Using a knowledge management framework to analyze continuing education in the accounting and auditing sector

Introduction

The accounting and auditing industry is a knowledge-intensive industry, so it is important to implement effective knowledge management in work. Accounting standards are frequently updated and revised, and the business environment is also changing rapidly, so effective continuing education is an important part of the accounting industry. The continuous training and the culture of knowledge are vital for auditing, because it helps managers and auditors to stay updated with the latest practices and regulations which improve the audit results¹. Also, the training programs, which emphasize knowledge sharing, can lead to a sustainable competitive advantage for the accounting firms by improving employee competencies².

As a former EY senior auditor and a member of the Institute of Certified Public Accountants, I am required to spends more than half a month every year in continuing education every year and learn the latest accounting standards and new business knowledge. According to the SECI model³ of knowledge management, these customized courses provided by partners and senior managers are accelerator of knowledge creation, sharing and reusing. This article will analyze the knowledge transforming process of continuing education in the accounting and auditing industry through the four processes of SECI model.

Socialization

The audit work is based on master-apprentice relationship, and junior employees will have mentors who are audit managers. The mentors are certified public accountants with many years of working experience. They are familiar with clients in different industries and different business environments, so they have gained lots of tacit knowledge. The mentors will pass on their real-world audit work experience, the tacit knowledge, to the newcomers.

Moreover, these junior auditors also accumulate much personal experience in practical work, which also creates tacit knowledge. Then they communicate and exchange ideas with their mentors, which create new knowledge and form knowledge sharing. This process completes the transformation from tacit knowledge to tacit knowledge, which is the socialization of knowledge among colleagues. Furthermore, freshmen auditors often communicate and consult with each other about the problems they encounter. In the process of exploring solutions, they will create and share knowledge and accumulate tacit knowledge in their respective work experience.

Externalization

Besides regular works, the mentors collect and record the tacit knowledge they have accumulated, and codify them into teaching materials, which are explicit knowledge, for annual continuing education. The annual continuing education usually start before the peak seasons, and partners and senior managers teach employees by the latest accounting standards and actual work cases. Continuing education in accounting firms is similar to school classes, mainly consisting of instructor teaching, class discussions and simulated cases. The mentors accumulate a lot of tacit knowledge during the socialization stage. When preparing learning materials for continuing education, they will record the relevant knowledge in codified form and disseminate them by lecture slides, reading materials, and demonstration cases documents. This externalization process turn tacit knowledge of individual auditor into explicit knowledge of the accounting firm.

Also, the training department further organize these learning materials into the standardized work instructions or search indexes, which form abstracted codified knowledge. Research⁴ shows that the implementing a knowledge management system with features of document management and article management can strongly support knowledge sharing, capture, and application in the auditing environment. The explicit knowledge taught by the mentors in the continuing education improves the professional skills of staff and enhances their working efficiency.

Combination

Since different instructors provide different kind of teaching materials, the continuing education can bring and share different explicit knowledge. Diverse courses can bring brainstorming for employees, which promote the exchange and sharing of knowledge. Different explicit knowledge can help employees gain comprehensive experience and combine them to form new knowledge.

In addition to the continuing education within the company, auditors also read journals, learn online and use mobile learning, which will also help them acquire more explicit knowledge through different channels. Through the combination of internal and external explicit knowledge, employees can capture the knowledge of the accounting standards, audit methods and business environment, which improves the quality of their professional services.

Internalization

After receiving continuing education, auditors will transform the explicit knowledge they have learned into methods for handling cases in actual work. When facing specific situations with different clients, employees will adjust the standardized guidelines and apply them in the actual work environment. So, auditors will transform this explicit knowledge into their own tacit knowledge.

Moreover, the actual project experiences of auditors can create tacit knowledge. This personalized knowledge expands standardized audit guidelines to different business environments, improve adaptability and customer satisfaction. Also, mentors and colleagues will continue to exchange and share their knowledge, which start another SECI cycle to further create, share and utilize the knowledge.

Obstacles to this cycle

In actual work, there are several factors that affect effectiveness of this framework. First, the heavy workloads and fear of being criticized may hinder employees from communicating and consulting with mentors, which will affect the sharing of tacit knowledge during the socialization process. Secondly, because the auditing work is very stressful, employees may not spend too much time and energy in eontinuing Education. For example, some staff may not actively participate in discussions during lectures, which will lead to ineffective sharing and reuse of knowledge in the combination process. Thus, forming an excellent learning atmosphere and communicating culture in the organization can effectively promote continuing education within the SECI model.

Conclusion

In the accounting and auditing industry, effective knowledge management is important for staying updated with new accounting standards and business environment. The SECI model provides a structured approach to understanding how continuing education helps knowledge transformation within accounting firms. Although there are some challenges, the continuing education improve the effectiveness and efficiency of knowledge creation, sharing, and utilization in the accounting firms. And it enhances the professional development of individual staff and the audit quality of firms.

Article source: Adapted from Using Knowledge Management Framework to Analyse the Continuing Education in Accounting & Auditing Sector, prepared as part of the requirements for completion of course KM6304 Knowledge Management Strategies and Policies in the Nanyang Technological University Singapore Master of Science in Knowledge Management (KM).

Header image source: Steve Buissinne on Pixabay.

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