Monday, July 22, 2002 | 11:01 a.m.
The accounting students in Paulette Tandy's auditing class watched with the rest of the nation as corporate giants fell -- but as they watched, they learned.
While the Securities and Exchange Commission works to clear up the mess and investors work through trust issues, institutions like the University of Nevada, Las Vegas are trying to ensure their students take away valuable lessons.
Beginning next spring UNLV's College of Business will alter its curriculum to require that ethics be taught in key classes. The lessons will be embedded into existing business and accounting classes but designed to give students context like: How did the Enron scandal happen and how does it apply to what you are learning now?
"I think they are going to get much more exposure to issues of accountability and morality," Richard Flaherty, dean of UNLV's College of Business, said. "I have a deep concern that we need to become part of the solution, and I am trying to figure out ways to make that happen."
The hope is that the information will help students think their way out of a bad situation or avoid it altogether.
The Enron case already is being informally used by professors at the college as an example of what budding accountants should not do. And if Enron weren't enough, there is WorldCom, Xerox, Tyco and ImClone to learn from as well.
"We talk about (the accounting) scandals constantly, as you can imagine," said Tandy, a UNLV accounting professor. "We look at former Enron case studies to see why they were wrong."
Students in Tandy's class have noticed the not-so-subtle change in focus since the scandals.
"I think there does need to be a change in the way things are done in the industry," said John Maxton, a 22-year-old accounting major. "(The scandals) are just showing me the value of a good audit."
But UNLV isn't going the route of many other schools. About 20 colleges throughout the nation have created one-time classes that tackle subjects like uncooking the books, corporate fraud and the Enron case.
UNLV's integrated approach has one expert giving it a nod.
"Yes, yes, yes. That's the right way," said Robert Sack, an emeritus professor at Darden Graduate School of Business at the University of Virginia. "We need to start doing things like that to give students the right tools."
Sack said the while the one-time classes being offered around the country will get students up on current events, it won't impart a long-range sense of business judgment.
"It worries me, because I'm afraid people will focus on the wrong thing," Sack said. "What those classes do is show you things that any good accountant could have seen coming. What we need to do is teach business and accounting students to say, 'Wait a minute. Do I really want to take that kind of risk?"'
One example Sack uses in his class is Enron's use of words like integrity and excellence in its company literature. At corporate events employees would receive T-shirts emblazoned with those words.
At the same time the corporate culture used the rank-and-yank practice, where executives would evaluate their employees on a scale of one to five. Those who received fives were yanked, or fired.
Sack said he then asks his students, "Would you work for a company like this?" He points out the contradiction between the corporate ideals and practices and teaches students to weigh those things before accepting a job.
The question accounting student Dan Price, 23, finds himself asking is whether ethics can be learned in a classroom.
"I think ethics are taught to you from childhood and it can be drilled into you, but how much can you actually teach?" Price asked.
UNLV ethics professor Craig Walton says students can be taught ethics, but the School of Business' method of using case studies like Enron and WorldCom to as examples is not the way to go.
"That's an unusual approach to ethics, to just look at things that have gone wrong," Walton said. "The trouble with that is an ambitious but not morally mature person may say, 'Oh, I'd better not do that."'
What is more effective, Walton said, is to give examples of good corporate behavior.
Johnson & Johnson, for example, immediately removed Tylenol from the shelves after fears surfaced that bottles of the medicine had been laced with poison, he said.
"That was incredibly responsible corporate behavior," he said.
What's more, students must be given hypothetical circumstances and taught to think their way out of a situation, Walton said.
Whether UNLV's foray into creating more ethical accountants will work remains to be seen, but Flaherty says it can't hurt.
"I don't think education is the entire solution, but we can't just stick our heads in the sand," he said.
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