The Development of Accounting Education in Russia

The Development of Accounting Education in Russia Svetlana Karelskaya Saint-Petersburg State University Saint-Petersburg, Russia SNKarelskaya@mail.ru Abstract - This research was dedicated to the development of Russian accounting education. Its main objectives were: to determine the causes of the development of Russian accounting education at the beginning of the 20 th century, to discover the condition of the rapid increase in the number of institutions of commercial education, to establish the list of specific educational institutions that trained accountants, and to identify the reasons behind the structural changes of the commercial education system, which consisted in the establishment of new institutions of higher learning. Keywords accountant; higher education; commercial education; accounting I. INTRODUCTION Today Russian education is experiencing radical changes connected with the Bologna Process. In the case of accounting education, these changes are especially painful, since a steady tendency has developed in recent years to try to remove it as a separate degree programme from the system of higher education, as well as removing Accounting from the list of compulsory subjects taught to students of both bachelor's and master's degree programmes. This tendency can be explained to a great extent by an active debate in the academic community on whether accounting should be regarded as a science, with doubts voiced even by economists. Accounting education entered higher education programmes only at the beginning of the 20 th century. The study of the history of this question would reveal how first educational institutions that taught accountants managed not only to find students, but also gradually attain a higher level in the education system. This paper is the result of an interdisciplinary research that consolidated the study of the primary sources pertaining to the regulation of Russian education as a whole and the documents regulating the work of specific educational institutions, as well as overviews of their activity written by their participants, the information concerning methods of teaching accounting in separate educational institutions and the results of their comparison with the methods used in other countries in the same time period. Special attention was paid to the specifics of development of commercial education in Russia, the natural course of which was partially interrupted during the Soviet period. This circumstance determined the choice of the research period - the end of 19 century-beginning of 20 century, when there was a qualitative change in the development of Russian commercial education. His study led to a better understanding of the Ekaterina Zuga Saint-Petersburg State University Saint-Petersburg, Russia ekaterinazuga@mail.ru problems faced by modern Russian reformers of accounting education. II. THE EVOLUTION OF ACCOUNTING EDUCATION DURING 18-19 CENTURIES The history of accounting education in Russia started in 1721, when accounting as a subject appeared in the curriculums of arithmetic schools by order of Peter the Great. Later, it became a compulsory subject in commercial classes and vocational schools of commerce. Starting from the first half of the 19 th century, accounting began to be taught at universities. Nevertheless, it was just one of a whole set of other subjects taught in programmes of professional training. Within the programmes of lower and secondary education, accounting was included in the curriculum for training workers in the field of commerce; at universities, it was first taught only to students of philosophy, and later - to future engineers and lawyers. For the first time this subject appeared in a university curriculum at the Faculty of Philosophy of St. Petersburg University. In 1836, the Department of Agriculture, Forestry and Commercial Accounting was opened there. The first person to teach this subject at the university was S. Usov (1796-1859), who also gave lectures on farming, forestry, cattle husbandry, technology and commercial accounting, as well as public lectures on agriculture at the Open Economic Society. In the beginning, accounting was not regarded as a university subject. S. Usov only gave public lectures, which, one must say, were very popular. Later, accounting was included into some legal education courses, in particular, courses on civil and commercial law [1, p. 80]. The course given by Usov included accounting in wholesale trade, retail business and small-scale retailing with settlements between contracting parties and an emphasis on exchange rates. At the end of the 19 th century, teaching accounting spread to other institutions of higher education in Russia, and accounting achieved the status of a university subject [2, p. 87]. For instance, starting from 1891, accounting began to be taught at St. Petersburg Technological Institute. The course was given by I. Hopfenhausen (1832-1910), chief accountant of the Mining Department [3, p. 6]. In Kharkov University, in the 1890s, seminars on Single-entry and double-entry accounting and bank accounting were held within the course on commercial law [1, p. 80]. However, these changes did not lead to the establishment of new institutions of higher education that would be training accountants. Only at the end of the 19 th century, educational institutions training accountants finally appeared. Getting a degree in - 242 -

