GLOBAL: Downturn brings ethics into focus

As the recession digs deeper and major accounting scandals are seen as a cause, business and accounting lecturers across the globe are looking to instil a sense of ethics in their students. Critics have argued this lack of education has led to scandals such as Bernard Madoff's US$65 billion Ponzi scheme in the US and the Satyam Computer Services scandal in India where its CEO admitted to falsifying accounts.

Ethics have been largely ignored in many prestigious business schools, says one accounting professor at Australia's Deakin University. Steven Dellaportas argues that students are not equipped to deal with ethical dilemmas.

Dean of Boston University school of management Louis Lataif says,"There's a certain self-consciousness now that we may be part of the problem." Writing in the Sydney Morning Herald, Lataif says, "There's a lot more to education than learning how to read balance sheets."

As a result of the heightened awareness, universities and business programmes around the world are beginning to embrace ethics education in an effort to teach students how to deal with difficult situations before they arise.

Paul Healy, co-chair of a new ethics panel at the Harvard Business School in Massachusetts, says the school has faced criticism since the financial crisis for downplaying ethical concerns in its MBA programme.

Last November, Dean Jay Light created the panel to test how effectively the university teaches its students to manage ethical dilemmas. Healy said at the time the study would put administrators "in the students' seats" to analyse whether or not the programme's ethics course did its job.

On the other side of the globe at the Melbourne campus of Deakin University, Professor Dellaportas is using a more hands-on approach to ethics: he takes his accounting students on field trips to a local prison to visit inmates convicted of fraud.

The exercise is part of a financial ethics course he has been teaching since 2007. Dellaportas says talking to imprisoned accountants is an experience students will always remember.

"While the visit to the prison certainly had an impact on the students, their feedback indicated that it was eye-opening and what the inmates had to say was something they would never forget."

Other universities are also using the recession to demonstrate what not to do. At the Wisconsin School of Business, accounting students launched the university's first Ethics Day on 3 December. Students staged a lost wallet contest, with rewards for those returned, and encouraged future accountants to "flex your ethical muscle".

Stanford University and the Massachusetts Institute of Technology both say they have created classes and projects to explore the recession and its causes, as well as possible change for the future.

Dellaportas says ethics is an important part of an accountant's education: "We try to make the students aware of the issues they are likely to face and provide them with a strategy to deal with those issues, as well as give them an understanding of the consequences of what will happen if they follow the wrong path," he says