The BADGERACCOUNT

News for Alumni and Friends

A team of Wisconsin School of Business accounting students took second place in this year’s Deloitte Tax Case Study Competition. Wisconsin was one of 12 teams to compete in the national competition held in Orlando, Fla., Nov. 21-23.

The four-member team won second place in the under-graduate division of the competition, earning each a $1,000 prize and earning $5,000 for the school’s Depart-ment of Accounting and Information Systems.

The Wisconsin students were among more than 230 students from 44 colleges and universities who began the competition by gathering at regional sites across the coun-try in October to tackle real-world tax issues. The presti-gious national collegiate competition involves analyzing a hypothetical case study and applying their knowledge, skills and teamwork in a race against the clock and each other to solve complex tax scenarios. The competition is sponsored by the Deloitte Foundation, the non-profit services arm of Deloitte LLP.

The four Wisconsin students are seniors in the Integrated Master of Accountancy (IMAcc) program at the Wisconsin School of Business. Senior Lecturer Lynette Stolarzyk was the team’s coach and Professor Jon Davis was its assis-tant coach. In the finals, the Wisconsin team competed against teams from Brigham Young University, College of William and Mary, Georgia State University, University of Iowa and University of Northern Colorado.

Accounting Students Win Second Place in Deloitte Competition

WHAT’S INSIDE• Thomas Linsmeier:

The Future of Financial Statements ........... 4

• Accounting Faculty Updates ...................... 8

• Alumni Closeup: Matt Ackermann .......... 14

• WorldCom Whistleblower Speaks to Professional Issues Class ........................ 14

• Students Launch Ethics Day. .................... 15

Wisconsin students Tina Wang, Jesse Graewin, Jenna Lenz, and Luke Farrell celebrate their success.

Fall 2008

We’ve had another great year at Wisconsin. Last year, I mentioned that the Department had identified a list of three strategic priorities. The first was to increase the size of our professional programs. We’ve made considerable progress on this priority. Enrollments are up 20 percent and student quality is also up. We are hoping for more growth in next year’s incoming class. Second, as I noted last year, we kicked off a campaign with a short-term goal to raise $6 million by the end of 2008. We stand at $3.8 million right now. Despite the condition of our economy, alumni continue to step forward to help us meet this goal. We are also continu-ing our activities on the professional educa-tion front, and our faculty has participated in several executive programs offered through the Wisconsin School of Business.

We’ve had many other wins over the past 12 months. Chronicles of Higher Education ranked Wisconsin Accounting at the #1 position in its study of scholarly productivity in the discipline on a per-faculty member basis. Public Account-ing Reports ranked our programs at #12. We continue to lead the nation on the number of interns we place at the Financial Accounting Standards Board and we continue to be in the top set of schools on CPA exam first time pass rates. Two Big 4 firms added us to their target university recruiting lists. We also made it to fi-nal five again in Deloitte’s tax case competition.

The department hired two new faculty this year. Qiang Cheng received his Ph.D. from Wiscon-sin-Madison several years ago. Since leaving, he has been a member of the faculty at Uni-versity of Washington and University of British Columbia. As you might have heard, univer-sity faculties generally don’t hire back their graduates. The rare exception is when someone distinguishes himself or herself as a star. Qiang fits this category. He’s developed a very strong publication record and he is great in the class-room. We’re very lucky to have him back.

Also joining us this year is Qiang’s wife, Xia Chen. Xia is a graduate of University of Chi-cago’s Ph.D. program. She was also on the faculty at British Columbia. Xia is a recent graduate, but she has also done very well in the research game for the short period of time that has elapsed since finishing her degree and I’m confident that she will be a valuable addition to our faculty.

The Wisconsin School of Business as a whole has also fared well over the past year with both an $85 million gift to allow the school to retain its name for the next 20 years and a beauti-ful new addition to Grainger Hall for the MBA program. The architecture and furnishings in the Grainger addition are impressive. Be sure to take a look next time you are in town. If you do stop by, be sure and drop by the department. We’ll give you a tour.

Professor Jon Davis

Letter Chairfromthe

“We’ve had many

other wins over the

past 12 months...

The Chronicle of

Higher Education

ranked Wisconsin

Accounting at the

#1 position in its

study of scholarly

productivity...”

Jon Davis, Chairman,

Department of Accounting

& Information Systems

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The 40th Annual Accounting & Information Systems and Beta Alpha Psi, Sigma Chapter Awards Banquet was held Thursday September 25, 2008 at Inn on the Park. The event brought students, faculty and donors together to honor hard work and continuing contributions.

Professor Terry Warfield was honored with the Most Dedicated Member Award plaque by Beta Alpha Psi. This award will be given to one Beta Alpha Psi member each year who exhibits outstanding service and dedication to the organization. Terry Warfield was the faculty chair and helped develop the Beta Alpha Psi Sigma Chapter for many years before stepping down from the post last year. In addition, Joan Schmit, who was introduced as the school’s new Senior Associate Dean, gave a short welcome speech.