accounting became possible only after the reform of commercial education implemented in 1896 with the Regulation on Institutions of Commercial Education approved by Nicholas II (1868-1917). The Regulation stipulated a new structure for the system of commercial education and simplified the procedure of establishing new educational institutions. The need for the reform was determined by the fact that training of professionals in the field of commercial science in Russia was significantly inferior to the one in Europe. This was also true about training of accountants. The transformation of the Russian system of commercial education consisted in replacing the system that had existed before that time and included two types of institutions - vocational schools and courses - with a 2-level system comprising four kinds of institutions: the first, or lower, level (commercial classes, commercial schools) and the second, secondary level (vocational schools of commerce) and courses of commercial knowledge. Commercial classes provided education to students who were already working at some business enterprise, teaching them knowledge that was necessary for their work. Classes were arranged so as to cater for students combining their work and study. Commercial classes accepted students of 12 years of age and older, who had completed elementary education. According to the Regulation on Commercial Education, students were given elementary instruction in religious education (Bible classes), the Russian language, arithmetic with commercial calculations, accounting and correspondence, calligraphy, as well as other subjects necessary for working at a business enterprise [4, p. 285]. Each course lasted for no more than 2 years. Teaching in all commercial classes followed similar training programmes that included subjects listed in the Regulation on Commercial Education. Commercial schools, similarly, prepared their students for practical work at business enterprises. Schools accepted children at the age of 12 to 15, who completed no less than 2 years of a village training school. Education process was based on teaching basic knowledge to children born to the families of peasants, bourgeois, craftsmen, and small-scale businessmen before they started to work. There were two kinds of such schools, differing in the length of study. Schools with one-year programmes taught Bible classes, the Russian language, commercial arithmetic, accounting and business correspondence, commercial geography of Russia, calligraphy, etc. Schools with 3-year programmes taught Bible classes, the Russian language, accounting, commerce together with knowledge of commercial and industrial legislation, commercial arithmetic together with the necessary knowledge of algebra, foundations of geometry, Russian history, commercial geography of Russia, business correspondence, knowledge of merchandise in the local commercial region, calligraphy and foreign languages [4, p. 286]. Students in oneyear programmes and in graduation classes of 3-year programmes were subdivided into two groups (departments): one with accounting as the major subject and the other with knowledge of merchandise in the local commercial region as the major subject. The accounting department was to provide additionally practical classes in accounting, while the merchandise department gave practical training in merchandise of the local origin, with enhanced study of natural science. Besides, schools with 3-year programmes sometimes taught foreign languages. Education in commercial schools and commercial classes was conducted predominantly by practical method. Thus, the purpose of training at institutions belonging to the lower level of commercial education was to provide essential vocational training that graduates needed for their future work at business enterprises. In accordance with their education programmes, accounting was taught as a subject on a par with a range of other disciplines. Exception to this rule was those specialist classes of commercial schools that focused on enhanced study of accounting. Instruction in most subjects, including accounting, at these educational institutions was provided through teaching the minimum of general knowledge and its further consolidation at practical classes, which consisted in registering records in account books of hypothetical enterprises from different sectors of the economy. Vocational schools of commerce. There were two types of vocational schools of commerce with a 7-year programme and with a 3-year programme (grades V to VII). The term of study could be extended by 1 year upon request from the founders or the board of trustees. Vocational schools of the first type aimed at giving students both general and commercial education; schools of the second type provided only commercial education. The first grade at a vocational school with a 7-year programme accepted children from the age of 10, who had education sufficient for entering the first grade of a Real School; 3-year school programmes accepted children from the age of 14, who had competed the programme of first four grades of a secondary-level educational institution. Vocational schools with a seven-year term of study taught Bible classes, the Russian language and language arts, two foreign languages, history, geography, mathematics, natural history (what is now zoology, botany and mineralogy), physics, commercial arithmetic, accounting (theoretical and practical), business correspondence (in Russian and foreign languages), political economy, jurisprudence (mainly commercial and industrial legislation), chemistry and merchandise knowledge with technology (which included practical classes and laboratories in chemistry and merchandise knowledge), commercial geography (mostly Russian), calligraphy, drawing and gymnastics. The course included a number of optional subjects, such as shorthand, singing, music, and dancing. Vocational schools with a 3-year term of study taught the subjects included in the three final years of the seven-year programme that were connected with commercial profession [4, p. 286]. Summarizing the information about vocational schools, we can say that they had a lot in common. These were institutions with the term of study lasting for 7 or 8 years, which during the last 2 years of the course taught vocational subjects; or these were schools with 3-year programmes, which provided only vocational training. They prepared students for work as clerks at financial institutions. Some of these schools trained accountants. Teaching at vocational schools combined lecture courses with practical classes. Courses of commercial knowledge were the fourth type of commercial education institutions identified by the Regulation on Commercial Education issued in 1896. Courses could - 243 -

