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Sunday, July 28, 2002


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CRAIG T. KOJIMA / CKOJIMA@STARBULLETIN.COM
Hamid Pourjalali, director of the School of Accountancy at the University of Hawaii's College of Business Administration, visited an executive accounting class last week. The summer/fall program, taught by Jenny Teruya, seen standing at left, is designed for those who don't have an accounting background and want to learn accounting in a short period of time.




Fixing the books

UH School of Accountancy
refocuses after enron


By Dave Segal
dsegal@starbulletin.com

Last year it was the Enron debacle flashing like a warning signal throughout accounting classes at University of Hawaii and other college campuses nationwide.

University of Hawaii

This fall it very well may be WorldCom.

But sometimes good can come out of bad. And with accounting today under the heaviest scrutiny ever, Hamid Pourjalali, director of UH's School of Accountancy, sees an opportunity to send a message to his students while at the same time continuing with his goal of making the department one of the best in the country.

"The very first good we're getting out of (the accounting cover-up) is we have to emphasize ethics," Pourjalali said. "Accountants have always said these are the core values that we value and they have mentioned them over and over, but now we have something to link this to. If you are not this way, this is the end result and see what happens."

Some colleges this fall are planning to offer courses or case studies on some of the fallen companies.

University of California, Irvine, will offer MBA students "The Enron Case," a two-credit course that will sift through the energy company's financial statements looking for red flags. Massachusetts Institute of Technology will present case studies on Tyco International Ltd., Global Crossing Ltd. and Xerox Corp. -- companies that have been dragged down by accounting improprieties. The University of Nevada, Las Vegas, is altering its curriculum to require that ethics be taught in key classes.

UH isn't planning any courses specifically targeted to any of the disgraced companies but in some of its classes has been using case studies of Enron and other embattled corporations.

"It certainly has become part of the cases that instructors are using," Pourjalali said.

For example, auditing instructor John Wendell has used Enron as a case study in his auditing class.

"But the bottom line is we have to improve the ethics coverage in our classes," Pourjalali said. "There's a collegewide effort right now to improve ethics coverage in the classroom, including accounting. So we are part of the larger picture in that aspect."

Janelle Chun, a 24-year-old senior who will graduate from UH in May with an accounting degree, has no regrets about her chosen field but said the downfall of Enron auditor Arthur Andersen has sullied the industry.

"From what I understand, (accounting impropriety) always has been there," Chun said. "It's just that nobody regulated it enough. So it's now only recently that they've been getting caught. It's hard as an accounting student because they've put mistrust along with the profession."

Chun, who was president of UH's 80-member accounting club last school year, said in her classes that professors made references to the Enron case during the course of their regular instruction. She also said that her accounting club last year had an ethics workshop in which the topics of Enron, ethics and Arthur Andersen was discussed.

"I think ethics always has been at the basis of everything in cost accounting," she said. "We go through this code of ethics that was adopted by the Institute of Management Accountants," a large nonprofit organization dedicated to management accounting and financial management.

Eric Pae, a 23-year-old master's student who will graduate in accounting from UH this fall, said he chose the profession because of the job security. While he still plans to follow through with his chosen field, he said that recent developments have made him think twice about the industry.

"It's kind of scary or shocking because (Enron) was big enough to take down one of the largest accounting firms in the world," Pae said in reference to Arthur Andersen. "In a way, public accounting was one of the most sound professions. To take down a firm the size of Andersen, which has lasted 80-plus years, there's got to be something to it. You're taught in classes to provide assurance that financial statements are accurate."

Pae said that during classes last spring professors and students talked about how the Enron case affected the profession, who should be responsible from a supervisory standpoint to ensure proper reporting and what kind of changes should be made.

"We're trying to be more aware of the whole situation itself, like trying to find out if there was a mistake in the accounting system itself, or the rules and regulations or the ethics," Pae said.

The Iranian-born Pourjalali, who came to UH from the University of Louisiana at Lafayette six years ago and has headed the School of Accountancy since Aug. 1 has been busy trying to upgrade the school since taking over.

Among the changes:

>> Curriculum. His department surveyed every university in the nation that offered accounting information systems courses and requested copies of their syllabuses for that particular area of accounting. The department spent three months analyzing the syllabuses to see what topics were covered and then chose the topics that were relevant to UH. Pourjalali and his department also surveyed by mail about 1,200 accounting professionals in Hawaii to get feedback on all of the courses offered by UH's School of Accountancy. In addition, Pourjalali brought together accounting educators in the UH system for a Waikiki conference in May to examine all the curriculum and to get feedback from accounting professionals.

"Everybody was talking about tax, tax, tax," Pourjalali said. "So we created a subcommittee of about 20 professionals and professors to look at the tax courses. Eighty percent of our students go to smaller firms so I had to figure out what their needs are, and they needed more tax education. Large firms -- the Big Five -- have these training sessions for their employees who get sent somewhere for three months to get trained. But smaller firms don't have that capability. So we had to look at our curriculum to see if it was meeting (the smaller firms') needs."

