the Public Trust, Stupid’
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
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.
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:
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
student internship opportunities as part of the curriculum.
Hands-on experience is the best way for most students
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of what is available is either outdated or difficult to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.
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
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
Future of Our Profession
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
GeorgiaSouthern.edu, or call 912-681-5679.
time to provide CPAs with the arsenal of skills they need
to protect the investing public. It’s the public trust,
always, I welcome your comments and suggestions.
Kranacher, MBA, CPA, CFE