The featured guest of the evening was Thomas (“Tom”) Linsmeier, member of the Financial Accounting Standards Board (FASB), who was honored as the Department of Accounting and Information Systems’ Distinguished Account-ing Alumnus for 2008. Prior to joining the FASB, Tom was the Russell E. Palmer Endowed Professor and Chairperson of the Department of Account-ing and Information Systems at Michigan State University. He also served as Academic Fellow and Special Consultant to the Office of the Chief Accoun-tant at the U.S. Securities and Exchange Commission (SEC), where he was responsible for developing U.S. financial reporting disclosure rules relating to the market risk inherent in derivatives and other financial instruments. In addition to providing insights for the future accounting professionals, Tom’s acceptance speech thanked both his family and the university for providing him with the opportunities to be so successful.

Along with the honored faculty, teaching assistants were acknowledged for their continuing dedication to maintaining the business school’s high level of education. As the night progressed, the top 10 graduating seniors of 2008 and the Deloitte Foundation Doctoral Fellowship recipient were recognized and presented plaques displaying their achievements. The main part of the banquet consisted of recognizing outstanding students who were awarded various scholarships. Several new donors were also recognized at the banquet including the Borhegsi family, who was in attendance. The Devitt Graduate Master of Accountancy Scholarship was also announced during the evening’s events. The Accounting Department is very thankful to these new donors and to the donors that consistently give back to the university. Also, congratulations to all of our outstanding students!

The 40th Annual

AWARDS BANQUET

Above: Attending recipients of the top 10 graduating seniors of 2008. Below: Honoree Tom Linsmeier and Alumni Jay Price.

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Recent moves have allowed the Accounting Department to function more as a unit. The Departmental Office moved into a new suite on the fourth floor, 4171, that provides a reception area and waiting area, as well as office space for Lynette Stolarzyk and Judy Schaeffer. The PhD students in accounting are now on the 4th floor of Grainger. Several other department members’ offices have been moved on the fourth floor and we now have additional fourth-floor space for three lecturers: Roger Schroeder, Sue Haine and Anita Kroll. Stop in to see us!

WE’

VE M

OVED

!

Marsha Keune, a Ph.D. student, received the Deloitte Doctoral Fellowship in Ac-counting. She is one of 10 accounting doctoral candidates in the U.S. to re-ceive the fellowship from the Deloitte Foundation. The fellow-ship provides Marsha $5,000 in her final year of coursework and $20,000 in the following year as she completes her dissertation. Her disserta-tion focuses on the social psychological aspects of audit engagements.

While in town to receive the Distinguished Alumni Award, Tom Linsmeier gave a public talk on the future of financial statements. Tom shared his thoughts on the current economic situation and dealt with issues such as mark-to-model accounting and regulatory forbearance. In addition, Tom explained the FASB’s newest project of reorganizing financial statements in order to improve usefulness and communication between management and users. This reorganization will have the financial statements portraying a cohesive financial picture by making clear the relationships between the statements and disaggregating information to be more useful. Tom gave an engaging and informative speech to those in attendance. In addition to the public talk on campus, Tom met with alumni and other professionals in Milwaukee at an event co-sponsored by Foley and Lardner, where Tom discussed fair value ac-counting and other evolving FASB agenda items. These two talks were sponsored by the Arthur Andersen Center for Financial Reporting.

Thomas Linsmeier and the Future of Financial StatementsSpeaker Highlight:

Marsha Keunereceives the Deloitte Doctoral Fellowship in Accounting

The first floor entrance to Grainger Hall’s new east wing welcomes visitors to the Wisconsin School of Business.

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Multicultural Business Student Association The Multicultural Business Student Association (MBSA) strives to provide multi-cultural and international pre-business, business, and students in-terested in business with activities, resources and information to heighten their knowledge about future business careers. We bring in professionals from different companies to interact with our members and inform them of the opportunities available within the company. MBSA started off the semester with a great presentation on resume building and interviewing skills with Cintas. Members can look forward to meeting with Ameriprise Financial, Kohl’s and KPMG this semester, along with social and commu-nity service events. (Submitted by Christine Ly, MBSA President.)

Institute of Management Accountants The UW-Madison student chapter of the Institute of Management Ac-countants (IMA) has had a great year filled with fun and informative events. The IMA is looking to continue to grow and pursue new ideas this semester. IMA is pursuing new volunteer activities and has participated in many of the Wisconsin School of Business initiatives. The core objec-tive of IMA, however, remains in the hosting of professional meetings. Already this semester, IMA has had the opportunity to host U.S. Steel. IMA’s other meetings will be with CUNA Mutual, Integrys, and an event is in the works with the new CFO of Dell, Brian Gladen. ( Submitted by Jesse Graewin, IMA President.)

Beta Alpha Psi This semester, Beta Alpha Psi is pleased to welcome four outstanding presenters to our professional meetings. Our first presenter will be TDS Telecom. TDS will provide us with an inside look at accounting and internal audit in the telecommunications industry. After TDS, the remain-der of our presentations will be from public accounting firms, including Ernst and Young, BDO Seidman, and Wipfli. In addition to our profes-sional meetings, Beta Alpha Psi is looking forward to offering many great volunteer and social opportunities. Our volunteer events, including those organized with the Department’s preferred employers, give members and pledges the opportunity to give back to our community. Our social events allow students to meet with peers and prospective employers in a relaxed environment. This semester, Beta Alpha Psi will also explore two very im-portant ways to involve more accounting students. First, we have created a Diversity Committee to encourage increased membership and involve-ment by international students. Second, our new Sophomore Admissions Committee will explore adjusting class requirements to allow students to join Beta Alpha Psi earlier. These efforts will parallel the new Wisconsin School of Business admission requirements. (Submitted by Luke Farrell, BAP President.)