belong to both lower and secondary levels of commercial education, depending on requirements that course participants had to satisfy when applying and on the scope of commercial subjects taught. Courses of commercial knowledge were aimed at imparting knowledge in one or several subjects of commercial profession [4, p. 288]. They provided instruction, in matters necessary for their practical work, to young people of both sexes who wished or were under the necessity to serve at business enterprises with possible efficiency [5, pp. 95-96]. The range of subjects and the length of study as well as the level of preliminary education of course participants were determined by the founders. There were two types of courses: 1) courses in separate commercial subjects; 2) courses with a programme covering several compulsory vocational subjects constituting commercial education. Courses of the first type were aimed at teaching one or several subjects of commercial education, usually not combined into a single educational programme. The second type included courses where subjects were taught at the level not lower than that of commercial classes, including instruction in the following professional subjects: accounting and business correspondence, commercial arithmetic, political economy, jurisprudence and commercial geography, and other vocational disciplines. Courses of the second type accepted only students who had at least primary education. Commercial courses that had study programmes which comprised a set of compulsory subjects provided education at the level no less than that of commercial schools. Their distinctive feature was a considerable flexibility of the management structure, which allowed them to meet the changing demands of the society in the field of education provided for specialists in the commercial branch of knowledge. As compared to other types of educational establishments, courses could restructure their curriculums and syllabuses, open new departments and programmes of study. This can be exemplified by the changes in Russian legislation concerning vodka sales. In 1893, the state vodka monopoly was introduced. This meant transferring the sales of vodka from private organizations to special state-controlled institutions. As early as 2 years after that, specialized courses appeared dealing with special aspects of accounting in such institutions. Commercial courses in particular played the key role in the development of Russian commercial education. At the beginning of the 20 th century, they formed the basis for the establishment of a whole number of educational institutions, such as institutes and courses of higher education. The development of commercial education experienced a qualitative shift that consisted in the establishment of a new - a fifth - type of educational institution of commercial education, this time belonging to a higher educational level as compared to every other type that had existed before. With the appearance of higher educational institutions, the system of commercial education was transformed from a two-level into a three-level system. Now it included institutions of lower, secondary and higher education. III. HIGHER EDUCATION FOR ACCOUNTANTS Up to the beginning of the 20 th century, accounting education in Russia was only provided in some educational institutions at lower and secondary levels, while in Europe, starting from the middle of the 19 th century, the majority of accountants received their degrees at universities [6, p. 115]. Only in 1906, the first institution of higher education that trained accountants appeared in Russia. It was founded in Saint-Petersburg by M. Pobedinsky (1859 1926) on the base of accounting courses. These courses were founded in 1897 and in 1904 became private Saint-Petersburg courses of commerse that finally turned into the base of specialized higher school of commercial education. St. Petersburg Higher Courses of Commerce founded by M. Pobedinsky became the first institution of higher learning, training accountants in Russia. This high status of the courses can be explained by the many reasons. But one cannot help to emphasize the main reason, namely, the activity of the person who founded the courses. Founders had always played a determinative role in the work of Russian educational institutions. Schools of commercial knowledge were initiated by professional associations of salesclerks, mutual loan societies, societies for dissemination of commercial education, and individual representatives of the merchant class. Courses were often established by well-known accountants. And their work and energy determined the nature and the success of the courses. For example, F. Esersky (1836-1915) saw the main aim of his courses in promotion of the Russian triple-entry accounting system and used all his knowledge and energy to achieve this goal. It was his active work that made his courses the first widely popular institution of that kind in Russia, and his accounting system found recognition not only in Russia but also abroad. M. Pobedinsky saw the main goal of his courses in training highly qualified professionals and patterned the programme of education after higher institutions of commercial knowledge in Europe, engaging the leading teachers of his time for its realization. This helped the courses to achieve recognition as a higher education institution of commercial knowledge. The fact that the founder of the courses was a member of accounting profession determined his special attention to training of accountants; as a result, this study programme continued to exist throughout all changes and transformations experienced by the courses. At a later time, Courses of Higher Commercial Education in Kiev were similarly reorganized and transformed into Kiev Institute of Commerce in 1908, while in St. Petersburg, in 1910, Courses of Higher Commercial Education formed the basis for St. Petersburg Institute of Higher Commercial Knowledge. In 1912, courses established by the Moscow Association for Promotion of Commercial Education were transformed into Moscow Institute of Commerce; Kharkov Higher Courses of Commerce - into Kharkov Institute of Commerce, etc. One of the reasons behind the changes in question was high demand for qualified professionals with knowledge of business organization and commerce, management of the banking and the cooperative sectors. The need for those professionals arose due to the increase in the number of commercial enterprises - 244 -

