October 18, 2004
Accounting is No Longer 'Boring,' Says Cisneros
by Niti Dalal

According to Henry Cisneros, the former U.S. secretary of housing and urban development, there is a new golden rule in this country: Whoever has the gold controls the rules.

On Oct. 6, Cisneros addressed students in the Professional Program in Accounting in a lecture regarding the role of entrepreneurship in the American economy. Accounting, he said, is playing an increasingly important role in business, especially with the passage of the Sarbanes-Oxley Act (SOA) in 2002. The act holds chief executive and chief financial officers responsible for any errors made in their financial statements.

“People are going to jail for issues their accountants are dealing with. People are depending on your understanding of complex accounting rules now more than ever,” Cisneros told students.

As a prime example, Cisneros discussed the recent criminal investigation into Fannie Mae, the largest U.S. home financing company. On the day of Cisneros’ lecture, Fannie Mae CEO Franklin Raines and CFO Timothy Howard testified at a House hearing to defend the company’s accounting practices.

With the increasing pressures on accountants and executives, accounting is becoming a hot field. Because of the huge premium placed on quality accountants today, Cisneros encouraged students to get the best education and credentials possible.

“Do whatever you can to further your education after these five years…This is not a field that is standing still—it’s changing very rapidly. Failure to stay current not only serves clients badly, but it will also hurt your own career. Accounting is not a boring profession anymore,” he said.

Cisneros suggested that the importance of accounting is especially evident in small businesses, or companies with less than 500 employees. Although approximately 550,000 new small businesses are established each year, only one out of five lasts more than three years.

“The blueprints of success for small businesses” include four major financial elements, Cisneros claimed. These elements include conducting financial analysis in the search for good partners, managing costs, analyzing the market and the competition and quantitatively analyzing risks.

Understanding small business is important, Cisneros said, since these companies play a major role in the U.S. economy and since most people will, in some fashion, work with a small business during their professional lives. Cisneros cited Toyota, which spent more than $400 million on minority businesses within four years, as one example of a large corporation that depends upon small business.

Cisneros commended the PPA students in his closing remarks: “Congratulations on what you have chosen to do. Early judgment is going to serve you well. You will go into the world that needs your skills more than ever.”

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