In the wake of corporate scandals such as WorldCom, Parmalat and Enron, students at the School of Management are learning the nuances of round-tripping, insider trading and fictitious transactions in preparation for their future careers.
A new SOM class taught by Jonny Frank LAW ’83, a former federal prosecutor who is currently partner in charge of fraud risks and controls at PricewaterhouseCoopers, and SOM professor Shyam Sunder is introducing students to various financial fraud schemes, how they were detected, and how they could have been prevented.
Frank said he thinks the class will have a practical application for graduates.
“We’ve promised everybody in this class that there will be a point in their career when they will be touched by fraud,” Frank said.
Sunder said he has not heard of any other business school offering a course that deals with financial fraud.
So far this semester, the class has addressed topics such as improper revenue recognition, understatement of liabilities, and overstatement and misappropriation of assets. Issues scheduled for future lectures and presentations include improper expenditures, bribery and corruption in emerging markets.
The class is divided into five groups — each of which presents a weekly case study related to the topics being discussed.
In addition to discussions and group presentations, which students make from the various viewpoints of auditors, investors and leaders of corporations, both professors said they have scheduled a variety of speakers over the course of the semester.
“We want a 360-degree perspective, not just an auditor’s or prosecutor’s perspective,” Sunder said.
Next week’s guest lecturer led the Department of Justice task force in the Enron investigation. At the end of the semester, a colleague of the mayor of Bridgeport who was prosecuted during the city’s bribery scandal is scheduled to talk with the class.
“What the students are going to find is that it can happen to anybody. He didn’t go into business intending to commit fraud, but he ended up giving money to the mayor of Bridgeport,” Frank said of the speaker.
Sunder said he hopes the analysis of case studies will ultimately show students the far-reaching consequences of becoming involved in dishonest business practices and discourage them from such activities.
Frank and Sunder said they met through a friend at the SOM last year and planned the class together. They said the SOM administration approved the idea last spring.
Although most of the class’s 15 students attend the SOM, one Yale College student is also enrolled.
“You hear a lot about different financial fraud scandals in the news, and some of the firms I’ve been interviewing with are involved,” the student, Yves Blechner ’04, said.
Blechner said he has already taken three classes at the SOM and is pleased with the financial fraud class because of the professors’ anecdotes and emphasis on group presentations.