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Written Communication Frequently Composed by Entry-Level Accountants

by: Susan M. Moncada, Sandra J. Nelson, and Douglas C. Smith

Recent developments in accounting education and the profession have emphasized that possessing good written communication skills is important to succeed in the practice of accounting. Some accounting professionals feel that improving written communication skills is the most important additional education that should be addressed by the 150-hour requirement to sit for the CPA examination. The decision of the AICPA to test writing skills, beginning with the May 1994 examination, also acknowledges the importance of having well-developed written communication skills. Furthermore, we know that writing ability has been an important factor affecting performance appraisals and salary increases of entry-level accountants.

To be adequately prepared for the accounting profession, job applicants should know the types of written documents they will be expected to compose as entry-level accountants. In addition, accounting and business-communication faculty must provide students with opportunities to practice writing the types of written communication required by the profession.

This article1 identifies the types of written communication that entry-level accountants most frequently compose. In addition, we compare the perceptions of CPAs employed in public accounting to those employed in industry. Specifically, we wanted to find out the extent to which entry-level accountants, employed by either sector, compose the same types of documents. Also, we examine the differences based on the size of public accounting firms.

CPAs employed in public practice and industry from a Midwestern state were surveyed. From a list of 15 types of written communication, all respondents were asked to rank the eight most frequently written by entry-level accountants. An "other, please specify" category was included as the sixteenth item on our survey instrument in case we inadvertently omitted a viable form of written communication. We received 261 usable instruments from 150 public accountants and 108 management accountants. Three individuals did not specify how they were employed.

Written Documents Frequently Composed

First of all, entry-level accountants create to some extent all 15 types of written communication listed in the survey instrument as shown in Table I. The top eight forms of written communication most frequently composed, however, are working papers, memoranda, general business letters, instructions and procedures, documentation for an existing system, analytical reports involving comparisons and evaluations, electronic messages, and compilation review reports. Based on the magnitude of the percentages, the remaining eight types of communication may be composed, but much less frequently.

We also feel that the items identified on the survey instrument thoroughly represent the types of written communication entry-level accountants compose. Only sixteen individuals (5 from industry, 11 from public practice) ranked the "Other" category. The types of other communication listed included Internal Revenue Service correspondence, client-assistance request letters, special-analysis workpapers, billing descriptions, and personal to-do lists. While some entry-level accountants may be expected to construct these documents, the low number of responses suggests that these items are seldom composed.

Table I- Rankings of Written Communication Frequently Composed

  All CPAs Public Practice Industry

Working Papers
1 (72.9%)
1 (80.2%)

2 (62.7%)
Memoranda 2 (59.0%) 2 (52.7%) 1 (68.1%)
General Business Letters
3 (41.0%)
3 (49.8%) 3 (50.6%)
Instructions & Procedures 4 (40.5%) 4 (35.8%) 5 (47.2%)
Documenting a System 5 (36.0%) 5 (33.0%) 6 (40.1%)
Analytical Reports 6 (35.8%) 8 (27.2%) 4 (48.0%)
Electronic Messages 7(30.8%) 7 (28.3%) 7 (34.3%)
Compilation Reports 8 (23.9%) 6 (31.3%) 10 (14.2%)
Progress Reports 9 (19.2%) 12 (14.4%) 8 (24.6%)
Management Letters 10 (18.4%) 9 (21.3%) 9 (14.5%)
Tax-Research Reports 11 (13.8%) 10 (18.8%) 14 (5.9%)
Audit Programs 12 (13.0%) 11 (15.4%) 12 (9.1%)
Audit Reports 13 (12.6%) 13 (14.3%) 11 (10.0%)
Performance Reviews 14 (4.7%) 15 (3.3%) 13 (6.8%)
New Business Proposals 15 (4.0%) 16 (3.1%) 15 (5.4%)
Other 16 (3.2%) 14 (4.6%) 16 (1.3%)
N = 261
N = 150 N = 108

Note: The percentages shown are based on the total possible points any one item could be awarded.Comparisons by Employment Sector

When we compare the perceptions of CPAs by employment sector, the rankings are somewhat different. The top five types of communication composed by entry-level accountants in public practice were among the same five items identified by the entire sample. The most notable disparities involve composing analytical reports, progress reports, and compilation/review reports. For entry-level accountants employed by industry, analytical reports appear to be composed more frequently, while documentation for an existing system and compilation/review reports are composed less frequently.

