HKUST accounts for change

Every module in the MBA offered by the Hong Kong University of Science and Technology (HKUST) moves with the times in terms of course content, case studies and concepts. The impact of the continuing financial crisis, however, means that one subject is seeing more changes than most - accountancy.

Students must get to grips with a raft of new regulations and initiatives resulting from the need to tighten risk management and improve corporate governance. It is also essential that they understand how these rules will affect the responsibilities of managers at every level and the high ethical standards that will be expected of them.

"In class, we talk about principles and practice, but also the scandals and why they happened," says Professor Chen Tai-yuan of the Department of Accounting at HKUST. "The school has always emphasised business ethics, but is now doing even more than before to look at the reasons [for wrongdoing] and the penalties."

To illustrate key points, Chen selects cases involving companies from around the world. This makes it possible to, for example, highlight differences between the GAAP (generally accepted accounting principles) rules used in the US and the IFRS (international financial reporting standards) rules applied in Hong Kong, mainland China and other major economic centres.

Discussions typically also cover the steps required for convergence between the two sets of standards - something that is now big on the international agenda - and the implications of "iPhone accounting". This term describes the practice adopted by Apple who, although obliged to follow US GAAP regulations and delay revenue recognition over a two-year period, choose to report a second non-GAAP set of figures that immediately recognise iPhone sales revenue.

"We incorporate material like this to reflect real-life business practices," Chen says. "I also introduce fair-value concepts and issues related to the Dodd-Frank Act passed in the US, which has a clawback provision [where senior executives have to pay back salary and bonuses depending on their performance] if companies have to restate their accounts."