Mike Altschaefl*Albany-Chicago Company LLC

Brandon Andries*Managing Partner OperationsVirchow Krause & Company LLP

Howard Carver*Retired PartnerErnst & Young LLP

Danny Cunningham*PartnerDeloitte & Touche LLP

Dianne Dubois*Maple Street Associates

David Gay*PartnerErnst & Young LLP

Kirk Geadelmann*U.S. ControllerBest Buy

Susan Haine*Susan Haine Business Consulting, LLC

Daniel J. Kelly*Vice President, Human ResourcesAmerican Family Insurance

Jeff Kowieski*PartnerWipfli LLP

Speaker Highlight: STUDENT ORGANIZATION NEWS

Department of Accounting & Information Systems Advisory Board Members(* Denotes Alumni)

Neil Lonergan*PartnerGrant Thornton LLP

Tim Mattke*Manager of Managerial Accounting and ResearchMGIC Investment Corporation

Janice MuellerWisconsin State AuditorLegislative Audit Bureau

Jay Price*Retired PartnerArthur Andersen LLP

LeRoy SchmidtRetiredWICPA

Roger Schroeder*Retired PartnerKPMG LLP

Todd Watchmaker*PartnerKPMG LLP

Suzanne Wessels*Finance DirectorEcolab

Ray WilsonPartnerPricewaterhouseCoopers LLP

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Cheng, Q., and D. Farber. 2008. Earnings restate-ments, changes in CEO compensation, and firm performance. The Accounting Review 83 (5): 1217-1250.

Prior research finds that earnings restatements are linked to CEOs’ excessive option-based com-pensation and equity holdings. In this paper, we investigate whether firms that experience earnings restatements recontract with their CEOs to reduce their option-based compensation and if so, whether this leads to improved firm performance. Based on 289 restatement firms over the period 1997-2001, we find that the proportion of CEOs’ compensation in the form of options declines significantly in the two years following the restate-ment. Furthermore, we document that this reduc-tion is accompanied by a decrease in the riski-ness of investments, as reflected in lower stock return volatility and subsequent improvements in operating performance. Our results suggest that a decrease in option-based compensation reduces CEOs’ incentives to take excessively risky invest-ments, resulting in improved profitability. Overall, our findings provide insights into the design and efficacy of CEO compensation contracts.

Chen, S., X. Chen, and Q. Cheng. 2008. Do fam-ily firms provide more or less voluntary disclose? Journal of Accounting Research 46 (3): 499-536.

We examine the voluntary disclosure practices of family firms. We find that, compared to non-family firms, family firms provide fewer earnings forecasts and conference calls, but more earn-ings warnings. Whereas the former is consistent with family owners having a longer investment horizon, better monitoring of management, and lower information asymmetry between owners and managers, the higher likelihood of earnings warnings is consistent with family owners having greater litigation and reputation cost concerns. We also document that family ownership domi-nates non-family insider ownership and concen-trated institutional ownership in explaining the likelihood of voluntary disclosure. Using alterna-tive proxies for founding family’s presence in the firm leads to similar results.

H Ashbaugh-Skaife, DW Collins, WR Kinney Jr, R. The Effect of SOX Internal Control Deficien-cies and Their Remediation on Accrual Quality. The Accounting Review 2008.

This paper investigates the effect of internal con-trol deficiencies and their remediation on accrual quality. We first document that firms reporting in-ternal control deficiencies have lower quality ac-cruals as measured by accrual noise and absolute abnormal accruals relative to firms not reporting internal control problems. Second, we find that firms that report internal control deficiencies have significantly larger positive and larger negative ab-normal accruals relative to control firms. This find-ing suggests internal control weaknesses are more likely to lead to unintentional errors that add noise to accruals than intentional misstatements that bias earnings upward. Third, we document that firms whose auditors confirm remediation of previously reported internal control deficiencies exhibit an increase in accrual quality relative to firms that do not remediate their control prob-lems. Finally, we find firms that receive different internal control audit opinions in successive years exhibit changes in accrual quality consistent with changes in internal control quality. Collectively, our cross-sectional and intertemporal change tests provide strong evidence that the quality of inter-nal control affects the quality of accruals.* Funded in part by support from the Arthur Andersen Center for Financial Reporting

M.B. Keune and K.M. Johnstone. Staff account-ing bulletin No. 108 disclosures: Descriptive evidence from the revelation of accounting mis-statements. Accounting Horizons 2009 (March, forthcoming).

