The Corporate World’s Scarlet Letter Becomes Students’ Badge of Honor

“E” Stands for Ethics, Not Enron, for the Next Generation of CPAs

By Simon Eskow

Nothing recalls scandal more than the tilted “E.” Like Nathaniel Hawthorne’s scarlet letter, Enron’s logo became the sign of ignominy for corporate deception, audit failure and handcuffed CEOs doing “perp walks” in courthouse squares.

Enron’s bankruptcy might not have been the biggest, nor was Ken Lay the kind of poster child for greed that Tyco’s Dennis Kozlowski became. Sure, Enron fell spectacularly, dragging a Big Five accounting firm to oblivion, but its short, simple name was suitable to the media’s appetite for shorthand terms describing complex events. And it was the first.

“That’s the one that always comes up because that’s the one that got the ball rolling, so to speak,” Vindra Sooknanan, a second-year accounting major at Long Island University, said. “The new textbook we’re using is only three months old and the chapter we’re working on now on bankruptcy mentions Enron.”

Rumors of war and midterm elections may have pushed Enron from the media spotlight, but the rash of corporate malfeasance in the last year is electrifying accounting programs in unexpected ways. One would expect WorldCom, ImClone and others to serve as cautionary tales or case studies in contemporary issues or basic finance classes. It is less intuitive, however, that a year of negative press would create the “bizarre positive” that has given luster to the CPA image, helping to swell the rolls of some accounting programs. The entire crisis, in fact, has confirmed to students that the ethical essence of the CPA designation remains untarnished, despite a “few bad apples” who apparently succumbed to a lot of pressure from top management.

In a dozen conversations with the next generation of CPAs, students expressed confidence in themselves, their future and their profession. Many saw the recent crisis in accounting as a matter of personal choices and individual behavior, as opposed to compromised ethics endemic throughout the profession.

Under Pressure

“Enron changed my perception dramatically,” said Cathy Ziemba, a junior in SUNY Buffalo’s accounting program. Ziemba was in her second accounting class last fall when all hell seemed to break loose. “I had a professor who taught us all about the methods these companies used to scam their investors. I actually e-mailed a professor asking if it was really that bad.”

But Ziemba, like other students, came to see the scandals as a result of a few top accountants and the profit-driven importuning of CEOs and other top management who made millions at the expense of their companies’ investors. For them, the problems shouldn’t reflect on the majority of accountants.

“Generally, I think CPAs are ethical, but they face a tremendous amount of pressure,” she said. “I consider myself an ethical person and I’ll try to work under the highest standard possible, but there’s no telling what kind of pressure there will be down the road. It makes me a little wary, but I’ve been reassured that it’s mainly at the corporate level that this happens. Things will change.”

“You’re not going to say all accountants are bad because a few people cooked the books,” Carlyn Ray, another SUNY Buffalo junior, said. “I know a lot of people who were discouraged from entering the accounting major because of this, but that makes a better job market for us. They said ‘There aren’t going to be jobs because of this,’ and I said, ‘Are you kidding? People will always need accountants.’”

Ray started off as a computer engineering major, but found after a couple of internships that she didn’t like the work. Last summer, she switched to accounting; Enron and the like weren’t part of her calculation.

“I was looking for something with a lot of math. Accounting wasn’t what I expected; it wasn’t just number crunching, it was problem solving,” Ray said. “What we learn is so broad; we have to learn marketing, human resources, finance. It’s kind of like taking a minor in everything else.”

SUNY Buffalo Junior Stephanie Grondahl agrees. Grondahl said that accounting wasn’t her first choice. After transferring out of a MIS program because of its lack of challenge, she decided to go into accounting, especially seeing how a cousin was able to work for herself from home after having two children.

“There are many ways to go with an accounting degree. There are a lot of opportunities,” Grondahl said. “Some people stayed away from it because it seems like a tainted profession, but I don’t think what’s happening out there swayed me.”

From Appalling to Appealing

Students joked that friends teased them for entering accounting programs. Ziemba said her boyfriend once asked if her professors were teaching her how to cheat, while Odarka Koshariuk, a senior at Montclair State University in New Jersey, said people jokingly have called her a “paper shredder.” Students and professors say that while some people may have attached a stigma to accounting because of what they learned in the media, they no longer perceive CPAs as stuffy bean counters tied to a desk.

