Concordia's Thursday Report

Vol. 29, No.9

January 27, 2005


Accountancy is more popular than ever, despite scandals

By Keith Randall

Peter Stoett

Michel Magnan writes a column on finance for the newspaper La Presse.
File photo by Christian Fleury

The accounting profession is recovering from the drubbing it has suffered in the past few years, says Michel Magnan, Associate Dean of the John Molson School of Business.

“Enrolments in the accounting major are holding up very well, and increasing here at Concordia. That’s true especially in the United States. They were going downhill for many years, so the fact that accounting has made headlines for the past few years has raised interest in the profession.”

Magnan was interviewed as he pored over Nortel’s massive restatement of earnings. The key to that debacle was lack of respect throughout the organization for the rules of accounting and reporting.

However, the Nortel affair is dwarfed by another scandal in the U.S. “Some of Nortel’s figures were illusions, but Enron was a whole mirage.”

New laws and regulations are not the solution to executive malfeasance, he said. Standards were well established. While accountants may have been accomplices to corporate mischief, many other executives were also involved.

“Top management essentially engaged in quasi-fraudulent actions to get around the standards. You can have all the standards you want, but if management intends not to respect them, they’re going to cheat, lie and do whatever it takes to get what they want.’

A chartered accountant given the honorary designation of fellow by the Ordre des comptables agréés, Magnan has a doctorate from the University of Washington, in Seattle. As an accountant, teacher and researcher, Magnan says he can get excited from many different angles.

“Everything firms do eventually gets reflected in financial statements, so if you understand those you’re well on your way to understanding what the firm is doing. A good manager must be comfortable with figures.”

The Dickensian image of accountants is a reassuring image for Magnan. “At least these old guys with eyeshades were sturdy people. Maybe something got lost in terms of the moral fibre of what it was to be an accountant.

“A colleague at the University of Alberta said it was almost like being called to the priesthood to be an accountant. If you go back 30 years, you were expected to be of very high moral quality and stringent about policies and standards. Over the last 20 years, we were expected to be salespeople, consultants, business advisors, and many things.

“It becomes difficult to maintain your integrity as an auditor who’s expected to vouch that the books are being kept in the proper way when you’re advising the client on various strategies to minimize taxes or submit a loan application. It creates confusion in one’s mind. We’ve lost something in that regard.”

Perhaps a new generation of accountants will rediscover that lost moral fibre. The Registrar’s office reports that enrolments in accounting majors have risen from 972 in 2000-01 to 1,400 so far in 2004-05.

Given the time lag from enrolment to graduation, the Ordre has noted only a slight rise in applications for professional status, but a significant increase in demand for accounting and auditing services.