The purpose of this paper is to provide a descrip-tive analysis of companies’ previously uncor-rected financial statement misstatements using disclosures recently mandated by Staff Account-ing Bulletin No. 108 (SAB 108). We analyze 355 companies that disclose and correct 792 misstatements in their financial statements filed

Selected Abstracts of Recently Published Research

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from November 15, 2006 to February 15, 2008. We present descriptive evidence on the size and industry distribution of companies who disclose SAB 108 adjustments, showing that larger com-panies and those in the banking/insurance/real estate industries are most commonly represented in our sample. We also describe the types of audit firms that are associated with these companies. The results show that the concentration of sample companies in the banking/insurance/real estate industries are most often audited by the smallest audit firms in the market, and there is consider-able variation in the application of quantitative materiality thresholds for SAB 108 disclosures across audit firms. Finally, our descriptive analy-ses reveal insights about the nature, direction, and magnitude of specific misstatements correct-ed by SAB 108. For example, we show that the most common SAB 108 misstatement corrections involve current liabilities, deferred taxes, rev-enue recognition, and leases. In addition, many companies in our sample used SAB 108 to cor-rect misstatements identified in the current year in order to avoid restating prior period financial statements.* Funded in part by support from the Arthur Andersen Center for Financial Reporting

Changling Chen, Mark Kohlbeck, and Terry Warfield. Timeliness of impairment recognition: Evidence from the initial adoption of SFAS 142. Advances in Accounting, incorporating Advances in International Accounting (2008).

This research investigates the timeliness of impairment recognition from the initial adoption of Statement of Financial Accounting Standards no. 142, Goodwill and Other Intangible Assets (SFAS 142). Using a sample of firms reporting goodwill at yearend 2001, we examine the lag between incorporation in returns and recogni-tion in earnings of 2002 goodwill impairments to provide market-based evidence on the timeliness

of goodwill impairments upon the adoption of the new rule. First, our results indicate that the market anticipated the initial adoption write-offs. Second, while the concurrent association between stock returns and newly incurred impairment losses indicates timely recognition of impairments after the new standard, the market also anticipated the new impairment losses subsequent to initial adoption. This indicates that timeliness can be improved further after the adoption of SFAS 142.* Funded in part by support from the Arthur An-dersen Center for Financial Reporting

Clor-Proell, S.M. and M.W. Nelson. Account-ing Standards, Implementation Guidance, and Example-Based Reasoning. Journal of Accounting Research, 45(4): 699 – 730, 2007.

This paper examines interpretation of accounting standards that provide implementation guidance via affirmative or counter examples. Based on prior psychology research, we predict that prac-titioners engage in “example-based reasoning” such that they are more likely to conclude that their case qualifies for the same treatment as the example. We test our predictions in two experi-ments in which participants judge the appropri-ateness of income-statement recognition. Experi-ment 1 uses MBA students and varies example type (affirmative, counter) and case (revenue rec-ognition, expense recognition) in a 2 x 2 design. Experiment 1 supports our predictions. Experi-ment 2 uses more experienced practitioners, and varies example type (affirmative, counter, both) in a 1 x 3 design. Experiment 2 supports the use of example-based reasoning, and indicates that prac-titioners in the “both” condition respond as if they had only received an affirmative example. These results have implications for understanding how guidance that accompanies accounting standards can result in aggressive or conservative applica-tion of standards.

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FACULTY UPDATES

Joe BoucherIn some ways, this past year was more of the same, and in others, it was not. More of the same includes teaching two undergraduate sections of Bus Law II, as well as a Legal mod-ule of the Executive MBA program. In addition, I updated the two state bar publications that I co-authored: one on LLCs and the other on Corporations. I also co-authored an article in the Wisconsin Lawyer updating lawyers on the most recent developments in LLCs. What was new this past year was teaching the graduate legal module to the Kohls’ corporation execu-tives. In addition, I authored a series of 17 articles on new tech companies for the internet site, Wisconsin Technology News. Finally, I provided sessions on entity formation for the MBA program, various undergraduate sections and the Burrill competition.

Qiang Cheng I am a new associ-ate professor with the Department and earned my Ph.D. in Accounting from this school and my M.S. in Accounting from Tsinghua University in Beijing, China. I previously taught at the University of British Columbia and the Uni-versity of Washington. I conducted extensive research on various financial reporting and disclosure issues, including how investors use accounting information for valuation purposes, how executives affect financial reporting and disclosure decisions for their self-interests, and how security analysts help disseminate information in the capital markets. In one of my well-cited papers, my coauthor and I found that executives with higher stock-based compensation are more likely to report earnings that meet or just beat analysts’ forecasts in order to increase the stock price at which they sell their shares. Currently, I am working on how founding family ownership affects critical corporate decisions, such as CEO turnover, corporate disclosure, and tax planning. I have published many papers in lead ac-counting journals, including The Accounting Review and Journal of Accounting Research.

I will be teaching financial accounting in the spring. I taught financial statement analysis to both undergraduate and MBA students at previous universities. I am also very active in the academic accounting field in North America and Asia and currently serve on the editorial boards of The Accounting Review and Contemporary Accounting Research. I am also the president-elect of Chinese Ac-counting Professors’ Association at North America, and am the co-chair organizing the association’s research conferences.

Xia ChenI have my Ph.D. and an MBA from the Univer-sity of Chicago and am joining the UW-Madi-son Accounting faculty this year as an assistant professor. Previously, I taught at Sauder School of Business at the University of British Columbia. My research examines various financial reporting and dis-closure issues and my work appears in lead ac-counting and finance journals, such as Journal of Accounting Research, Journal of Financial Economics, and Contemporary Accounting Research. Currently, with my husband and colleague, I am researching how founding family ownership affects critical corporate decisions, such as CEO turnover, financial reporting and tax planning. I am also working on a few projects related to financial analysis, earnings restatement and firms’ financial constraints. This semester I am teaching advanced financial accounting. My husband and I are very excited about our move to Madison. We are thrilled to come back here and we are enjoying the wonderful fall weather. Our two boys, Albert (6) and Eric (2), are excited about their new school and daycare.

