MSU prof wants accounting students to know how spot fraud in real world

Nick Gibbons remembers flying down to Houston
last fall, when the Arthur Anderson accounting
firm gave him the most lavish job interview of
his young career.

By GAIL SCHONTZLER Chronicle Staff Writer

"They were actually touting their client Enron,"
said Gibbons, 25, a Montana State University
graduate student in accounting.

Despite being put up at a "very luxurious,
ostentatious hotel," Gibbons turned down a job
offer, preferring to take a job with a firm in San
Francisco.

"Thank God I did," Gibbons said, since Arthur Anderson is likely to be laying off accountants in
the wake of the Enron scandal and the loss of several major clients.

MSU has about 70 undergraduate and graduate students in accounting and they are feeling
the impact of the Enron debacle, the nation’s largest bankruptcy. It has been a huge blow to
the reputation of Anderson, the Big Five accounting firm that reassured investors about Enron’s
soundness and then started shredding documents when the truth came to light.

Bonita Peterson, associate professor of accounting, said many neighbors and friends have
talked with her about the Enron scandal.

"They’re absolutely shocked and floored by it," she said. "I’m not."

People aren’t aware of how many fraud cases come to light each year, she said. Millions of
dollars are lost and people sometimes commit suicide.

That’s why she’s pushing hard to improve the education of accounting students — nationally
and at MSU — so they will know how to spot fraud when they go out in the real world.

Fraud isn’t just a big-city phenomenon, Peterson said, pointing to the spate of local
embezzling cases, including a 1998 embezzlement at the MSU Student Health Service that
may have cost as much as $750,000.

Peterson did a national survey of accounting programs and found only 19 U.S. universities offer
a separate elective course on fraud. Most cover fraud as one topic in a broad course on
auditing. They average only 6.7 hours on fraud. That’s inadequate, she said.

MSU will add an elective class in fraud examination in the fall of 2003, she said. She’s excited
about that and an upcoming visit to MSU by Joseph Wells, founder of the Association of
Certified Fraud Examiners, who will speak to accountants, students and the public April 25 and
26.

The scandal hasn’t dissuaded her graduate students from their chosen career, Peterson said.
"Now more than ever, we really need our best and brightest in accounting."

Meg Alt, a graduate student heading for a job with Ernst & Young in San Jose, sad the scandal
is probably a good thing for the profession, underlining the need for accountants to keep up
with the business world’s new financing schemes.

"It’s kind of wake-up call," Alt said. "I think it’s an exciting time to be going into public
accounting."

"It’s neat to see how important our profession really is," Gibbons said.

"The only time accountants end up in the limelight," said Eric Flynn, 22, a graduate student
from Townsend, "is when they do something wrong."

Gail Schontzler is at [email protected].

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