisions are continuous (thanks to the FASB). l Integrates course with other classes (audit, tax, etc. ). But Does the BAM Work? ? ?

The History of the Business Activity Model’s Use l l l Until the past year, the model has been used only at the University of Virginia. – Skeptics have argued that great professors and great students account for any “apparent” success. – Formal assessment was not possible until materials were complete. Historically, few resources existed to facilitate adoption by other institutions (training, user manuals, etc. ) Yet, this past year, five new institutions adopted the BAM, with another coming on line this fall. Now Assessment Can Begin!!!

Formal Assessment Project l l Begun in the Fall of 1999 with financial support provided by the Pew Foundation and the American Accounting Association. Research also supported by the Carnegie Academy for the Scholarship of Teaching and Learning. This scholarship is a way of recording, displaying, examining, investigating, and building powerful methodologies to address the pathologies of learning: amnesia, fantasia, and inertia.

Project Description: Does the Business Activity Model Work? l l l Does the model accomplish its goals? How well does it work relative to more traditional courses (both in the shortterm and long-term)? Does it affect subsequent courses in the curriculum?

Research Design and Method l l l Multi-phase, longitudinal investigation: during the course (Phase I), subsequent to the course, but before graduation (Phase II), and post-graduation (Phase III). Variety of tools and metrics: student, faculty, alumni, and employer attitudinal surveys; focus groups; and standardized tests (certification and professional exams). Except for questions designed to capture demographic information or written comment feedback, most questions require responses on an ordinal scale from one (strongly disagree) to five (strongly agree).

Progress To Date l l l Three attitudinal surveys were created, pilot tested, and delivered to over 300 intermediate financial accounting students at five U. S. universities. The following results were compiled from two surveys of the first semester intermediate course at each school. Second semester responses are being coded.

Student Profile l l l Average age: 21. 5 years (70% 20 years) Other characteristics: 54% female, 85% juniors, 19% minority status, 4. 7% foreign, and 23. 6% transfers Major: 62. 4% accounting with another 31% double majoring in accounting with another discipline l Academics: mean GPA of 3. 3 (53% in top 10% of high school class) l Experience: > 60% reported no previous experience with accounting l Work: 20% (5 -10 hours per week) and 30% (10 -20 hours per week) l Study Hours: 44. 1% (10 -20 hours per week) and 16% (more than 20 hours per week)

Critical Thinking l l Students enjoy identifying and solving problems, but admit to difficulties in formulating decisions. After the BAM, students agree that ambiguity and uncertainty hinder their ability to solve problems. – 17. 8% rate uncertainty as their greatest dislike for the course – 22. 4% suggest that the course can be improved by reducing uncertainty l Students acknowledge that the BAM encouraged critical thinking – Median response of 4 on a 5 point scale (strongly agree) – 10. 3% rated critical thinking and analysis as what they most liked about the BAM

Group Work l l Student attitudes toward working in groups was generally positive and consistent throughout the semester. They acknowledge that working with others is important and that group exercises are an effective learning tool. However, there are several inconsistencies: – 26. 3% rate group work as what they like most about the course – 16. 8% rate group work as what they like most about the BAM – 16. 3% cite working in groups as one of the least attractive aspects of the BAM

Communication Skills l l Student ratings of the importance of oral communication skills to business declined during the semester, as did their beliefs that oral presentations reflected their knowledge. Yet, more students rated their communication skills higher at the end of the semester than at the start. Neutral on whether the course improved them. Students rated the “importance of writing to learning” lower at the end of the semester, while valuing “essays as useful in evaluating knowledge” more at the end of the semester than at the beginning. Neutral on whether the course improved them.

Research Ability l l l Students prefer courses that rely on detailed texts over those that encourage library research and readings, even though they are comfortable with computerized research tools. After one BAM semester, students report a higher expectation that the course text should have “most of the answers. ” These responses are consistent with student concerns over the uncertainty they face in the BAM.

Motivation Toward the Profession l l l Most students recognize the value of the accounting major in providing access to business opportunities. However, student ratings of “interest in accounting as a major” declined slightly after the first semester and students were neutral as to whether the course “increased interest in accounting. ” Nevertheless, students agreed that the BAM enhanced their understanding of the profession and addressed important business issues. – 43. 9% indicated that the BAM’s realism was what they liked most about the course. Wait A Minute Here!!!!

Isn’t it ironic that most students appreciate the BAM’s realism, but dislike its uncertainty? Students don’t equate the business world with risk and uncertainty!

Course Rigor l Students were almost unanimous in their assessment of the course as being time consuming, challenging, and interesting. – 12. 1% cited information overload for the course. – 11. 0% disliked time-consuming nature. l Generally agreed that the BAM was a valuable learning tool. – 17. 3% reported the BAM to be what they liked most about the course. – 10. 1% recommended that nothing be changed in the course. But How Do the Instructors Feel?

Instructor Feedback I really enjoy doing the BAM and the students seem more interested in class, although I don’t think they like having to depend to meet outside of class…Also, I think they’re struggling on how to learn on their own. There is a lot less frustration among the students that I thought there would be. As for me, I am having a ball. This is by far, the most fun I have ever had “teaching” (moderating) an intermediate accounting class. I love teaching the course this way and hope to do a much better job in the future. I had some difficulty in knowing what to really emphasize and reinforce in class discussion so that students had a better idea what to study…our students really seem to enjoy the interaction and analytics.

Interim Result Summary Students appreciate the model’s realism and faculty enjoy using it. Students dislike the uncertainty and miss having lectures. Too Early to Tell on Model Effectiveness!

Intriguing and Unexpected Findings Effect of Changing Student Demographics on Curriculum Design and Implementation Double Majors Student Hours Worked Extra Curricular Activities Theoretical Model and Approach May Be Sound, But Demographics May Prevent Desired Outcomes.

Intriguing and Unexpected Findings The Influence of Student Expectations on Curriculum Implementation Family Classmates Other Students Metrics May Not Properly Capture Model Outcomes.

Immediate Implications of the Current Work Reinforced the need for multiple metrics and research methods, as well as careful program implementation. Opened the door to a new investigation that can be initiated, while awaiting completion of the longer, longitudinal project.

The New Study: Research Contributing to Professional Practice I will match student demographic and attitudinal data from the current project to newly collected student internship feedback data. This will allow me to: • Report on firm internship program performance. • Match student profiles to internship program ratings. This Means That My Carnegie Project May Impact Both University Curriculum AND Professional Firm Training Programs

Conclusion Good measures will allow us to capture the gut-wrenching drama and conflict found in Accounting: Preparing to do Battle Thrill of Victory The Agony of Defeat

Thank You: Questions and Comments Catanach Jr. , A. H. , D. B. Croll, and R. L. Grinaker. “Teaching Intermediate Financial Accounting Using a Business Activity Model. ” Forthcoming in Issues in Accounting Education (November 2000). My web page: http: //www 19. homepage. villanova. edu/anthony. catanach/BAMHome. htm Melody Marcus at Mc. Graw Hill – Irwin (212 -904 -2029 or melody_marcus@mcgraw-hill. comm). Mc. Graw Hill presentations on Tuesday at 10: 15 AM and 3: 15 PM in the Mariott (rooms 309 and 310). Stop by their booth to sign up. Contact Mary Harsten (St. Mary’s University), Bob Hilbelink (Dordt College), Dave Kircher (Ohio University), Brock Murdoch (Cal State – Chico), and Gerry Dougherty (Villanova University).