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Susan Fricano HaineI am teaching Corporate Tax this fall and loving it (most days). After graduating from the Ac-counting program here at the UW in the late ‘80s with an undergrad and graduate degree in accounting, I never completely left! I enjoyed a successful 10-year career in public account-ing at Grant Thornton, followed by eight years at the QTI Group in Madison as chief operat-ing officer. During those years, I returned to the Accounting department to teach on several occasions and also continued to sit on the Department Advisory Board which keeps me in touch with new faculty, their research work, and other activities in the Department. Last year (fall 2007), in a life-changing move, I sold my stock in QTI, left the corporate job, and struck out on my own, starting a business con-sulting practice. I could give you all the details here, but instead please check out my website at www.susanhaine.com. I also left QTI to find a way to pursue my first love, teaching. This fall, I have reconnected with faculty friends (Larry Rittenberg, for example, who has always been there to lend his experienced point of view) and am teaching corporate tax.

Jon DavisThe past year has gone by very fast for me. Aside from my administrative responsibilities as depart-ment chairman, I have been spending time in the classroom teaching partnership tax to account-ing and law students and teaching/managing the undergraduate introductory cost accounting course. I’ve also been doing a fair amount of traveling. I spent a month this summer with my family in Buenos Aires and I’ve visited several other cities in the U.S. On many of these trips, I’ve had the opportunity to meet with some of you and it has been great fun. I really enjoy reconnecting with some of our past graduates and I hope to do more of that in the future. On the research side, I’ve been working to get a few research papers pushed out the door, including some work on the psychology of compromise in the public accounting environment and a model of the dynamics of corporate fraud inside organizations. For those of you who know me, yes, I am still playing World of Warcraft in my spare time. I don’t have as much time to do this as I used to have, however. If you find yourselves in Grainger Hall, please stop by to say hello. I’ll give you a tour of the new building!

Mark A. CovaleskiI continue to enjoy teaching in the areas of managerial accounting and strategic cost management. Not only do I teach courses in these areas for the undergraduate and graduate curriculum in the Department of Ac-counting, but I also teach these topics in the Executive MBA and Executive Education programs. My major focus for teaching and executive development is in the health care industry, where I teach healthcare financial

management for the University of Wisconsin’s School of Medicine and Public Health, Tulane University’s Graduate Programs in Health Care Management, the American College of Physician Executives and numerous in-house management development programs for hospitals and clinics across the country. I also serve on boards of directors in the healthcare, insurance, and pharmaceutical indus-tries. I continue to serve on several editorial boards for academic journals, and have recently published a pair of chapters in scholarly research books published by Oxford University Press in London and Elsevier Press in London. I have also been active in the Management Accounting section of the American Accounting Association. During this past year, I have chaired the Executive Committee in the Wisconsin School of Business, chaired the Undergraduate Specialization in Health Care Management, and served on the faculty advisory board for the Bolz Center for Arts Administration. At the campus level, I have served as chair of the Lectures Committee and, most recently, have joined the UW Athletic Board.

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Ann O’BrienTeaching students to lie, cheat and steal…hmmm, what a prospect. Yes, this past spring semester, the department offered a new class on Fraud Examination. With Lynette Stolarzyk assuming my responsibilities for the profes-sional programs and internship course, I was the lucky faculty member to be assigned to teach the Fraud Examination class. With the help of the Association of Certified Fraud Ex-aminers, speakers from accounting firms and

the FBI, students were instructed in the fine art of fraud…examination. After listening to speakers’ stories, studying fraud schemes and enjoying popular con movies and books, students learned that “reality” usually has at least two perspectives and that when performing a fraud examina-tion, one must look through a newly acquired lens in order to success-fully spot fraud. Preparing the class for this first-time offering was quite a chore, but it was rewarding. I look forward to teaching the course a second time this spring, making improvements from the trial run last year, and enjoying the experience of a new class. Teaching the Fraud Examination class in the spring was a complete contrast to teaching Ac-counting Information Systems in the fall semester. Not only is the fraud class more entertaining, there is only one computer project!

I have been teaching MBA and other graduate courses in accounting for many years. In addition, I taught intermediate management accounting (Cost Manage-ment Systems) for the last few years, including last spring. I also began teach-ing Strategic Performance Measurement in the Evening MBA program. This fall, I am teaching a Ph.D. seminar (Introduc-tion to Accounting Research) and the MBA Introductory Managerial Accounting course that I have been teaching for many years. I am serving the final year of my three-year term as co-editor of Account-ing Horizons. In February, I represented the journal on an editors’ panel at the American Accounting Association’s New Faculty Consortium. I also attended the PCAOB Symposium in Washington, D.C. in April. Within our department, I chaired the Faculty Recruiting Committee and served on the Professional Programs Com-mittee. My recent research projects have studied analogical reasoning in account-ing contexts, the effect of competition on the use of customer satisfaction measures in executive compensation, and the use of negotiated sales targets in employee compensation. These papers have been presented at various universities and aca-demic conferences.