“People have come to realize we’re not paper pushers but we have an essential function that nobody realized before,” said Megan Lehman, a Montclair State junior.

Enron showed how the world of finance was tied into so many lives.

“A lot of people were affected by Enron, but they were affected by one act,” said Myrna Fischman, an accounting professor at Long Island University in Brooklyn. “The students and faculty haven’t come across any ridicule for this, but there has been this bizarre positive.”

Fischman’s bizarre positive is a greater general understanding of what CPAs do. Students agree: many of their acquaintances were impressed by the work it takes to become an accountant, or by how much money they stand to make in the corporate world. Enron became a kind of booster for the profession, which is partly the reason for a dramatic increase in accounting majors at SUNY Buffalo. According to Sam Tiras, a professor there, the number of students in a required course for accounting majors increased by 30 percent between 2001 and 2002. When he asked his freshman orientation class in September what major the students wanted to pursue, nearly all of them expressed interest in accounting.

“A couple of things are going on,” Tiras said. “The economy tanked, jobs in computer science dwindled, and the demand for high finance has gone down. And on top of that, there were the scandals.”

Tiras contends that the demand for CPAs will increase with the heightening scrutiny of financial statements, along with a greater need for consultants who understand the accounting issues associated with human resources, information technology implementation and other functions within a corporation. Enron and economic realities, then, are giving accounting majors an edge.

Choices of the New Generation

Odarka Koshariuk has a job lined up at Deloitte and Touche when she graduates from Montclair State in May.

“You can’t blame people for questioning the profession,” she said. “But I think our class—the new generation—will be more perceptive and focused when it comes to ethics.”

Koshariuk and other students are confident they will make the right ethical decisions, though they aren’t sure what they would do if they had to face the kind of pressures someone like David Duncan, former Andersen accountant who led the firm’s Enron audits, presumably did.

“I don’t think corporate America is for whistle-blowing,” Koshariuk said. “You have to make these kinds of decisions on a daily basis.”

“I wouldn’t want to be in a position like that (to decide whether or not financial statements are misleading),” Erjona Dudija, a Montclair junior, said. “It’s still a question mark of how I’ll be able to deal with it. It boils down to individual ethics.”

Almost everyone says it’s about the individual. Junior Roberto Araujo decided to switch to accounting at LIU last year just as the Enron case was making headlines. But he concluded that the accounting failures over the last year were exceptions rather than the rule.

“If a company is doing good, and I’m doing a good job, then my job is secure,” he said. “I thought about the scandals, but I realized that these were single events. Someone was doing wrong, but it wasn’t everybody. I might work where there’s a lot of pressure to lie, but if I do, I’ll lose my license.”

“Would you want to work for a company like that anyway?” Sookanan asked him.

“Sometimes an accountant thinks they have no choice,” he said.

Accounting students tend to deny the effect their generation as a whole might have on ethical practices. “You can’t pin it down to a generation,” Veronica Beltran, a senior at LIU, said. “It’s always about the individual, though we have learned from Enron.” Enron seems to have convinced Beltran and other students that CPAs are connected to a wider world, and individuals are responsible to other individuals, families and communities.

“My goal is to get my CPA license and become an investigator for the IRS,” Beltran said. “I want to build my way up the ladder, but eventually I want to do something in my community, like open a tax practice. I did this because it was more or less the same thing my brother did in school, and that made my mother very happy. So I wanted to make her happy too.”

“My mother had the same reaction,” Araujo said. “She said my accounting degree was the right choice: it’s better for me and I can manage my family’s accounts.”

Araujo said he hopes to work for a large firm when he graduates, and help his relatives who own property in the Dominican Republic and are looking to make investments in the United States. For Araujo, accounting is about personal choices, professionally as well as ethically. When Fischman told him that, under current economic conditions, the only growth area is in accounting, he looked at an online job listing website.

“I saw there were 500 jobs posted,” he said. “And that was just for New York City.”

Fischman attributes those numbers to the diverse training accountants receive as students.

“The accountant can do everything that people in finance can do, because of their training,” she said. “They know every department.”

“You can’t go wrong with accounting,” Beltran said. “You can see accountants as guys with glasses and suits, but then you have auditing, marketing, finance. When I learned that, that’s when I appreciated how many opportunities a CPA has.”