‘It’s the Public Trust, Stupid’

E-mail Story
Print Story
MARCH 2007 - Since the corporate scandals of Enron and WorldCom broke at the beginning of this decade, the importance of the CPA’s role in our financial markets has become a primary focus for regulators and the investing public. Recently, however, CPAs have been receiving mixed signals regarding what is expected of them.

The Sarbanes-Oxley Act of 2002 (SOX) got auditors to understand the importance of using their professional judgment in the audit process rather than simply relying on a checklist. But lately, President Bush (in his January 31 “State of the Economy” speech in New York City’s Financial District), the SEC, and others seem to be bending under pressure from the business community “to change the way the law [specifically, SOX section 404] is implemented.” Compliance costs and global market competition have been cited as the reasons for their concern. While most people agree that efficiency is a noble goal in business, some might ask, “At what cost?” The message touted during Bill Clinton’s presidential campaign in 1992—“It’s the economy, stupid”—was meant to remind everyone of the overarching issue. We seem to have forgotten what prompted SOX: fraud.

Where to Begin

If we are to maintain and broaden public confidence in the accounting profession, let’s start where we can have the greatest impact: with changes to our formal education programs. Following are some suggestions in this area:

  • Offer temporary practical work opportunities to professors. Turnover among educators is extremely low, given the tenure provisions in academia. Many accounting educators are not CPAs, and those who are licensed may not have had any practical experience for 20 years or more. CPA firms that are willing to offer temporary or part-time practical work opportunities to professors who are on sabbatical or on intercession between semesters may find it a win-win situation.
  • Provide student internship opportunities as part of the curriculum. Hands-on experience is the best way for most students to learn.
  • Develop comprehensive practice sets and case-study scenarios with a solutions manual for classroom use. Although hands-on materials are effective, many accounting educators don’t use traditional practice sets because much of what is available is either outdated or difficult to follow, especially if their practical experience is a distant memory or nonexistent. Comprehensive case-study scenarios with real-world data encourage students to actively participate. These exercises also enhance communication and critical-thinking skills.
  • Professional ethics concepts and practical implementation strategies should be integrated throughout the accounting curriculum. Many schools have adopted “writing across the curriculum” to improve students’ written communication skills. Accounting and business curricula should similarly incorporate professional ethics concepts and practical implementation strategies, to teach students what will be expected of them as professionals. Of course, unless these values are reinforced in the workplace, the academic effort will be futile.
  • Fraud detection and deterrence should be a required part of the accounting curriculum. Accounting education needs to teach future CPAs the skills to effectively meet the public’s expectations in the area of fraud. This includes a basic knowledge of criminology and the laws related to fraud, the fundamentals of investigations, and the various types of fraud schemes. Although more colleges are offering a fraud-examination course as an elective, basic knowledge of fraud detection and deterrence is essential to success in today’s professional environment.

The Future of Our Profession

By the way, for those readers who are interested in supplementing their knowledge and skills in this area, Georgia Southern University and West Virginia University are co-sponsoring a Fraud and Forensic Accounting Education Conference May 10–12 in Savannah, Georgia. The purpose of the conference is to help educators and practitioners develop their professional and academic skills in fraud examination and forensic accounting. The material and content for the conference are based on the National Institute of Justice (NIJ) Model Curriculum Project for Fraud and Forensic Accounting Education. To request a copy of the model curriculum exposure draft and implementation guide, send an e-mail to FFAModel@mail.wvu.edu. Questions about the conference may be sent to Cynthia Parrish at CParrish@ GeorgiaSouthern.edu, or call 912-681-5679.

It’s time to provide CPAs with the arsenal of skills they need to protect the investing public. It’s the public trust, stupid!

As always, I welcome your comments and suggestions.

Mary-Jo Kranacher, MBA, CPA, CFE
Editor-in-Chief
mkranacher@nysscpa.org

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

©2009 The New York State Society of CPAs. Legal Notices