Karla JohnstoneI continue my work in teaching and research in auditing. I joined Professor Rittenberg as a co-author in writing the textbook Auditing: A Business Risk Approach and am now teaching both undergraduate and graduate-level auditing courses. My recent research investigates issues including fraud brainstorming, audit implications of Staff Ac-counting Bulletin No. 108 disclosures, audit budget-setting, internal control evaluation, and audit planning and pricing in the post-SOX environment. I continue to serve on the editorial boards of major research journals, including The Accounting Review and Auditing: A Journal of Practice & Theory.

Ella Mae Matsumura

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Brian W. MayhewI spent the 2007 spring semester on sabbatical at the University of Hawaii – Manoa (UH) as a visiting professor. As a visiting professor, I had two main responsibilities. The first was to co-teach the second intermediate financial report-ing course. This course covers material similar to our AIS 302 course at UW, which I do not teach. I benefited greatly from the opportunity to catch up on some of the major changes in financial report-ing, especially those involving fair valuing of investments. This experience gave me a sound base for assuming responsibility for our Professional Issues class inspring 2008.

My second responsibility was to interact with the Ph.D. students at UH and share with them my research insights. While both purposes fulfilled my responsibilities as a visiting professor, I had an additional reason to spend my sabbatical at UH. My visit at UH enabled me to teach the most ethnically diverse students I have ever taught in my career. Just as important, I got a chance to live in a different culture. The strong Asian and Island influence in this culture differs greatly from the Ger-manic and northern European influence of my Wisconsin upbringing. At the same time, the experience could be gained within the U.S. which greatly simplified my family joining me on the adventure. Those of you with children will under-stand that moving four boys (ages 2 to 11) over 4,000 miles from home is nosmall undertaking.

Shana Clor-ProellNow in my second year at UW, I continue to teach Intermediate Accounting I to undergraduate students. With all of the recent changes in the financial reporting environment, such as the proposed move to IFRS and the increased discussion about the use of fair value accounting, this class continues to be very enjoyable. On the research front, there are a number of new developments. First, my dissertation recently received the ABO Outstanding Dissertation Award. Second, the FASB’s financial state-ment presentation project and the increased fair value disclosures mandated by SFAS 157 led Terry Warfield and I to start a project that examines how financial statement presentation affects nonprofes-sional investors’ interpretation of fair value information. Finally, risk disclosures mandated by the SEC in 2005 and the recent downturn in the economy have Hollis Skaife and I examining risk disclosures and risk management in the retail industry.

Larry RittenbergTeaching at one of the great institu-tions in our country with enthusiastic students and great colleagues con-tinues to bring great joy to me. My focus continues to be on the auditing courses, but with some additional coverage of Enterprise Risk Manage-ment and Corporate Governance in Executive MBA courses. I am also

working on a research project to develop a model to determine an optimal size of an internal audit department, and it seems that I am continually updating the audit textbook. This will be my last year as Chairman of COSO. My association with COSO has had great rewards. During the past two years, I have had the opportunity to work with the Ministry of Finance of the People’s Republic of China as they developed their internal control and risk management guid-ance. I have also made presentations and/or met with regulators in Japan, Norway, Spain, the Netherlands and China, as well making numerous presentations in the U.S. ranging from Directors’ Summits to seminars on internal control. My greatest joy during the past two years is that of having grandchildren. I make every opportunity I can to spend time with them “at the cabin.”

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Lynette StolarzykLast year was a whirlwind of activity as I familiarized myself with the life cycles of the BBA, IMAcc and GMAcc programs as the Director of Professional Programs in Accounting. I also taught AIS 600 (the professional internship experience) for the first time. Now that I have my feet wet, I am full steam ahead on making the programs better based on the suggestions of the faculty, students and preferred em-ployers. Most of my day-to-day activities center on advising students. My husband and I welcomed a son into our family this summer. Andro was born on July 6 and joined two sisters, Ella and Ava. With three children under three in our house-hold, there is no down time and conse-quently, no hobbies or outside activities to report. The photo is one of Ava/Snow White and me trick-or-treating.

Tom TierneyI continue to teach two sections of intermediate financial accounting (301) and an introductory tax course designed primarily for non-accounting majors (329). I also coordinate the 301 course activities to provide continuity since the other 301 instructors tend to change frequently. I continue to be impressed with the high caliber of student that I interact with in 301. Accounting and finance majors make up the class and are a group of truly high achievers. The tax course I teach offers more diversity of students since there are students from the Wisconsin School of Business School, the Law School and the School of Human Ecology taking the course.

Holly SkaifeI currently teach the elements of financial report-ing and analysis to students enrolled in the full time MBA program as well as the enterprise MBA program in the Wisconsin School of Business. My research continues to focus on current top-ics that address the supply of and demand for financial information in global markets. I’m still traveling once or twice a month to participate in conferences or present workshop papers. The

best part is I now have friends or family in many of the places I visit! My three older children have graduated from college; Brandon and Caroline are working in Chicago and Colleen works in Seattle. Alyssa is a junior in high school and Ike is in seventh grade. After receiving tenure three years ago, I bought an old house near Camp Randall and entertained myself by knocking off the roof and adding a second floor. It’s a great place to host Department picnics and family celebrations. I hope you’ll come visit!

