Volume 37, Number 1 November 2006

Haas School of Business University of California News

Inside

Development and Enhancements of CFRM 4

Berkeley Award Winner 5

Financial Reporting The Intrinsic Market Value of Ethics in Business Conference Highlights 6 Based on an interview with John C. Bogle, Founder of The Vanguard Group

By Solomon Darwin, Executive Director, Center for Financial Reporting and Management Faculty and Research 8 had the privilege to have a candid talk with John Bogle, Founder of the Vanguard Group, at the 17th Annual Conference on Financial Reporting, where he was Adjunct Faculty 12 Ithe lunch keynote speaker and recipient of the Berkeley Award for Distinguished Contributions to Financial Reporting. Career Enhancement 14 Mr. Bogle, a pioneer in the mutual fund industry, introduced the first Standard & Poor’s 500 index fund ever -- the Vanguard 500 Index -- in 1976. He believes investors Teaching Enhancement 16 should join the market rather than trying to beat it. He demonstrated this by offering low cost, low maintenance index funds that allowed several millions of investors to Student Activities 19 participate in the greatest bull market ever. During my interview with him, we explored the possible causes and remedies for Student News 20 the deterioration of American values and ethics in business and possible remedies. I asked him two key questions: CFRM Donors 22 continued on page 2 . . The Intrinsic Market Value of Ethics in Business

Darwin: “What are the contributing factors to the I strongly concur with Mr. Bogle’s conclusion that erosion of the conduct and values of our business lead- the answer to our ethical problems boils down to the ers, our accountants, our investment bankers, and our character and integrity of individuals who run our money managers over the past two decades?” businesses. To address this problem, we highly promote Bogle: “One major contributor to the erosion of that ethics and values in our curriculum at Haas, as they conduct and those values has been the change in the provide the foundation on which a stable society ex- nature of our financial markets that reflects radically ists. Without that foundation, not only companies, but different views of what investing is all about, and the even civilizations collapse. On a personal level, every- role of our nation’s accounting system in defining them. one must answer the following question: What is my One is the real market of intrinsic business value. The highest aspiration? The answer might be wealth, fame, other is the expectations market of momentary stock knowledge, popularity, or integrity. But if integrity is prices. This is why I have chosen “A Tale of Two Markets” secondary to any of the alternatives, it will be sacrificed as the title of my remarks today. in situations in which a choice must be made. Such In the Real Market of business, real companies spend situations will inevitably occur in every person’s life. real money and hire real people and invest in real capi- Desert storm hero General H. Norman Schwarzkopf, tal equipment, to make real products and provide real talking about leadership said: “Leadership is a potent services. If they compete with real skill, they earn real combination of strategy and character. But if you must profits, out of which they pay real dividends. But to do be without one, be without the strategy.” so demands real strategy, real determination, and real The purpose of ethics in business is to direct busi- capital expenditures, to say nothing of requiring real ness men and women to abide by a code of conduct innovation and real foresight. that facilitates public and investor confidence in their Loosely linked to this Real Market is the Expecta- products and services. Berkeley is so committed to this tions Market. Here, market prices are set, not by the re- cause that the Haas School has established the Center alities of business that I have just described, but by the for Responsible Business dedicated to creating a more expectations of investors. Crucially, these expectations sustainable, ethical, and socially responsible society. are set by numbers -- numbers that are to an important All major accounting professional organizations have extent the product of what our managements want an ethics code. The American Institute of Certified them to be, too easily manipulated and defined in mul- Public Accountants (AICPA), the Institute of Manage- tiple ways. When we have two vastly different markets, ment Accountants (IMA), and the Institute of Internal it is almost inevitable that major conflicts arise.” Auditors (IIA) all maintain a code of ethics. Professional Darwin: “What are some of the possible solutions to accounting organizations recognize the profession’s our ailing problems?” responsibility to provide ethical guidelines to its mem- Bogle: “In the long run, the numbers that are bers. The AICPA’s first principle of professional conduct reported as earnings don’t change the realities of invest- states: “In carrying out their responsibilities as profes- ing. For the good of our society, we need to return to a sionals, members should exercise sensitive professional system in which the real market of owning businesses and moral judgments in all their activities.” returns to play the starring role in investment strategy, Why is this important? and the casino-like expectations market is consigned to Ethics has been the foundation of our global success a supporting role, even as we strive to provide financial and is the heart of America’s economic freedom. reporting that makes those expectations as hard and firm America’s standards have tarnished from time to time, and realistic as we possibly can. Each one of us must fo- but we have always demonstrated in history to quickly cus our own personal human resources of integrity and respond to the crisis, pay the price, correct the prob- character on resolving the stubborn and difficult issues lem, learn from the mistakes, and move forward. that have arisen in this flawed era of capitalism.”

