18 = THE UNIVERSITY DAILY KANSAN
WEDNESDAY,JULY17,2002
Professors: learn from big business' mistakes
By Matt Norton Kansan staff writer
As the U.S. government tries to determine the scope of the crises that have rocked Enron and Worldcom this year, two University of Kansas professors are teaching their students to look at the issues with a critical eye.
Both professors said they thought the fallout from these scandals would not include much new regulation of businesses or their accounting firms.
Michael Ettredge, associate professor of business, said that problems with accounting practices was not a new phenomenon in the financial industry. Because cases tend to come in groups, the public panics especially when the economy is struggling he said
Ettridge said that the combination of rising pressure to maintain profit growth in the face of a sluggish economy and the relative lack of oversight from financial institutions and the government provides businesses the opportunity to commit fraud.
He said he doubted that the Securities and Exchange Commission had the resources needed to closely monitor all of the companies publicly traded in the United States.
"We could reduce street crime by literally putting a cop on every street corner, but how much would that cost?" he said. "The same thing is true in the realm of
Matt Glavin, Overland Park senior in finance, said he had concerns about the recent scandals as he looked for a job upon graduation in December.
Ettredge said he taught his MBA students to be skeptical of financial reporting so that they could be aware of potential problems.
Glavin said he had hoped for a job as a consultant with one of the major accounting firms in the country, such as Deloitte & Touche or KPMG, which has offices in Kansas City, Mo. He said he now doubted whether he could get a job with one of those firms because of the general panic within the industry.
"They're probably not going to be able to detect a fraud, but at least they're going to probably have some idea of what firms to be suspicious of because there are so many red flags," Ettredge said.
Glavin said that he also doubted whether the Bush administration could patrol the financial reporting industry. He said he thought there were still a lot of firms engaging in illegal accounting practices, but to catch these firms the government would first have to fully bring the problem out into the open.
financial reporting. There's only so much enforcement we want to pay for."
"If they were going to be effective, things would have to get worse before they get better." Glavin said.
Managing the political spin associated
By Todd Smith Kansan staff writer
KU Business school doesn't require ethics course
Recent accounting scandals like Enron and WorldCom have brought illegal business practices and ethics into the public eye.
But the University of Kansas does not require business students to take a business ethics course.
Bill Fuerst, dean of business, said students could take a business ethics course as an elective and that a master's degree in business administration required a half-credit business ethics course.
Fuerst said the business school had reviewed its undergraduate curriculum and thought it did a good job addressing the issue of ethics.
"A good number of our classes have coverage of ethics in them," he said.
Some business schools offer ethics courses, but many of the schools do not require students to take them, he said.
Only two schools from the Big 12 Conference, the University of Colorado and Iowa State University, require undergraduate business students to take a business ethics course.
CONTINUED ON PAGE 19
Donald Heider-Markel, assistant professor of political science, said that people in the Bush administration, as well as leaders in the Democratic Party, had ties to the business community. Because of these ties, it is unlikely that the government will make many changes to the law regarding regulation of the financial industry, he said.
"It's not like they're going to run around beating up on their friends," Heider-Markel said. "At the same time, the Democrats in Congress clearly want to make this
with these events is important to both Republicans and Democrats.
But beyond what the administration might do, Heider-Markel said he thought many Americans had become accustomed to dishonesty in business and politics.
a campaign issue for the fall, and the administration can not be seen as not doing anything."
With more people invested in retirement programs like 401k s, there might be more attention paid to this crisis. Heider-Markel said, but probably not enough to make a big impact on the fall elections.
CONTINUED ON PAGE 19