Judy SchaefferI have spent quite a bit of time on the move of the department office, setting up new space for the PhD students and the new MAcc lab. The department was able to secure the former Brand Center which gives us a very nice reception area, waiting area, offices for Lynette Stolarzyk and myself and a room for the copier,

supplies, a table and desks for PhD students. We are sharing a room connected to the suite with Marketing for more of our PhD students. We also have another set of rooms for PhD students where the copier used to be and Al Talarzcyk’s former office. Some final decorating touches and the move will be complete. I also have been working with painters, carpet installers, furniture compa-nies and electricians to get the new Ernst and Young MAcc Lab/Lounge remodeled and furnished. My family and I recently met in San Diego for a wedding -- that’s me -- the second from the right.

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TerryWarfieldTeaching, research, and service activities have kept me quite busy. It has been a pleasure to teach Account-ing Theory and Intermediate Accounting this past year and to work with doctoral students on their research, as well as joint projects. Current working papers examine the accounting for

variable interest entities and accelerated share repurchases, as well as earnings management in banks. All of these studies are co-authored with former PhD students – how fun. I have served the past two years as chair of the Professional Programs committee and I have had the honor to serve the past two years on the Financial Accounting Stan-dards Advisory Council to the FASB. It has been a fascinating and challenging stint, as the Board is advancing major standards projects (e.g., pension accounting, leases, and revenue recognition) along with international convergence. My wife, Mary, and I are now empty nesters with our youngest, Katie, a junior at the University of Iowa. Our oldest, Andrew, now is married and lives in Milwaukee. Mary and I had a great trip to Japan this past summer to visit our second-oldest child, Lauren, who is teaching English in a high school on Hokkaido.

Al TalarczykTime flies when you are having fun. I can’t believe that it will be 30 years this spring since I walked into the old “Commerce Building” to teach my first tax class for the Department of Account-ing. During the academic year I currently teach the first tax class, a gradu-ate class in tax research, and a graduate class in Estate, Gift and Gen-eration Skipping Tax. The graduate classes are cross listed with the law school which in my opinion cre-ates a great environment enabling our accounting and law students to work together on various projects. In the summer I have also been teaching the second required law class in a very challeng-ing accelerated three

week format. I am also quite proud of the fact that I have co-coached with Professor Jon Davis a team of our students to the national tax championship in three of the last six years in the PwC national case competition. On a personal level, I continue my professional prac-tice which focuses primarily in the area of tax and estate planning. Sue and I have success-fully made the adjustment to an empty nest. Instead of world travels, we are now excited by the idea of visiting our children in New York, West Virginia and La Crosse. We always look forward to our days in our cabin in northern Wisconsin. Unfortunately, the pictures relate to being hazed into trying to wakeboard by my son. The first picture I call, “Optimism,” the second is entitled, “How did I ever get in this position” and the final picture is, “ I will not let go or give up even if I am totally under water.” I guess I will stick to skiing next summer! I hope this letter finds you all healthy and happy.

John J. Wild This past year I taught our Financial Statement Analysis and Valuation course to the masters of accountancy and MBA students. I also taught our PhD seminar in Archival Empirical Research. As in prior years, I continued to coordinate our Accounting Principles course, which serves several hundred students per year. My co-authors (F. Heflin and K. Shaw)

and I published “Information Quality and Intraday Spread Patterns” in the Review of Accounting and Finance, and I served on the Edito-rial Boards of three academic journals this year. My new financial accounting book (co-authored with P. Easton, M. McAnally and B. Halsey) is selling well and is currently used at the majority of the Top 30 MBA programs according to BusinessWeek. I also served as the Lead Speaker at Accounting Symposia held in Austin, Columbus, Los Angeles, Chicago and Boulder.

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Matt Ackermann, a December 1994 graduate, just published a children’s book called Antoine’s Ault Park Adventure. This book is for kids age three and up and is a call to action for kids to get out in nature. In the book, a little boy named Antoine goes to Ault Park for the first time. While walking the wooded trails he sees and hears new things. Matt

lives in Cincinnati with his wife Lisa and their dog Lizzie. Matt says the book is a “green” publication, as the illustrator, the web designer and the editor are all from Matt’s neighborhood. The book was also printed and bound in Cincinnati.

ALUMNI CLOSEUP: Matt Ackermann (’94)

After being a stay-at-home mom since 2000 while working part-time for a family business and providing tax and financial reporting ser-vices for several other small businesses, Deborah E. Allen Schultz (‘85) began a new job in September as the financial manager of Friends of WHA-TV.

Christopher C. Cain (‘90) is a partner at Foley & Lardner LLP in Madison. His practice is general corporate, mergers and acquisitions and IT legal work.

Congratulations to Michael Kraehnke (‘97) who was elected to the KPMG U.S. firm’s partnership. Michael is currently on a rotational assignment at the International Accounting Standards Board in London, England, as a Practice Fellow. He is a CPA licensed to practice in Wisconsin and New York. Michael also serves as a member of the American Institute of Certified Public Accoun-tants and the Wisconsin Institute of CPAs.

Karen Scheppelmann (‘00 & ‘01) of the Denver KPMG office was recently awarded the local 2008 Chairman’s Award for Excellence in Volun-teerism for her efforts with KPMG’s Green Committee, which focuses on improving em-ployee’s and business’s environmental aware-ness and also getting out in the community and giving back to the environment. Congratulations, Karen!

Since graduation, George T. Abraham (‘03) married his wife, Marietta, and welcomed two children into the world – son, Konner and daughter, Mia. George completed his CPA licensure requirements and currently works as a Finance Manager in Corporate Financial Plan-ning & Analysis at Motorola. He also serves on the Northern Cook County Area Board for Junior Achievement of Chicago.