that appeared as a result of the economic reforms introduced by Alexander II (1818-1881), the key reform being the abolition of serfdom in 1861. This led to in a rapid increase in the number of private industrial-commercial enterprises, industrial manufacturers, etc. At the beginning of the 20 th century, however, the demand on the part of employers for professionals in the field of commercial activities remained unmet. Thus, a researcher of that time who examined the issue, M. Kechedzhi-Shapovalov, wrote: Not only in the provinces, but in both our capitals, the need for commercial education is far from being satisfied... Take, for example, Moscow, with its three or four thousand students at commercial schools of different kinds, categories and names, and compare that figure with more than a hundred thousand-strong sales personnel... [7, p. 2]. IV. FEATURES OF THE DEVELOPMENT OF RUSSIAN ACCOUNTING EDUCATION The development of commercial education at the end of the 19 th and the beginning of the 20 th centuries consisted not only in the increase in the number of educational institutions. training numerous future professionals. but also in the better quality of education provided. Initially, study programmes in Russian institutions of commercial education followed European and American models. Eventually, national features had developed. The main difference of Russian approach towards training of commercial workers as compared to the one used in the West, and especially in America, was that in Russia commercial education provided not only professional knowledge. Graduates received knowledge and skills not only in professional disciplines but in general subjects as well. Syllabuses and methods of teaching in all subjects were aimed at seamlessly integrating general and professional education. This balance was achieved through careful selection of material taught, a system of cross-curriculum connections, and orientation of general subjects towards future professional activities of the students. For example, foreign languages were considered highly important for commercial workers, and senior students in foreign language classes were taught to draw up documents necessary in their future practical work (inquiry letters, offers, letters of complaints, letters of credit, etc.). Natural history was regarded as a basic subject for subsequent study of commodity science and qualitative evaluation of merchandise; arithmetic - as a foundation for practical, i.e. commercial, arithmetic; history - as an educative element and an introduction into history of commerce; general geography - as a basis for commercial and economic geography of Russia [8, pp. 100-101]. Professional education of future businessmen, financiers, government and municipal employees, and accountants included subjects in three fields - economic, legal and commercial-technical. The nature of specialization subjects was determined by the local (regional) needs. For instance, institutions of commercial education in Siberia aimed at training entrepreneurs who would conduct trade with Mongolia; thus, in addition to a number of compulsory subjects, students were taught the Mongolian language [9, p. 166]. Accounting was a compulsory subject in all institutions of commercial education. It was taught in the form of both lectures and practical classes. The latter consisted in filling out accounting books of hypothetical businesses. This approach was widely used in most countries of the world (America, Belgium, Germany, Italy, Czechia, Switzerland, etc.) [10, pp. 301, 303, 306]. The Russian method of teaching during practical classes consisted in studying examples related to the topics that had been discussed at the lectures. A lot of attention was paid to theoretical issues. This approach was modelled on the one used in Germany. The difference of the Russian approach consisted in advanced study of industrial accounting and its characteristics specific to businesses belonging to different branches of industry. It is known that in Italy, where accounting education was considered one of the best in the world, only Bocconi University organized practical classes of industrial accounting. Thus, a special place occupied by teaching of accounting in institutions of commercial knowledge and the demand for professionals in the field of accountancy lead to the establishment of institutions for training accountants. First, these were only commercial schools, vocational schools of commerce, and courses of commercial knowledge. After 1906, the latter group began to be transformed into institutions of higher learning. V. CONCLUSION The basis for the development of Russian higher education in the field of commerce, including training of accountants, was formed by courses of commercial knowledge that occupied in the Russian educational system an intermediate position between the lower and the secondary levels. Their advantage lay in prompt changes of their curriculums in response to the changing requirements of the society towards education in the field of commerce. This aspect that has been identified as an important feature of their activity provides an explanation for modern problems in training of