CSUSB to Offer Class on Business Ethics Using the Accounting Frauds of Companies Such as Enron as Examples

The recent and ongoing rash of revelations and investigations on fraudulent or questionable bookkeeping methods by the top management of major companies in the United States will serve as a backdrop to a new course being offered at Cal State, San Bernardino on ethics in accounting.

The course - Accounting, Law, Ethics and Institutions - will examine corporate ethics, the implications and effects on investors, businesses and government when companies manipulate their financial statements to mislead; how companies "cook their books" and the role of corporate management, auditors and financial analysts in hiding the truth, said Cal State, San Bernardino lecturer Steven Mintz, who will be teaching the course in the fall.

The course's goal is to instill a strong sense of ethics in CSUSB business students, said Mintz, who developed the class for accounting and business students.

"Our hope is that they will resist pressures imposed by some in top management to be a team player and possibly become part of the kinds of scams and cover-ups that have brought down all too many U.S. companies," Mintz said. "As students who will be working in this environment in the future, we feel Accounting 444 can help sensitize them to the devices used to manipulate company results."

The class is in response to recent revelations and investigations on how the heads of large companies have manipulated or held back information to further their own profits often at the expense of shareholders and company employees, who have seen their company stock holdings, investments and retirement funds drop to next to nothing.

"These managers have personally profited from stock price increases while cashing in stock options, and their gains were based on false and misleading financial information," Mintz said.

Cal State, San Bernardino joins several other prominent universities such as Notre Dame, the University of Texas at Austin, Washington and Lee University and UC Irvine in offering courses in business and accounting ethics as a result of the financial scandals.

Ongoing investigations of companies would be used in the class. The course will study several prominent companies such as Enron and major accounting firms such as Arthur Anderson.

"The recent financial shenanigans disclosed by companies such as Global Crossing, Enron, Adelphia and WorldCom have led to stock price declines of 99.8 percent, 99.8 percent, 99.75 percent and 99.6 percent, respectively," Mintz said.

The revelations of those business dealings led to Fed Chairman Alan Greenspan warning Congress last month that the corporate financial scandals threaten the nation's slowly mending economy. Congress later passed legislation, which was signed into law by President Bush, on ways to deal with the top managers who deliberately mislead financial statements of their companies to further their own gains.

"Accounting and business students at CSUSB should be informed of the ways in which top management at some companies have 'cooked the books' to make their companies appear to be doing better than they really are to drive up stock prices.

For more information, contact Cal State, San Bernardino's Public Affairs office at (909) 880-5007 or the Accounting and Finance Department at (909) 880-5704.