Established 1916

Search ogb.wfu.edu

 

 

 

 

 

Calloway taking a close look at Enron
By Andrea Carden
Old Gold and Black Reporter

The university’s accountancy program is currently ranked 20th nationally, and students here have succeeded in achieving number one scores on the CPA exams nationally.

However, these accountants-to-be have been forced to take a closer look at the profession in light of the allegations of fraud and poor business ethics that have encircled Enron and the accounting firm Arthur Andersen, a major employer of university graduates, in the past few months. By allegedly hiding part of its debt through unlawful accounting practices and the destruction of evidence by certain employees at both companies, the Enron affair has initiated a questioning of principles concerning the practice of accountancy.

Employees of Enron allegedly disposed of important documents containing traces of debt and unethical actions. A handful of Andersen employees are accused of aiding in the concealment of these items as well, especially through the use of off-balance sheet financing. As a result of this, many expect the accountancy profession to experience a reemphasis on integrity in the industry. Andersen may also experience financial distress based upon these unfolding events.

In the midst of this scandal, the university’s accountancy program could feel its effects. According to Jack Wilkerson, the dean of Wayne Calloway School of Business and Accountancy and a professor of accounting, "About one-third to one-fourth of Wake (accounting) graduates are hired annually by Andersen, which is approximately 10 students each year," he said. "We have had a good relationship with them over the years."

Although the effects of this scandal could be perceived as far-reaching, the general feeling at the Calloway School is that the Enron’s effect upon the university will be slight. "It’s not going to have a big impact on the program. There will continue to be audit services and tax services provided by Andersen and the other Big Five CPA firms," George Aldhizer, an associate professor of accounting, said. "The biggest impact will be upon the firms themselves and which firms students now choose to work for. Students will have to make a choice between accounting and non-accounting consulting firms. It is too early to tell how it will affect students. As many students major in (management information systems) as in accounting, and most stay on for a fifth year. This area of study will not diminish."

"There is so much uncertainty regarding the issue now," Wilkerson said. "It may hurt the supply of accounting students, but the national trend in accounting enrollment has been down, even before the Enron scandal.

"In the long run, this may make the field more exciting and attract the right type of dedicated students. In the short run and the long run, it will not have much impact on Wake accounting graduates," he added.

"These students are among the top graduates in the country and will succeed in the accounting profession, the majority employed by the Big Five firms."

Because of the Calloway School’s connections with Andersen, many students have participated in internships with the company. Their reactions are similar to their professors’.

"This incident is a great tragedy to the business world and the country," said Brad Lewis, an accounting graduate student who participated last year in a Denver, Colo., internship at Andersen.

"It doesn’t necessarily affect my opinion of the entire company.

There were only a few people in the company who made unethical decisions.

"This will ultimately bring about a lot of change in the accounting industry."

Another graduate student had a different take on the long-term implications of the scandal. "It has made the accounting profession a more lucrative profession," said accounting graduate student Andrew Hunter, also a past Andersen intern.

"(Accounting) will always exist, because companies will always need auditing services," he said.

"I do not believe that it will tarnish Andersen at all. It is more an energy issue related to Enron than an accounting issue.

It definitely shows the importance of accounting to a company."

Despite the many connections that the university has had with Andersen, the general feeling seems to be that the university will remain unimpacted by changes at the company.

"Ultimately there will not be any effects on Wake Forest and its accountancy program as a result of this issue," said Dale Martin, associate dean for academic program and resources and professor of financial accounting. "The number of total hirers will be the same for graduates. Andersen is a good firm and this is unfortunate for the firm because the acts of a few reflect poorly upon the entire company.

"This could have happened to any firm," he said.