His attitude demonstrated a slavish addiction to the burning issues of the day. If society desired education systems only to instruct what was needed at the moment, it could do away with universities. Replace the four-year stint with short-courses or web-based classes. Universities, however, have two major goals that transcend the tyranny of the urgent. First, higher-level education attempts to teach undergraduates how to learn. It does this by instilling a passion to learn, by teaching methods of learning, and by building a toolkit of skills that one may employ for years to come. The idea is to prepare students for life, not just for the first job.

A second goal of university education is to construct a foundation for understanding one's field of study. In accounting, educators endeavor to erect a conceptual framework (not to be confused with FASB's conceptual framework). The idea behind this conceptual framework rests on the notion that not everything can be learned in a four-year degree (or even a five-year program!); even if possible, new things are developed all the time. Instead of trying to absorb every detail known to the human race, which would require a lifetime program in school, the idea is to teach the vocabulary of the field and its major underpinnings.

University professors also teach how one should approach the problem. For example, a good university accounting education in (say) the 1970s did not encompass structured finance, but a student well-trained at the time should be able to figure out the basics. Study the motivations of each of the economic players to the transaction. Ask what each actor gives up and receives in the deal. Then look for similar circumstances; by observing that the establishment of special purpose entities looks a whole lot like finance subs before they had to be consolidated helps immensely in comprehending SPE transactions.

I found the executive's preference for focusing on foreign currency and derivatives comical. He did not bother to ask what the class would study in the rest of the semester. Had he inquired, he would have discovered that the class would cover both topics. But I find it hard to teach the accounting for foreign subsidiaries if the students do not understand the accounting for domestic subsidiaries. Like, duh!

As to my spending three weeks on intercompany transactions between a parent organization and its subsidiary, I wish the manager had asked me. I have two reasons for spending so much time on the topic. The first reason is that it drives home the entity concept. Knowing the entity for which one is accounting goes a long way toward clearly thinking about how to account for the organization. It helps one to differentiate between internal and external transactions.

The second reason for an in-depth treatment of intercompany transactions is that it drives home in a concrete fashion the principle of revenue recognition. If the sub sells inventory to the parent, for example, the profession does not allow the consolidated group to record the revenue until the inventory is sold to a third party. Dealing with this type of intercompany transaction allows one to drive home this fundamental principle of accounting.

The amusing follow up to this story occurred shortly after the visit when the SEC announced an investigation of this corporation because of possible accounting fraud. The board of directors then relieved several managers of their positions. The issue -- you guessed it, revenue recognition.

Instead of criticizing what we did in the class, the manager would have been better off if he had allowed me to continue my presentation. He would have benefited immensely.