Education is the Best Prevention

As accountants how do we teach the young/new learners coming into our field the evils of unethical behavior? You would believe that the recent examples of Bernie Madoff and the Enron executives are the best cautionary tales to someone making the choice between fraud and honesty, but the reality is different. Most swindlers never consider themselves criminals and many perpetrators of fraudulent acts start small, as did Madoff, and justify their actions through rationalizations. Over time the deceit grows to a size that the criminal can no longer hide. Enron did not start out with the hundreds of Special Purpose Entities (SPE’s) they collapsed under; they began with one and grew. Scholars have dedicated vast amounts of time trying to answer my initial question. Colleges offer courses in business and accounting ethics in an attempt to keep new entrants into the white collar world ethical, yet the problem of business fraud continues to grow. Perhaps it is not the education that is failing, but the material they are using to educate.

     In an auditing course as a student, I was taught several ethical lessons about the billing of client hours, collusion and misappropriation of major assets, yet in no course was basic accounting fraud ever covered. I was taught how to account for inventory, but not how inventory is stolen and the psychology of those that steal it. I firmly believe that the “why do people steal” question is just as important to students as the equation to determine bond amortization. At some point colleges must begin to require courses in fraud and the psychology of white collar crime as requirements for any degree in accounting. The status quo has given the world scandal after scandal, so why not try a different approach? In the attainment of every college degree there are required general education courses in everything from ecology to history, so maybe now is the time to include a little ethics as well.



Ernest T.

Taxation/Accounting/Excel/QuickBooks/Fraud Investigation

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