Ethics programming abounds in college and university accounting curriculums. And as normal with higher education, courses tend to be more theoretical than practical. Now, though, a set of tools is being made available to schools by a veritable laboratory of real-world accounting ethics dilemmas: a Big Four auditing firm.
KPMG last month began marketing a program called “The Ethical Compass” to business schools nationwide. It consists of videos, case studies, and role plays designed to get students engaged in a thought process about the kinds of ethical choices they will have to make when presented with very specific scenarios in the workplace.
“It’s all stuff that can and does happen from the time young accountants enter the work force,” Scott Szabo, an audit partner with KPMG in Charlotte, N.C., tells CFO.com. “They need to be prepared to recognize ethical issues and take action before an ethical violation occurs,” adds Szabo, who recently served as co-instructor for a class at Wake Forest University that used the Ethical Compass role plays.
In October KPMG sent information about the program to the 7,000 professors in its recruiting database. In addition to Wake Forest, schools that have signed up to use it include UCLA, Boston College, and Bentley College in Waltham, Mass. So far, schools are cherry-picking the Ethical Compass components to provide a new wrinkle in their existing programs, often covering just one or two class periods.
But the full program could be developed into a semester-long ethics course, notes Blane Ruschak, national director for recruiting at KPMG. “We expect the usage will significantly increase in the spring when the schools have had time to figure out how it fits into their curriculum,” he says. “Our goal for the first year is to be in all 40 of the ones we designate as ‘premier’ schools — the ones from which we hire the most people.” About that same number of colleges and universities already have requested to receive the tools for evaluation, Ruschak adds.
While the program obviously is intended as a recruiting tool, Ruschak says that KPMG also sees it as an opportunity to “give back to the academic community.” Szabo downplays a query about whether an additional motivation might be related to the firm’s 2005 settlement of a case in which it paid $456 million to avoid criminal prosecution for allegedly helping wealthy clients create illegal tax shelters.
For each school that uses the Ethical Compass program, a KPMG partner works with a course professor to deliver the education in the classroom. At Wake Forest, six role plays were used in a class in the Masters in Accounting program. The scenarios they present do not address the nitty-gritty work of preparing or reviewing clients’ accounts, but rather interpersonal situations.
In one role play, for example, a high-ranking officer at a public company informally recruits a member of an external audit staff while the audit is still in progress. “That situation obviously can create independence and objectivity issues,” says Szabo. In the Wake Forest classroom, the student playing the auditor said no thanks to the job offer, although that didn’t end the discussion. Questions that arose included: Should the audit-staff member report the interaction with the client’s officer to the engagement partner for that client? What happens if the auditor changes his or her mind? Should the auditor be removed from that audit?
Other role plays had two staff auditors arguing over the chance to gain access to the office of an uncooperative employee at the company being audited; a senior audit manager attempting to influence a new staff auditor to record less time than actually was spent to complete the work; and a public accounting firm tax partner trying to impress an attractive candidate by sharing personal information about a celebrity client.
Teddy Koch, a student in the Wake Forest graduate program, finds value in the real-world quality of the role plays. “It was pretty interesting,” he says. “There were things you could encounter that, as a student, I wouldn’t have anticipated. It was good to be exposed to them because a lot of them were a bit murky and you wouldn’t know how to react.”
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Other aspects of the full Ethical Compass program address topics such as conflicts of interest, professional skepticism, information security, and how to raise concerns about cheating.
In most cases, there are more gray areas than right answers. “You can’t just put these ethical scenarios into a convenient yes/no, right/wrong framework,” says Szabo.
For example, Ruschak says one of his favorite case studies presents a situation of a graduating student who has accepted a job at his second-choice firm, after being rejected in his bid for a dream job at another firm. Then, just before starting work, the other firm calls, says a position has opened up, and offers it to the individual.
“I’ve used that one at Accounting Honor Society meetings,” says Ruschak. “It is really interesting that a group of honor students tends to be pretty much split, with half saying it’s OK to go for your dream job and half saying it’s wrong to back out of the job you accepted.”
It’s the “what-if” scenarios that really get the discussion jump-started. In the previous example, what if the second job offer is from a firm with global business and not just national business like the one whose offer you had accepted? What if the firm where you accepted a job is small and only hired two people this year, and it’s too late to find a replacement for you? “After presenting the what-ifs, you can see the students start to change their minds and really start thinking about the impact of their decisions,” Ruschak says.
In a few scenarios, the ethical position is more clear-cut. One had an accountant having his secretary complete a web-based continuing professional education for him. That one resounds with both students and faculty, though, because they frequently deal with the same issue on campus. “They begin to understand that the same ethics they’ve been taught in school are going to apply even more in the business world,” says Ruschak.