Bachelor degree in accounting

EXECUTIVE SUMMARY

* IN THE WAKE OF THE CORPORATE SCANDALS CAUSED by Enron, WorldCom and others, the CPA profession has taken numerous steps to turn crisis into opportunity. In particular colleges, universities and their accounting faculties have changed their course offerings and other aspects of the accounting program to better equip students to cope with the ethical challenges of the accounting profession.

* AVAILABLE DATA SUGGEST ENROLLMENT IN accounting programs around the country is stable and there was no immediate exodus of students following the scandals. Individual schools have addressed the new professional environment head on with new course offerings, real-life case studies, increased emphasis on ethics and guest speakers at seminars and lectures.

* ACCOUNTING INSTRUCTORS SAY THE SCANDALS have helped them emphasize to students the importance of accounting. The attitudes of students themselves have not changed significantly in the postscandal period. In general, the more students knew about what had taken place the more positive their attitude toward accounting.

* TO CAPITALIZE ON THESE CHANGES, SCHOOLS NEED to make introductory courses more relevant to the current business climate to encourage more students to major in accounting, instructors need to offer students at all levels the opportunity to explore the social, political and ethical implications of accounting decisions.

* AS STUDENTS GRADUATE AND TAKE JOBS IN INDUSTRY or public practice, employers need to reinforce the ethics lessons students learn in school in the workplace. This can be done through employer-sponsored ethics workshops and by making it clear that CPAs are free to raise questions when they suspect possible wrongdoing.

Let's play a game of word association. Read the term in bold type and say the first word that pops into your head.

Crisis

What did you come up with? If you're from a Far Eastern culture, you might have a different answer. In Chinese the symbol for crisis is actually composed of two symbols. The first is for "danger." The second is for "opportunity." Was opportunity the word you thought of?

Why did we undertake the above exercise, and what does it have to do with accounting? In the wake of Enron, WorldCom and other corporate scandals, crisis is a word that has been closely associated with the accounting profession. Although these incidents had a devastating effect on peoples' lives, there also is a positive chapter to this story. In fact this crisis presents an opportunity for the profession.

This article examines the response by accounting educators--and others--in the years since the scandals first broke. It looks at changes in course offerings, administrative actions and student attitudes toward accounting to help educators refine their academic programs to take maxi mum advantage of the opportunities the crisis presents and help all CPAs understand how they can contribute to the positive changes.

REGULATORY AND PROFESSIONAL RESPONSE

The reaction to the crisis at the regulatory, professional and industry levels has been well-documented. The Sarbanes-Oxley Act of 2002 and the flurry of rules the SEC implemented to enforce the act's provisions evidenced the regulatory response. Many regard current U.S. standards as among the toughest corporate governance rules in the world. The issuance of professional standards for accounting and auditing is but one component of the accounting profession's response. CPAs have heard calls for change from the profession's leaders. The cooperative spirit in working with the newly formed Public Company Accounting Oversight Board (PCAOB) is evidence of substantive reform. Within industry the response is embodied in the significant resources companies have committed to implement the provisions of Sarbanes-Oxley. Section 404 of the act, requiring an external auditor's report on management's assertions about internal controls, has prompted publicly traded companies to pay more attention to these matters than ever before.

WHAT EDUCATORS DID

Although the academic response to the corporate scandals has garnered less attention, there are questions of fundamental importance to the future of the accounting profession. How are leading universities responding? Are student views of the profession changing? Has the publicity surrounding the scandals sent danger signals to students, or is it a message of opportunity?

Enrollment data provide a quantitative answer to some of these questions. Data from the 2001 to 2002 academic year suggest stable enrollment in accounting programs across the country. In 2002 the majority of schools were predicting enrollment increases for both bachelor's and master's programs for 2004. This is particularly encouraging considering the number of ac counting graduates declined by 27% from 1995 through 2002. It also demonstrates that there was no immediate exodus from accounting programs as the scandals broke, as many had feared. The more telling statistics will be published in forthcoming AICPA reports as students gain a deeper understanding of the implications of the past three years for the profession.

Discussions with accounting program leaders suggest enrollment may have increased from 2002 to 2003. David W. Wright, faculty director of the master in accounting program at the University of Michigan, refers to the corporate scandals in describing the record enrollment in the most recent class: "By every measure our master's program is flourishing-if not because of, then at least in spite of, the tumultuous times in which we live." Several schools reported similarly significant enrollment increases.

To further gauge the academic response, we requested newsletters published and information on new course offerings since the scandals from each of the 89 schools that grant doctorate degrees in accounting in the United States. The intent was to obtain anecdotal evidence of the academic response to the corporate upheaval. We received information from 26 schools and examined the Web sites of most of the schools that did not send a response.

Clearly, many of the schools recognized an opportunity for growth in their response to the scandals. Of the 26 newsletters we reviewed, 11 made some mention of the postscandal accounting environment. Most highlighted changes to the curriculum. Tom Linsmeier, department chair at Michigan State University, expressed the central theme of this article when he wrote, "Each challenge can be looked at as a problem or an opportunity ... [We] are well poised to make the challenges of today opportunities for our students and alumni."

Shahrokh M. Saudagaran, dean of the Milgard School of Business at the University of Washington--Tacoma, offered guidance on how accounting education should respond to the opportunity: "I hope the current problems will motivate us to move from a debits and credits approach to an accounting education that focuses not only on technical rules but also on producing competent individuals with a functioning moral compass." Mort Pincus, chairman of the accounting department at the University of Iowa, mentioned these specific actions in response to the ongoing events involving the accounting profession: establishing an accounting orientation seminar session focusing on ethics and the honor code; introducing case studies and writing assignments involving fraud in upper-level undergraduate and MBA classes; adding business law classes focusing on SEC rules and the professional code; and inviting nationally known speakers to deliver lectures on Sarbanes-Oxley.

Michigan State's Linsmeier wrote, "We are offering three new courses next year as a result of comprehensive review and revision of our undergraduate and master's accounting curricula, the singular purpose for which is to better prepare our students to serve the business profession." Adding new courses was one of the most consistent, observable responses to the scandals. Most of the new offerings were related to fraud detection, corporate governance and ethics. Exhibit 1, below, shows some of the courses schools have added to their accounting degree programs. Most schools also created special topic courses with the flexibility to incorporate subjects of current interest to students and the profession. Many of these classes provide ongoing coverage of the corporate accounting scandals and the professional and regulatory response to them.

Institutions most often left decisions about how to incorporate coverage of the scandals to individual instructors. Some schools undertook a comprehensive review of the curriculum at the departmental level. For example, the University of Texas did such a review and found every accounting course included business responsibility and ethics issues.