 Why do people from all over the world flock to our America’s founding document: “We hold these truths to shores to find opportunities and excel? I was told: be self-evident, that all men are created equal, that they • 1 of every 4 scientists and engineers in the United are endowed by their Creator with certain unalienable States is foreign born. rights that among these are life, liberty and the pursuit • 50% of doctoral computer science and math degrees of happiness.” and 60% of doctoral engineering degrees awarded in America’s founders established a nation based on the United States go to foreign nationals. widely held ethical values. In George Washington’s • Over 40% of master’s degrees in engineering, com farewell address to public life on September 17, 1796, puter science, and math awarded in the United he said that the survival of freedom on American soil States go to foreign nationals. would have nothing to do with him, and everything to • Nearly 50% of all Nobel Prizes awarded in the do with the character of its people and the government United States between 1901 and 1991 were won by they would elect. foreign-born individuals or their children. My father and more than 70 of our family members It is an established fact that America attracts the best arrived here from India with a few pennies in their and brightest in the world to promote technological pockets and were given opportunities to prosper as sci- preeminence, strengthen the economy, conduct cutting- entists, physicians, academicians, and business people edge research, launch innovative companies, and create -- opportunities that were not made available to us in millions of high-paying jobs. our own nation. For us, America is not an experiment; Why do people flock to our shores? it is a reality. • We have been a breeding ground for generating In recent times there seem to be a perceived inef- inventions and training inventors. ficiency in the US regulatory system to protect investors • We have the most entrepreneurial business by maintaining fair, orderly and efficient markets in climate, one that promotes market-based competi- facilitating capital formation. Up until the year 2000, tion, rewards risk, permits failure and with relatively nine out of every 10 dollars were raised by foreign easy access to capital. companies in the US. By 2005, nine of every 10 dollars • We have the infrastructure to leverage competitive were raised outside of the US. There is a prospect of discoveries and speed time-to-market. losing foreign companies electing not to register in the • We are the home of great innovators such as Thomas US Stock Markets (recent examples include: India bulls Edison, Bill Gates, and Albert Einstein, to name a few. –WSJ article). Possible reasons for this trend could be: • We have intellectual property protection laws for • Our costly and cumbersome deregistration process innovators to create jobs and technologies where in the US their ideas are best protected and most profitable. • US litigation system • We have a transparent government when compared • Managements’ distraction from frivolous law to many, with political stability and a broad respect suits – second guessing regulators and litigators for the rule of law. • Cost of SOX and our complex Rule Based Financial • We have a high quality of life, relative security, and Reporting system that has evolved over time to abundance. keep people honest and prevent fraud. All of the above are true but they are purely a We should all ask ourselves how we can preserve byproduct of our strong ethical foundation. It is the the founding principles, values and ethics on which this character and profile of our nation that draws people nation is built to counter some of the disturbing trends from all over the world. we see in the US Capital Markets. Unless we promote The great English writer G.K. Chesterton observed the foundation on which we stand and restore the that America was the only nation in the world founded damaged portions in a responsible, ethical, and timely on a creed. He was referring to the second paragraph of manner, great will be our fall.

 Developments and Enhancements of Our Programs By Dayna Haugh, Assistant Director, Center for Financial Reporting and Management