Alumni News

The Professional Issues class meets each spring for three weeks after students finish their internships. The students attend class each evening four nights a week from 4 to 7 p.m. The class examines current issues across all disciplines of accounting including managerial, audit, tax and financial reporting. Most of the students arrive in the class after intern-ships with public accounting firms.

Many of the recent changes in the profession revolve around financial reporting, and as such the class spends a larger portion of its time on financial reporting issues. In spring 2008, the class dedicated time to the expanding role of IFRS in financial reporting. Michael Kraehnke provided an overview of IFRS from KPMG’s national office to the students. KPMG had just agreed to loan Michael to the International Standards Board in London, for a two-year stint. The class also spent nearly a full week examining proposed changes to the financial reporting model.

The highlight of the class may have been Cynthia Cooper’s visit. Cynthia was the internal audit vice-president at WorldCom who aided in bring-ing the fraud to light. She visited campus as part of our Ethic Initiative discussing her new book, “Extraordinary Circumstances,” on the demise of WorldCom. Students in the Professional Issues class read the book as part of a class assignment. We then had a private session with Cynthia prior to her public session. Students were able to ask Cynthia a number of questions, and we were able to discuss some of the details that were too in-depth for her public discussion. The students loved the chance to interact with her and most left with a much better appreciation for the ethical challenges they may face in the future.

WorldCom Whistleblower Speaks to Professional Issues Class

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By Lindsey Powell, IMAcc ‘10

The Accounting Student Ethics Board held the first Wisconsin School of Business Ethics Day on December 3. The Ethics Board is composed of approximately 30 seniors in the IMAcc program, and is dedicated to promoting ethics within the Accounting Department and the rest of the business school. As accounting students, we understand the important role ethics play in our daily lives and will play in our professional ca-reers, and we wanted to spread this understanding to other students as well.

Ethics Day was created to increase awareness of ethics and the signifi-cance ethical decisions have on us and the people around us. We staged a “lost wallet” contest and offered a reward to anyone who turned in one of three fake wallets — two were returned! Ethical trivia facts were posted all over Grainger Hall, students received bookmarks with the Accounting Code of Conduct on them, a raffle was held for all students who wore their Ethics Day t-shirt to school, and the day ended with a short speaker series presented by Professor Brian Mayhew of the Wis-consin School of Business and Denis Collins of Edgewood College.

Over 500 t-shirts were distributed that were printed with our slogan: “Flex Your Ethical Muscle.” The more we practice making the right ethi-cal decisions about small things in our daily lives, the easier it should be to make the right choice when faced with something larger. As Professor Terry Warfield put it, “If you don’t exercise your ethical muscle frequent-ly, you will be weak at the very moment you need to be the strongest. “

Our GMAcc program (Graduate-Only Master of Accountancy) is now in its second year and we have grown the class from 3 students in the first year to 10 students in this second year of the program. The GMAcc program is a 54-credit pro-gram for students without undergraduate degrees in accounting. The curriculum calls for two years of academics with a summer internship between year one and year two.

The GMAcc pilot class of three students now in their second year of the program joined up with the IMAcc graduate students who are working on their “fifth” or graduate year. The integration is going quite well and we can report that one of the GMAcc students in the pilot class is a teach-ing assistant this semester and a second student from the same class will be a project assistant in the spring semester. Students in the pilot class had internships with Ernst & Young and KPMG. All of these students received job offers following their summer internships.

The 10 students who started this past fall include one undergraduate from UW-Madison and 9 international students, all from the Asia-Pacific region. The main driver behind the large inter-national flavor of this particular class was due, in part, to the preferred employers’ interests in the Asia-Pacific region. We also had an overwhelm-ing large pool of international candidates which comprised approximately 90% of our applicant pool. At this stage in the fall semester, we are working to place these 10 students in professional internships with our preferred employers.

We intend to admit somewhere between 10 and 15 students for the GMAcc program next fall. Our ability to admit students is driven on both the numbers of students in the IMAcc program and classroom capacity. In addition, we canvas our preferred employers to determine their needs and capacity to place our students. Questions about the GMAcc program can be address to Lynette Stolarzyk, Director of Professional Programs, in Accounting, at lstolarzyk@bus.wisc.edu.

GMAcc Program

Update

Students Launch ETHICS DAY

Jenna Lenz, Paige Wade, Luke Farrell and Tina Wang, all IMAcc program seniors, wear their Ethics Day Ts.

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The Accounting CampaignThe Accounting Campaign, which began in May of 2007, has a $13 million goal of gifts and pledges. As of the date this newsletter was published, gifts and pledges totaled over $3.8 million.

Please help to continue the Wisconsin tradition of Accounting excellence by making a gift to support the department. Giving is easy to do. You can make your contribution today in any of these ways: • Visit www.bus.wisc.edu/aisgift/ • Call the UW Foundation at 608/265-7942 and indicate that you would like to make a gift to the Department of Accounting

and Information Systems • Complete and return the gift envelope included in this newsletter

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Please make your check payable to UWF- Wisconsin School of Business. You will receive a receipt for your contribution.Mail To:Wisconsin School of BusinessDepartment of Accounting and Information Systems975 University Ave.Madison, WI 53705-1323

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