accountants. At present, revision of curriculums is rendered difficult due to the fact that educational institutions work in compliance with officially approved educational standards. This lowers the level of accounting education, since curriculums cannot always be promptly updated in the situation of rapidly changing methods of teaching and accounting practices. Specifically, changes in accounting practice in the 19 th and the 20 th centuries consisted in implementation of double-entry accounting at enterprises and businesses, and the development of new bookkeeping systems, i.e. in modification of accounting techniques. Today, the latter are different and affect specific accounting rules, which are changed in the effort to adjust the national accounting standards so that they are in accord with international accounting standards (IAS). This adjustment is implemented through introducing amendments in standard acts regulating the sphere of accounting [11, p. 222-223]. Teaching of accounting in Russia followed in its structure the best foreign models. These models, however, were never used in their original form. They were always revised and transformed before being used in the educational process. Studying the experience of Russian educational institutions at the end of the 19 th and the beginning of the 20 th centuries in relation to the development of their curriculums is especially interesting now, if we take into account that IAS are being implemented in Russia and that foreign universities have a vast - 245 -

experience in teaching them. Another aspect that is being now adopted in the field of education concerns teaching methods, especially interactive training strategies (role playing, simulation of real-life professional situations). In this respect, Russian accounting education is quite a bit behind the leading educational institutions of the West. This study is the first one to identify the developments of Russian accounting education at the beginning of the 20 th century. As a result, the study made it possible to determine the causes of the rapid increase in the number of institutions of commercial education, establish the list of specific educational institutions that trained accountants, and identify the reasons behind the structural changes of the commercial education system, which consisted in the establishment of new institutions of higher learning. The results obtained provide for a conclusion that the processes occurring at the turn of the 20 th century established the traditions of Russian accounting education, which must be taken into account at the present moment when it again is experiencing changes. Today, educational standards are revised in response to the changing requirements of the society in general and the employers who are specifically interested in the training of certain kinds of professionals. Successful work of educational establishments today is impossible without due regard to the experience acquired in other countries. When adopting this experience, one should also take into consideration the specifics of its perception and understanding in Russia. Distinctive local features connected with adaptation of foreign experience to commercial education in Russia emerged at the turn of the 20 th century. REFERENCES [1] Statistics in St. Petersburg University. St. Petersburg: Publishing house of Saint-Petersburg University, 2010. [(Статистика в Санкт- Петербургском университете / под ред. Я.В. Соколова, Д.А. Львовой)]. [2] O.D. Kaverina, Organizing of training educational courses on economics in Russian Universities in ХIХ cent., Bulletin of Saint- Petersburg State University, Vol. 3, pp. 85-94, 2010. [(Каверина О.Д. Организация преподавания учебных курсов по экономике в российских университетах в XIX веке // Вестник СПбГУ)]. [3] Ya.V. Sokolov, Traditions and Perspectives of training of accountants in Russia. IPB of Russia 10 years, 1, pp. 5-8, 2007. [(Соколов Я.В. Традиции и перспективы подготовки бухгалтеров в России // ИПБ России 10 лет)]. [4] Regulation on commercial educational institutions approved by His Imperial Majesty from April 15, 1896. Complete Collection of Laws of the Russian Empire. Collected works (3d) in 33 volumes. Vol. XVI. St. Petersburg, 1899, pp. 281-288. [(Высочайше утвержденное положение, о коммерческих учебных заведениях от 15 апреля 1896 г.)]. [5] Report on the condition of commercial education in Russia for 1903-4 academic year in education institutions of Ministry of finance, Materials on commercial education, IV, 1905. [(Отчет о состоянии коммерческого образования в России за 1903-4 учебный год в учебных заведениях ведомства Министерства Финансов // Материалы по коммерческому образованию)]. [6] K.W. Hoskin, R.H. Macve, Accounting and the Examination: a Genealogy of Disciplinary Power, Accounting, Organizations and Society, Vol. 11, 2, pp. 105-136, 1986. [7] M.V. Kechedzhi-Shapovalov, About Commercial Self-education. St. Petersburg: Severnaya Pechatnya, 1910. [(Кечеджи-Шаповалов М.В. О Коммерческом самообразовании)]. [8] I.V. Borzikhina, Trade Schools and Commercial Colleges at the beginning of XX century, ANTRO, 2, pp. 93-105, 2013. [(Борзихина И.В. Торговые школы и коммерческие училища в начале XX в. // АНТРО)]. [9] I.M. Popruga, Formation of System of Commercial Educational Institutions in Siberia at the end of XIX- and at the beginning XX century, Publishing House Gramota, 8(14), part IV, pp. 165-167, 2011. [(Попруга И.М. Становление системы коммерческих учебных заведений в Сибири в конце XIX начале XX века // Издательство Грамота )]. [10] I.N. Lvova, About history of application of business games during accountants training, Finance and Business, 4, pp. 296-309, 2011. [(Львова И.Н. Об истории использования деловых игр при обучении бухгалтеров // Финансы и бизнес)]. [11] N. Generalova, N. Sokolova, IFRS in Russia: History, Realities and Consequences, Global Virtual Conference, April, 7-11 2014, p. 221-226. Available: http://www.gv-conference.com. - 246 -