Tag Archives: MPA Council

MPA Council and the ICAEW: The future of global auditing

icaewIn late February, Program Director Jim Franklin and Department Chair Lillian Mills were able to have some members of the Institute of Chartered Accountants of England and Whales (ICAEW), one of the leading institutions publishing articles about the profession internationally, to come and speak about the future of global auditing with members of MPA Council.

We were asked the question “What challenges do you think the auditing profession currently faces?” and “If you lived on a small island where all the companies did not have to have their financial statements audited because everyone trusted each other. If you wanted to open the island to foreign-based companies, what protections would you put in place?”

The resulting discussion I felt was fascinating, as it combined the knowledge I’ve developed in both my auditing and complexity theory categories. I feel these two questions are extremely related, and here’s why:

Let’s say we are on the small island described above. There is no need for audited financial statements because there is trust between the companies and shareholders. We face the decision of requiring audited financial statements in the face of foreign companies wanting to sell shares on our island because we do not have the same trust in these companies. Auditors would become in demand because of a lack of trust between company management and investors.

If shareholders feel they have been presented fraudulent financial statements, they will blame the auditors for not catching it. Even though it was the company that committed the fraud, the highly-trained auditors did everything they were supposed to do, a disproportional amount of blame falls upon the auditors.

This blame falls on the auditors because most people don’t fully understand the role of the auditors and the work they do. They just expect them to catch all and any fraud. This is what we discuss in auditing class as the expectations gap. Because people don’t understand the training and qualifications we have, and the limited nature of our job, we can only do so much to prevent fraud. Companies preparing the financial statements are the ones ultimately responsible.

Also, auditors are held accountable for the effectiveness of accounting standards. The problem with this is that the world is coming more and more complex, and companies are quickly adapting their operations in order to survive in the complex world. Frequently, we can’t keep up in developing accounting standards to reflect these new and innovative ways of doing business. Technically, a company’s financial statements could be following GAAP, but the core economics of the transactions are misrepresented.

Because of this expectation gap and lack of trust that is continually strengthened by corporate fraud, a a decent amount of people are mistrusting auditors for “not doing our job.”

The answer seems to be to close the expectations gap and to increase people’s trust in our services. The million dollar question, though, is how in the world can we do that?

Points to Ponder from MPA Council Ethics Week

MPA Council had its second annual ethics week on October 21st through 25th in conjunction with the university wide Integrity-UT week. During this week, MPA Council hosted multiple events, including a screening of the movie Wall Street, an ethics lecture led by Professor Robert Prentice, and an ethics discussion for students.

My personal favorite event was Professor Prentice’s lecture, and the points he brought up will stay with me for some time to come and hopefully will lead me to make ethical decisions in my career.

He opened the lecture by pointing out that, as individuals, we tend to think we are one person who acts a certain way based on our original personalities. However, research shows that our decisions are heavily influenced by our environments and these environments can even change our personalities.

Money especially can have a huge impact on the decisions we make. Professor Prentice showed multiple academic researches that showed people behaved much more selfishly and minimized the concerns of other people in their decision when prompted with money.

Morality is something we consider when dealing with other people, and as money takes us farther away from the consequences to others, we are less likely to make ethical decisions.

Other things can also influence our decision making, such as the colors present in our immediate environment and the actions of others around us.

To learn more about Professor Prentice work in business ethics, you can check out his work and the perspective of ethics from McCombs students through Ethics Unwrapped.


Getting Involved: MPA Council

I worked for a few years prior to returning to school in the MPA program.  I was a bit of a wallflower as an undergraduate, and I wanted to do the complete opposite here.  I’m doing everything I can to be as active as possible, and one of the great things about UT and the MPA program is that you can be as deeply involved as you desire.  As a traditional MPA, I’m only going to be here for just over a year, so I have to jump in feet first.

To that end, I was very interested in the MPA Council.  A couple weeks ago, they hosted an information session to kick off the fall semester.  I loved that one of their goals is to build the community of the MPA program, and that includes not only students, but alumni, faculty, staff, and employers.  I was elected to an officer position as Vice President and I’m massively excited to help roll the year out.  Ethics Week and Faculty Appreciation Week are both under my office, and I’m currently talking with potential committee chairs who will run those events.  I love building communities, and I want these events to really help weave that MPA tapestry.

Opportunities like these are why I came to UT, and are the kind of experience that you just don’t get other places.  We’re the top accounting program in the country at one of the largest universities in the country.  That combination gives us resources and access that are invaluable.

I’ll close out my first post here with my best accounting joke:

Why are so many students afraid to major in accounting?
They hear that it’s accrual experience.