CFRM Welcomes Two New Sponsors Executive Accounting Program I We are happy to have Ernst Name SOX Compliance Strategies for & Young and Protiviti as our Financial Executives newest Sponsors of the Center. Date  Day Program offered March 19-21 Ed Kennedy, Audit Senior Time 7:00 am - 8:00 am Continental Manager and Catherine Banks, Breakfast Area Director for the Pacific 8:00 am - 5:00 pm Class Program Northwest and Lead Campus Recruiter for Ernst & Topics Day 1: Planning & Organizing Young, expressed that they are very enthusiastic about Strategies for Compliance CFRM’s objectives and vision for the future. Day 2: Implementation Strategies Protiviti is a leading international provider for Compliance of independent internal audit and business and Day 3: Cost Reduction Strategies and technology risk consulting services. Rachel Bell, Other Solutions Director, Ed Scheuer, Managing Director, and Elaine Fee* $3,900 Poucher, Pacific Northwest Recruiting Manager have Executive Accounting Program II already enthusiastically supported several CFRM Name Reconciling IFRS with US GAAP activities. Date  Day Program offered March 22-23 New Executive Accounting Program Offered Time 7:00 am - 8:00 am Continental A survey was given to the attendees of the financial Breakfast reporting conference regarding their interest in 8:00 am - 5:00 pm Class Program attending Executive Accounting Program courses. Topics Day 1: Tools for Reconciling US Due to the great response, we are happy to announce GAAP with IFRS that two new programs will be offered March 19-23, Day 2: Case Discussions from Real 2007. Classroom space is limited to 60 students per World Examples for Reconciliation course. Online registration is available now at: Fee* $2,900 http://groups.haas.berkeley.edu/accounting/cfrm/ *Fees include breakfast, lunch, refreshments, conference/Exec06. parking and course materials The Executive Accounting Programs are designed Diploma of Completion to enhance leadership skills and equip financial A Diploma of Completion for the Executive executives with current knowledge and best practices Accounting Program will be granted in addition as well as foster personal development in a changing to CPE credits. business world. The programs employ the best Program Designed for: practitioners and academicians to engage the world’s most promising manager in a transformational • CFOs / Chief Accounting Officers experience to manage more effectively and • Financial and General Controllers innovatively. • Heads of Financial Reporting • IFRS/IAS Project Leaders • Accountants/Corporate Accounting Consultants

 Vanguard Founder Honored at Financial Reporting Conference

John C. Bogle, founder of the Vanguard Group, was honored with the Berkeley Award for Distinguished Contributions to Financial Reporting at the 17th Annual Conference on Financial Reporting, held on Friday, October 27, at the San Francisco Marriott Hotel. Mr. Bogle delivered the conference’s lunch keynote, “A Tale of Two Markets,” which looked at earnings man- Dean Tom Campbell and John Bogle agement and ethics in financial reporting. A committee of accounting standard-setters, cor- Award Selection Committee porate financial executives, and academics selected The objective of The Berkeley Award for Distinguished Mr. Bogle for this award. Solomon Darwin, Executive Contributions to Financial Reporting is to recognize an Director of CFRM said that “Mr. Bogle is an outspoken individual in financial reporting that has demonstrated advocate of strong business ethics and an ambassador courage, leadership, stewardship, or other meritorious performance in the interest of providing financial informa- for the high quality financial reporting to which Haas is tion useful to investors in making investment decisions. committed.” 2006 Selection Committee: Mr. Bogle is founder of the Vanguard Group, Inc., Dennis Beresford one of the two largest mutual fund organizations in the Professor world. He is also president of Vanguard’s Bogle Finan- Former Chair Financial Accounting Standards Board cial Markets Research Center. He created Vanguard in Tom Campbell 1974 and served as chairman and chief executive of- Dean ficer until 1996 and senior chairman until2 000. The Haas School of Business, UC Berkeley Vanguard 500 Index Fund, the largest fund in the group Colleen Sayther Cunningham and the first index mutual fund, was founded by Bogle Chief Executive Officer Financial Executives International in 1975. Arthur Fliegelman In 2004, Time magazine named Bogle one of the Moody’s Investors Service world’s 100 most powerful and influential people. He James Leisenring had previously been designated as one of the invest- Board Member ment industry’s four “Giants of the 20th Century” by International Accounting Standards Board Fortune magazine in 1999. He is a recipient of the Patricia McConnell Woodrow Wilson Award from Princeton University for Senior Managing Director Bear Stearns & Company, Inc. “distinguished achievement in the nation’s service.” George Staubus Mr. Bogle is the author of numerous books on in- Professor Emeritus vesting, as well as Battle for the Soul of Capitalism, his Haas School of Business, UC Berkeley 2005 look at corporate excess and what he sees as the Michael Sutton misplaced priorities of mutual fund firms. His newest Former Chief Accountant Securities and Exchange Commission book, The Little Book of Index Investing: The Only Guar- Patricia Doran Walters anteed Way to Earn Your Fair Share of Financial Market Senior Vice President Returns, will be published in March 2007. Association for Investment Management and Research

