A painless approach to adding SOX to the first (or any) accounting course
Kay M. Poston, School of Business, University of Indianapolis
Issue
Core Competencies Addressed
Pilot Implementations
Student Feedback
The Sarbanes-Oxley Act (SOX) represents the most
significant securities legislation since the original Securities
Acts. How we ensure that our students grasp SOX’s
content is not so clear—especially given that textbook
coverage is still quite limited and that most professors feel
they have too little time available for existing topical
coverage.
This implementation directly addresses the legal/regulatory
competencies identified as part of the broad business
perspective competencies.
In the pilot offerings, the 30-minute SOX exam was
scheduled for the seventh week of the semester (in
conjunction with the textbook coverage of internal controls
and the regulatory environment of accounting). The date
was noted on the syllabus, and the weekly assignments
included an ongoing reminder that students should
“continue reading and studying the Sarbanes-Oxley text.”
The exam counted 5% of the final course grade in the first
pilot offering and 6% of the final course grade in the
subsequent offering.
• I don’t think not going over the Sarbanes-Oxley book in class was an
issue, but I do believe it should have been worth more than 5%
because I felt it took just as much studying as the other exams. It
should have at least been worth 10-15%.
Resolution
At the University of Indianapolis, we feel that all business
students should have meaningful exposure to SOX as part
of their business core. Because all students are required to
take the introductory accounting sequence and because of
SOX’s implications for the accounting profession, we
determined that our user-based first accounting course
would be the most appropriate place for a concentrated
study of the Act.
General Approach
Rather than giving up any existing coverage, we opted to
“painlessly” integrate SOX into the course by requiring
students to learn SOX on their own. Students self-pace
themselves through a required SOX handbook and then
take a 30-minute, in-class exam (primarily true-false and
multiple choice questions) to demonstrate their
understanding of the major components and implications of
SOX.
The approach was piloted in Fall 2009 and Winter 2010.
Beginning Fall 2010, the method will be used by all
professors in all sections of the first accounting course.
Alignment with Program Goals
This implementation is directly aligned with the objectives
associated with two of our accounting program learning
goals. They are that our graduates will be able to:


Demonstrate their knowledge and understanding of
accounting principles, procedures, and the regulatory
environment within which the profession operates.
Recognize and effectively address legal and ethical
challenges facing the profession and individual
practitioners.
Initial Results
Student feedback from the pilot offerings suggests
satisfaction with being held accountable for their own
learning, and they agree that studying SOX this way was a
worthwhile endeavor. Professors in multiple courses are
benefiting by being able to discuss SOX-related issues at a
much higher level than before.
Future Implementations
Beginning Fall 2010, individual professors will have control
over the timing of the SOX exam and will have flexibility
over the percentage weighting, as long as it is at least 5%.
All professors will use the same base exam, but may elect
to add additional questions. The base exam will become a
formal part of our program assessment.
Sample True-False Test Questions
_____1.
Prentice, R., & Bredeson, D. (2010). Student
Guide to the Sarbanes-Oxley Act: What
Business Needs to Know Now That It Is
Implemented (2nd ed.). Mason, OH: SouthWestern.
An alternative is to have students read the actual Act,
which is readily available online at no cost.
• I think I learned a lot from reading it on my own. The importance of the
act is very well explained in the book.
• As I read the book, I found it astonishing how many businesses were
inflating their earnings. I would also prefer the SOX material to be
counted more in the final grade because it is something I will surely take
away from having this class and use as a reference when making
business choices in the future.
• I like SOX being a separate exam. It helps us to focus on just that when
taking the exam. Isn’t as overwhelming.
• I think the SOX test was fair because it covered a lot of what we learned
in the class as well. I did prefer the way the SOX test was set up
compared to how the other tests are done. All Short Answer and
Computations is tasking, some MC on the course material like the SOX
test would be nice or even T/F questions.
• I thought it was a little tough, but still fair.
• I thought the questions were fair and came from the reading. There
were really no off the wall questions. If you read, you knew the answers
or almost a good majority of them & if you didn’t, you were completely
lost.
_____2.
SOX requires that all public companies adopt a code of ethics
for their senior financial officers.
_____3.
SOX places personal responsibility on the audit partner in
charge of the audit for establishing and maintaining an audit
client’s system of internal financial controls.
_____4.
SOX requires that all members of the audit committee be
“financial experts.”
• I definitely think the exam was fair. There were no trick questions on it;
just straight up SOX material that was within the reading. Some of the
questions were pretty difficult though and the reading was a really big
one too. It was hard to keep all the material down straight. Plus, we had
to study for Exam 2 not too long after the SOX exam so that took some
time away from studying for the big test.
All firms auditing public companies are required to have annual
SOX compliance inspections, regardless of the number of
public companies they audit.
• I believe it should count for more because it is more accounting
knowledge in which we’d have no knowledge of unless we read so I
consider it just as important as the other tests. Maybe not to the extent
that it be worth as much as 26% but at least half of that.
Materials
We require the following handbook:
The PCAOB, being a U.S. federal agency, has no authority
over foreign accounting firms.
• I do not think it should be covered in class. It is important, but the class
should focus on more general accounting practice.
_____5.