Accounting Courses Spring to Life

"They're seeing accounting as a much more interesting and intriguing profession," says Gail E. Farrelly, who found enrollments unexpectedly increasing in the introductory accounting class she taught at Rutgers-Newark last spring. Even more telling, her class took place on Saturday mornings -- not exactly a desirable day or time -- and a second section had to be added to accommodate the additional students.

============
"What Enron, WorldCom and other negative business stories apparently have brought are a greater awareness of the critical roles that accountants play."
============

The increased popularity of accounting also saw enrollments increasing sharply in Rutgers' M.B.A. in professional accounting program. Last year, there were116 applicants for the program, compared to 85 the year before. Other good signs also are being seen across the country. Even before the demise of Enron, accounting enrollments nationwide were starting to climb from the lows of the 1990s. In academic year 2000/01, enrollments in undergraduate and graduate accounting programs were up a total of 3 percent from the previous year, according to Beatrice Sanders, Director of Academic and Career Development at the American Institute of CPAs.

The nationwide increase could be related at least partly to the decline of the dot-coms. But what Enron, WorldCom and the other negative business stories of 2002 apparently have brought are a greater awareness of the critical roles that accountants play. They also have drawn the connection between accounting and other disciplines in the minds of university students. And they have provided real-life, up-to-date examples students can sink their teeth into. It's no longer just about debits and credits; it's the headlines on the business pages and nightly news.

More Than Just Numbers
"They're realizing the connections between accounting and other disciplines such as finance, public relations and marketing," says Farrelly. "They're seeing that the whole numbers thing is part of selling a firm, part of building and maintaining the reputation of the firm, and that public perception counts."

"Some of our freshmen and sophomores have become more interested in accounting because they see that it has a lot more juice than they thought," adds Donald E. Wygal, CPA, Accounting Department Chair at Rider University. "Students who said they wanted to major in business have now selected accounting because they see what a good and dynamic field it is to get into."

At Rutgers Business School, graduate students are studying recent accounting scandals as part of a new M.B.A. elective titled, "Cooking the Books." Developed by Professor Miklos Vasarhelyi, the course begins with an examination of the Enron debacle and other corporate scandals. From there, students learn about what Vasarhelyi calls "cooking technology" so they can better understand how accounting methods have been used to obfuscate financial results. The premise is simple: Knowing how to detect cooked books requires knowing how to cook them, so the course is teaching students the tricks.

"I got interested in what's happening and decided that it would be worth talking about in the classroom," Vasarhelyi says. "It's very good for the students from the standpoint of understanding what's happening in today's environment and providing practical applications for accounting and finance."

Meanwhile at Rider, students this past fall were asked to compare Enron and WorldCom side-by-side to uncover the different ways that things can go wrong. What they saw with WorldCom, says Wygal, is that the company failed to have a good understanding of accounting. And what they realized about Enron is that there were "some sharp people who went out of their way to break the rules."

Taking a similar approach, Professor Irene Douma, CPA, asked her internal auditing class at Montclair State University to bring in business articles from The Wall Street Journal and The New York Times so they could determine why different companies were running into trouble. Was it a matter of weak internal controls, faulty audit procedures, a failure to maintain professional objectivity, or some other problem?

"There is a tremendous opportunity now to refocus on what is real professional behavior," says Douma. "It also shows us that ethics is not something that should be taught in a single week."

Most college textbooks devote just a single chapter to ethics, and in recent years the topic typically has been covered only at the end of a course. Now, professional behavior and the accountant's role as company watchdog and guardian are being woven throughout the curriculum. Recent events also have placed much-needed attention on other issues typically not covered in college textbooks, such as special purpose entities.

As curriculums are changing to address the current business environment, the profession itself also is being presented with a window of opportunity – not only to re-establish its position as trusted advisers but to create more positive awareness about the work that accountants perform. Along with that opportunity comes a question: Why has the profession remained so narrowly defined, and the public so unaware of the importance accounting plays in the world of business?

Farrelly, who recently retired from teaching to devote more time to her other career as a mystery writer, places part of the blame on the profession itself. "As accountants, we sometimes get wrapped up in our own little world and we forget that part of our job is to explain our world to other people," says Farrelly, the author of "Beaned in Boston" and "Duped by Derivatives."

While accounting professors are hopeful that more students will be filling their classrooms this fall, they also are concerned that such interest not be allowed to wane, especially at a time when the opportunities are so rich for new accountants.

============
"There is a tremendous opportunity now to refocus on what is real professional behavior."
============

With the passage of the Sarbanes-Oxley Act, attention now is focused on the importance of certain accounting procedures, such as the internal audit function, the role of audit committees and forensic accounting. The resulting opportunities even have found U.S. News & World Report naming forensic accounting as one of the most secure career tracks over the next few years. Douma from Montclair also predicts that internal auditing opportunities will expand and become increasingly attractive for new graduates. In fact, one of her former students recently sought her out to let her know that she has found a job in internal auditing and "is really looking forward to it because she sees the work as providing her with more variety."

Along with the new opportunities, the profession also is gong to be changing in ways that remain to be determined. The controversy that has surrounded the chairmanship of the new Public Company Accounting Oversight Board and the resignation of Harvey Pitt as chair of the Securities and Exchange Commission have only added to the confusion.

"Young people are wondering what are the rules, who is going to make the rules and who is going to make sure they are upheld," says Douma. "It's a caldron boiling out there, and it has created a level of insecurity and uncertainty."

Wygal at Rider also is concerned that while college students may have developed a greater appreciation for accounting, high school students may have had their negative images reinforced. "While the events of the past year have elevated the role of the accountant, I wonder if that message has gotten out to the parents of young people in high school," he says. "Those sons and daughters may be listening to their parents talking about 'all those rotten accountants.'"

In response to that concern, and as part of a concerted effort to reverse the tide of declining accounting school enrollments, the New Jersey Society of CPAs has developed a road show for high school students that details the range of opportunities and career paths open to those who study accounting. Another road show is being developed for business and community college students who have yet to declare a major.

"Our goal is to reach 30 high schools this year, and to expand upon that number each year," says NJSCPA President John F. Dailey Jr., CPA. "It is up to us as CPAs who are passionate about our profession to spread the good word. We already know that the more students know about accounting, the more likely they are to take an interest in selecting accounting as their major. Our job is to make sure they know about the profession and what we do."

And while the script remains to be written on how the profession will change in the years ahead, accounting professors by and large remain optimistic. "It's been an interesting turn of events," notes Wygal. "But the important message we have found is that the profession can -- and should -- play a positive role in helping to resolve the issue and crafting its future."