Students need personal finance, not Form-10Ks

Dear Editor:

 In his opinion column “Stop and smell the business; accounting a practical skill,” Tim Mak argues that all undergraduate students should take an introductory accounting course because accounting knowledge is “important in understanding financial statements, business and investments.” While Mr. Mak should be lauded for his efforts to pique student interest in the business world and investing, I am afraid he is missing the big picture. First of all, accounting knowledge is only one very small piece of the personal finance pie, and I would argue one of the pieces of lesser importance. Secondly, suggesting that an introductory course in accounting will provide students the skills to “read annual reports, Form-10Ks and general business reports about various companies and myriad industries” with any real comprehension is absurd.

Yes, there is an unquestionable need for personal finance education in the United States. But for the overwhelming majority of individuals, the need is not for how to read an annual report and perform fundamental stock analysis. Instead, the vast majority of individuals need to learn how to spend less than they make, how to avoid the deadly trap of credit cards (a cancer on financial health), how to save money and how to differentiate between a want and a need. For these lessons only high school math is needed – accounting won’t help. The credit card debt and financial problems of the CPAs and MBAs with whom I worked in a Big 4 accounting firm and a Fortune 100 finance department attest to this fact.

As to the usefulness of an introductory accounting course, accounting rules have become so complex and arcane that even top-tier CPAs and Wall Street analysts are unable to decipher their meaning. To suggest that a basic accounting course would prepare a student to dive into an annual report and make an informed investment decision borders on malfeasance – notwithstanding Charlie Munger or even Warren Buffet’s advice.

Instead of suggesting that undergraduates take an accounting course, Mr. Mak should be addressing the real issues and demanding that the university create a mandatory class in personal finance.

Steven Geer, CPA

Graduate student, School of Library and Information Science