MPA Council: Best Decision of my MPA Career

One of my biggest passions in the MPA Program: MPA Council. Since the council is involved in so many areas of student life, it’s hard to fully describe it in a blog post. I’ll attempt to present a good overview of the group and if you have questions I haven’t answered, don’t hesitate to ask them in the comments section.

What is MPA Council?

Before I describe the Council, I am going to describe the MPA Program the way I currently see it. The MPA Program is composed of 4 groups: students, staff, faculty, and alumni. Each of these groups have a lot to offer the program, and there will come a time you need help from one of these groups, and it pays to have a variety of contacts in each group to get things done.  One of the overall long term goals of MPA Council is to be a central body that facilitates communication between these four groups. I love diagrams, so I have drawn a diagram to illustrate this.  For example, if the MPA Program Office had a new idea, and wanted to gage student interest, it could talk to the Council and the Council could gain insight from a large number of students. The Council’s overall mission is to create a community within the MPA Program. It is commonly interpreted that this means the Council provides MPA students to get to know each other in a variety of settings. This is true, but more than that, the Council is about establishing a community within the four aspects of the program I described earlier. In other words, the Council hopes to synergize the unique and extremely proficient skill sets and capabilities of each of these groups and use them to ensure our program is the best in the nation.

MPA Council members at our boat party on Lake Austin

The council provides members with professional, academic, community service, and social events to participate in. Some of the events hosted this year include a boat party on Lake Austin, State of Accounting discussion with Dr. Lillian Mills, the Accounting Department’s Centennial Celebration with our lovely mascot Bevo, and a PhD panel (you can see pictures from our events here). Coming up we have Ethics Week, speakers for our distinguished speaker series, Faculty Appreciation Week.

Why did I join the Council?

I remember sitting at orientation listening to the professor panels, and professors saying how important it was to know your classmates for group cases and the importance of studying with classmates. I started freaking out, as I only know about 5 people on a speaking basis in the entire integrated class, and I was convinced I was going to fail everything. They talked about the Council at orientation, and I dove in so I could meet my fellow MPAs outside of the classroom. It was the best decision I have made in relation to my MPA degree. I have met so many people with distinct backgrounds and perspectives that I would never have been able to do in the classroom. It’s also provided me so many opportunities and resources within the MPA Program I don’t think I otherwise would have had.

What is my favorite part about the Council?

My personal favorite event of the Council is Member’s only Monday. One Monday a month, the Council provides its members with bagels, breakfast burritos, and coffee. It’s a come and go event, but it’s nice to sit in between classes with lovely MPAs and have a delicious free breakfast!

“An Inconvenient Tax”

On Monday, April 16, MPA Council screened “An Inconvenient Tax” to celebrate the end of tax season. For those of you who have not seen the video, I highly encourage you watch it. The film did a great job capturing the complexity of the US tax code, and explaining the most popular theories of ways to reform it. I feel this video is important to everyone, not just those interested in accounting and tax, because tax reform is going to be a major point of debate in the upcoming presidential election. Many of these theories of reform come up often in current events, and I now understand them better thanks to the documentary.

After the film was screened, the MPA Program Director Jim Franklin led a discussion amongst the council members present. Jim brought up many questions that sparked a healthy debate, the most memorable one being “What do you think will happen regarding the tax code in the future?”

There were many good and valid answers to this question, and this question continues to make me think.  Here is my very personal opinion about the future of the tax code, based on my current knowledge:

I hear many people talking about simplifying the tax code and implementing a flat or fair tax to replace our current complicated system. I completely agree the code needs to be simplified, and here are some facts to back up that opinion:

  • The current tax code is four times the length of Shakespeare’s complete volume of works
  • Over 16,000 changes have been made to the tax code in the past 20 years
  • American taxpayers spend $200 billion and 5.4 billion hours working to comply with federal taxes each year, more than it takes to produce every car, truck, and van in the United States.
  • The IRS sends out 8 billion pages of forms and instructions each year. Laid end to end, they would stretch 28 times around the earth. Nearly 300,000 trees are cut down yearly to produce the paper for all the IRS forms and instructions. (there are many more facts not included here that will blow your mind!)

The code in my mind has gotten out of hand. One of the reasons why is because congressmen continually use the tax code to please constituents and donors.  They soften the blow of their poor performance by creating loopholes for their major donors or try to create tax credits and deductions their constituents can use. If we replace our current system with a simpler tax policy, I don’t see why congressmen won’t continue to try to create tax breaks and changing the code until it eventually becomes as complicated as it is today. Continue reading “An Inconvenient Tax”