>> Technology. Accounting firm PricewaterhouseCoopers in Hawaii is raising $200,000 and Pourjalali is raising $100,000 to create a UH graduate research room, which will be available in late fall or early spring and be equipped with database computers and presentation facilities for master's students in accounting. The Hawaii accounting firm of KPMG, which continually has been donating money, also has given the School of Accountancy $40,000 over the past three years to refurnish an undergraduate room with computers and other necessities.

"I believe it's really important to have technology for our students if we want to be competitive with any other school in the nation," Pourjalali said.

>> Student recruitment. Pourjalali, who last year had about $15,000 worth of scholarships, is hoping to increase that to $50,000 this year because of rising tuition. There were 32 students on partial scholarships in school last year. Accounting graduates, according to Pourjalali, can earn $25,000 to $45,000 to start depending on the size of the firm they go to and can make $50,000 to $75,000 after five years, with managers making six figures.

"If a (community college) student is an honor student, I will pay half of his or her tuition to come to my program," Pourjalali said. "If we get good students in, we get great students out. They will be an addition to our reputation. It pays off in the long term."

>> Alumni feedback. He looked at how different universities in the nation communicate with their alumni and chose Carnegie Mellon University's system as the best model. Pourjalali is spending about $35,000 to buy the software, hardware and Web development to create a Web site for UH accounting alumni.

"I want the alumni to be able to have their own Web site so they can locate other people and, if they have a job opening, to be able to post it," Pourjalali said. "At the same time, I want to give them the ability to send me an e-mail about what we're doing right or wrong."

Danny Wong, a 1990 UH accounting graduate who is a senior manager and one of the primary recruiters at KPMG in Hawaii, said that he's been impressed with the job Pourjalali has been doing.

"I think he's doing a great job," Wong said. "He's been really proactive in trying to take the School of Accountancy in a positive direction. He's taken the initiative on a lot of different issues or topics."

Wong, who said that about half of KPMG's professionals are UH graduates, recommended that the students would be wise to get as much work experience and business knowledge as possible before venturing into the field.

"I think there's a lot more information they have to learn with the changes in accounting rules and regulations," he said.

Karen Silverstein, human resources manager and recruiter for PricewaterhouseCoopers in Hawaii, said 60 percent of the firm's staff are UH graduates.

"The students we hire are picked right off the top and we find them to be very qualified," Silverstein said. "We continue to hire at the same level we've always hired at and probably will be hiring about 15 people over the next year for full-time and part-time positions."

Silverstein, who took accounting at UH in 1982 and 1983 but graduated from Chaminade University in 1983, said PricewaterhouseCoopers is about 65 percent toward its goal of raising $200,000 for the UH graduate research room. She said the money is being raised through its staff and UH alumni.

In the meantime, UH's accounting enrollment, which has declined the past five years, is starting to turn around. Pourjalali forecasts that 90 undergraduates will complete their degree in the 2001-2002 school year that started in fall 2001 and runs through the summer of 2002 ending next month. He forecasts 110 students to graduate in the 2002-2003 school year. This upcoming school year he expects there to be between 300 and 350 undergraduate students and 120 master's students.

UH's master's accountancy program also is gaining in popularity. Undergraduates, who intend to obtain a certified public accountant license, receive 124 of their required 150 instructional hours through the undergraduate program. They can get the remaining credit hours through the master's program, which grants 30 credit hours. To practice as a CPA in Hawaii, individuals need to take 150 instructional hours, pass the CPA exam and fulfill the work experience requirement.

When Pourjalali came to UH in 1996, there were only seven students in the master's program. There were 70 this past year and more than 80 applied for the upcoming school year, with 50 having been accepted.

"My master's program will continue to grow," he said. "My undergraduate program also will continue to grow and I project a 20 percent increase in undergraduates (on a yearly basis) as a result of (recruiting at) high schools and community colleges."

Meanwhile, Pourjalali said that the generally accepted accounting principles, commonly referred to as GAAP and approved by the Financial Accounting Standards Board, are not to blame for the corporate malfeasance that is sweeping the nation.

"I don't think it was GAAP (that created the problems)," Pourjalali said. "It was individuals taking advantage of the situation they were in. A lot of people are questioning GAAP and whether the generally accepted accounting principles are appropriate or not. To me, GAAP in the U.S. is one of the most advanced GAAPs in the world. I still believe that GAAP should provide opportunity for people to select between different accounting methods, choosing the one that fits them the best. I don't think we should take that opportunity away. We should not go from a common law country to a court law country and say, 'This is it. Black or white.' We should give people the opportunity to choose."

Pourjalali, who said he anticipates more cases of accounting impropriety, said that people have gone from one extreme to the other and are questioning the whole market.

"It was just dishonesty," he said. "It was not GAAP. If it were GAAP, you couldn't have put these executives in hot seats because they would have said, 'I'm following the generally accepted accounting principles.' They did not follow the generally accepted accounting principles. GAAP gives people an opportunity to report different earnings. And I believe that opportunity should continue to be there because what you want are truthful methods that depict your financial situation. They just abused the system. They misrepresented the information."



UH School of Accountancy



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