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This paper summarizes efforts to develop a reduced cost, zero-cost-to-students, or open source text for introductory financial accounting and introductory managerial accounting. Initial attempts to secure an external grant for an introductory managerial accounting text failed to achieve executive administrator support and/or approval. Later, a comparable project was approved for internal funding, with a spring 2015 sabbatical, at full pay, for development of an introductory financial accounting text. This latter text has been completed and is available at http://digitalcommons.wcupa.edu/acc_texts Key Phrases: Open source texts, Open source, Rational self-interest Reduced funding for state universities have contributed to increases in the cost of tuition, as reported in the popular press. Textbook publishers contribute to increased costs, through the creation of new, more costly editions of texts. In some cases, these new editions are not warranted and essentially no new content is provided. Later editions are, sometimes, intentionally designed to be difficult to replace with earlier editions. Arbitrary changes or modifications are introduced to the new editions despite the absence of substantive changes in content. These profit-maximizing strategies are rational. An example of the “planned obsolescence” methodology, designed by publishers to protect the market for later editions of their texts, is provided in this paper. Colleges and universities have a variety of text selection methods. Generally texts are adopted by individual faculty members or faculty textbook selection committees or tenured faculty. While they might be presumed to possess the skills necessary to write texts and supplements, there is no economic incentive to do so, and business faculty, in particular, might be inclined to view such an endeavor in a cost-benefit framework. The opportunity cost of developing open source materials is time that could be devoted to other, profitable activities – thus that development is the consumption of time, a scarce economic resource. Publishers rely, successfully, on the overwhelming nature of the task as a form of what economists refer to as a “barrier to entry.” Publishers benefit (and profit) from their rational expectation that faculty will behave rationally. Examples of faculty objections to internal development of an open-source text or a zero-cost-tostudents alternative to costly, new editions of texts are provided in this paper, where objections appear to be based only on self-interest and are economically rational. Introductory financial accounting and introductory managerial accounting are courses, typically, required by all U.S. universities for all business undergraduate degree majors. No significant substantive revisions to either texts or supplements have been necessary for more than two decades, yet publishers produce new editions every two-to-three years. Publishers are engaged in a rational, profit-maximizing strategy designed to make earlier editions obsolete. It is this fact that makes these two courses (and others like them) ideal candidates for the development of open International Research Journal of Applied Finance ISSN 2229 – 6891 Vol. VI Issue – 6 June, 2015 435 source texts and supplemental resources. It is quite likely that any open source texts and supplements produced will enjoy an extended useful life. Recent innovations in financial accounting include the passage of Sarbanes-Oxley (SOX; 2002) and the expansion of International Financial Reporting Standards (IFRS) to replace generally accepted accounting principles (GAAP), the foundation of accounting in the U.S. SOX and IFRS are only briefly mentioned in introductory financial accounting texts and courses, where they are addressed in a bit more detail, but certainly do not represent the foundation, for intermediate and even advanced financial accounting courses leading to an undergraduate degree in accounting. Effectively, the content for the texts and supplements for introductory financial accounting has not changed for decades. The most recent innovations in managerial accounting include the balanced scorecard (BSc) and activity-based costing (ABC). Both topics have enjoyed introductory managerial accounting textbook coverage for more than two decades. Therefore, the content for the texts and supplements for introductory managerial accounting have also not changed for decades. The remainder of this paper is developed, as follows: first, two efforts seeking both external and internal support for the development of two introductory open source accounting texts is summarized. Second, an example of publisher planned obsolescence is provided. Third, results from an accounting faculty emailed query with respect to both (1) objections or disadvantages and (2) advantages associated with the internal development of an open source text and supplements, in an unscientific attempt to confirm the author’s anticipated expectations with respect to sentiment. Fourth, this paper addresses legal issues implicated in the development of these texts and course materials. Finally, this paper encourages colleagues to participate in the development of these open source texts, and recommends a strategy to accelerate the pace and expansion of open source texts and course materials. I. Efforts Seeking Support for a Department or Open Source Text Competing funding priorities and the allocation of limited resources constrained funding from University donors (that is, would a donor fund release time to develop an open source text when funds were simultaneously actively solicited for a new campus building?). Ultimately this text was drafted without external funding sources. 1 The introductory managerial accounting text could have been funded by a Big 4 accounting firm, eager to provide West Chester University with a $10,000 grant for this project, but WCU administration could not receive any portion of the grant money for administration and was concerned that this modest amount might interfere with a larger grant that the firm might make available for a new building for the business school. The principal investigator developed the grant proposal, where $2,500, each, would have gone to 4 adjuncts, providing them with an economic incentive to participate in the project. Administration did not receive the amount they had hoped for to assist with the construction of the new building. The Big 4 firm wanted more time to develop a stronger relationship with the institution, prior to making any significant economic contributions. Therefore, the grant was not pursued or approved and no significant amount was received for the new building from this external funding source. International Research Journal of Applied Finance ISSN 2229 – 6891 Vol. VI Issue – 6 June, 2015 436 Another stylistic objection to the introductory managerial accounting text, which was already under development, was the lack of clip art. To the primary author’s surprise, students do, in fact, like clip art, but this complaint or shortfall is easily corrected. Early conversations by the primary author with faculty in different disciplines revealed crossdiscipline concerns (e.g., ‘…if an economics open source text is developed, it will be developed by an economist…’). There was also concern that the author of the open source accounting texts might have some profit motive. This represents a pitfall to be avoided (and a pitfall prohibited by an open source license). Although the authors have not experienced it, it is conceivable that a nonconventional project such as this one could hinder a tenure-track faculty member’s career in the eyes of more senior, more traditional tenured faculty. In the case of the primary author a sabbatical request for the development of a department or open source text for introductory financial accounting was approved by his University. The author has completed the project, and the text is available online at the University website. Contributions to this evolving work are welcomed. A. Approximate Measures from the Sabbatical Request and for a Single Institution Some computations used for the approved sabbatical, extended by way of what those in finance might refer to as “capitalization into perpetuity,” were used to compute the present value of an open source text for the introductory financial accounting course. These measures are contained in Exhibit 1.
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