Also, it appears that the perceptions of accountants employed in public practice vary more than the perceptions of the accountants employed in industry. For the public accountants, only three items (the other category, performance reviews, and new business proposals) received less than 14% of the total possible points available per item. Six items (tax-research reports, audit programs, audit reports, performance reviews, new business proposals, and the other category), rated by accountants employed by industry, received less than this percentage. As a result, we can infer that new accountants employed by public accounting firms may be expected to compose a wider variety of accounting business documents than entry-level accountants employed by industry.

Comparisons by CPA Firm Size

When we look at the top eight forms of communication ranked by firm size, we also see some interesting differences (see Table II). CPAs working for local firms said that entry-level accountants compose compilation/review reports more frequently at their firms than did either CPAs employed by regional or "Big Six" firms. CPAs working for regional firms felt that entry-level accountants compose electronic messages more frequently at their firms than did either the CPAs employed by Big Six or local firms. The most striking discrepancies, however, exist between the rankings of the Big Six CPA firms and the other two groups. CPAs employed by Big Six firms indicated that three forms of communication (documentation for existing systems, analytical reports involving comparisons and evaluations, and management letters) are composed more frequently by their entry-level accountants than did the CPAs from the regional and local firms. It should be noted that at least two-thirds of the respondents from each group awarded points to the top eight forms of written communication identified in Table II.

Table II

Rankings by CPA Firm Size Big Six Regional Local
Working Papers 1 (82.7%) 1 (91.4%) 1 (91.4%)
Memoranda 2 (54.4%) 2 (54.3%) 3 (51.2%)
Documenting a System 3 (52.2%) 6 (33.9%) 6 (24.5%)
Analytical Reports 4 (39.7%) 7 (25.7%) 7 (22.5%)
General Business Letters 5 (57.7%) 3 (50.4%) 2 (55.4%)
Instructions & Procedures 6 (32.4%) 5 (38.6%) 5 (36.1%)
Electronic Messages 7 (30.5%) 4 (44.3%) 8 (20.7%)
Management Letters 8 (30.1%) 11 (16.8%) 10 (19.6%)
Compilation Reports 12 (7.7%) 8 (25.4%) 4 (43.8%)
  N = 34 N = 35 N = 81

Note: The percentages shown are based on the total possible points any one item could be awarded.

To be adequately prepared for the accounting profession, new accountants should know how to compose the forms of written communication most likely required on the job. Furthermore, entry-level accountants should realize that they will be expected to compose different forms of written communication more frequently than others, depending upon whether they are employed by industry, a Big Six, regional, or local public accounting firm.

The top three forms of written communication entry-level accountants compose, regardless of how they are employed, are working papers, memoranda, and general business letters. College accounting programs usually require students to complete a business-communications course. This course teaches students how to compose, through practice, the forms of written communication common to all business majors (namely, memoranda, business letters, analytical reports, electronic messages, and progress reports).
Many forms of written communication, however, are unique to the accounting profession. Included is the top-ranked item, working papers. Practicing accountants create client working papers for income tax returns and audit engagements. A number of commercial software packages exist to assist accountants in the creation of these working papers. Accounting faculty can help by teaching students how to compose profession-specific documentation as part of appropriate courses. Training students to use a software package, like Workpapers Plus, might be one approach.

Students who participate in an accounting internship or co-op have the opportunity to experience "real-world" professional correspondence composed by accountants.

For example, in addition to working papers, a client's audit file generally contains memos requesting advice, reporting research results, or describing work done. Past compilation/review reports and management advisory letters are another typical component. Much can be learned by examining the logical organization, relevant content, message tone, audience focus, and language usage found in these documents.

Finally, at least one writing handbook should be included in every new accountant's personal reference library. Effective Writing: A Handbook for Accountants by Claire and Gordon May is an excellent resource guide. This handbook provides excellent examples of written communication composed by accountants. The Guide to Managerial Communication by Mary Munter is another handbook that provides basic writing instruction in a compact, concise format.

Being familiar with, as well as knowing how to compose, the types of business documents most frequently written by entry-level accountants is an essential component of every new accountant's education. Accounting is the process of measuring and communicating information. The ability to communicate effectively in writing plays an important part in an accountant's success on the job.

Susan M. Moncada is an assistant professor at Indiana St. University; Sandra J. Nelson and Douglas C. Smith are associate professors at Indiana St. University and the University of Kentucky, respectively.

This study was funded by the Center for Research and Management Services, School of Business, Indiana St. University.

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