 CONFERENCE HIGHLIGHTS

Maria Nondorf, who is an Assistant Professor at the Haas School of Business, moderated the Current Issues at the SEC and PCAOB session. Panelists Carol Stacey, Chief Accountant, Division of Corporation Finance, SEC; Grace Hinchman, Senior Vice President, FEI; Bill Gradison, Immediate Past Acting Chairman and Founding Member of PCAOB; and Toby Bishop, Forensic & Dispute Services Partner, Deloitte LLP and Immediate Past President and CEO, ACFE covered topics regarding Review of Materiality Issues, Fraud (Audit Structure & Detection), FAS 123 Update on Guidance, and XBRL.

Dean Tom Campbell presented the Berkeley Award for John Bogle Thomas Linsmeier Distinguished Contributions to Financial Reporting to John his year’s 17th Annual Conference on Financial Bogle, Founder of the Vanguard Group during lunch. The Reporting was held on October 27, 2006 at the audience was captivated by Mr. Bogle’s speech on “A Tale of San Francisco Marriott Hotel. Key standard setters T Two Markets”. and regulators from FASB, IASB, SEC, PCAOB, AICPA, AcSEC, IMA and, FEI, as well as industry experts discussed The first afternoon panel Sarbanes-Oxley – “Journey the latest financial reporting trends and issues. to Compliance” was moderated by Suneel Udpa, Lecturer, Haas School of Business. Discussions covered Guidance for Thomas Linsmeier, Board Member of FASB opened the Management’s SOX 404 Assessment (including discussion conference with a speech on Fair Value. He then joined on the SEC’s Concept Release Comments); AS No. 2 the Emerging Issues in Financial Reporting panel to discuss Implementation; and Cost Reductions Strategies for Compliance. the IASB and FASB Technical Agenda, Convergence/ The panelists were: Brian Croteau, Associate Chief Accountant, Conceptual Framework, Business Combinations, and Office of the Chief Accountant, SEC; Jeffrey Johanns, Technical Transition of Issues for Global Corporations. Bob Walker, Consulting Partner, National Accounting Consulting Services, Immediate Past Chairman of FEI moderated and other PWC LLP; Hans Ploos van Amstel, Chief Financial Officer, Levi panelists were: Mary Barth, Board Member, IASB and Joan Strauss & Co.; Paul Sharman, President & Chief Executive E. Horngren Professor of Accounting, Stanford University; Officer, Institute of Management Accountants; and Thomas Mark Bielstein, Member, Emerging Issues Task Force, FASB Flannery, Partner and Americas Director of Audit Committee and Partner, KPMG LLP; and Steven Hobbs, Senior Advisor Communications, Ernst & Young LLP. of Protiviti.

“I found the conference extremely instructive. It gave me insight into both where financial reporting is today, and also into where it will go in the next 12-24 months”

Ed Scheuer Managing Director Protiviti

 Over 300 corporate executives participated in the conference.

Bob Laux, Director, Technical Accounting and The day concluded with a raffle awarding four lucky Reporting of Microsoft Corporation moderated the last winners prizes which included two nights stay at the Marriott panel on Complexities in Financial Reporting – “Facing Hotel, two free admissions to next year’s financial reporting the Challenges”. Panelists Leslie Murphy, Chair, Board conference, and an autographed book by Mr. Bogle. of Directors, AICPA and Group Managing Partner, More photo highlights of the conference are on our web Plante & Moran; Ben Neuhausen, Chairman, AcSEC page: http://groups.haas.berkeley.edu/accounting. and Partner and National Director of Accounting, BDO Seidman LLP; Betsy Rafael, Principal Accounting Officer, “I thoroughly enjoyed the Conference. The speakers and Cisco Systems, Inc.; Jon Flaxman, Senior Vice President panelists were excellent and I believe that I went away and Controller of Hewlett-Packard; and Mary Barth, from this conference with a broader understanding of the Stanford University discussed Principles-Based vs. Rules- fundamental current issues involving financial reporting. It was excellent to hear the viewpoints from professionals Based Standards; International Convergence/Causes of with different perspectives, such as the standard setters, Complexity; Codification of Existing Accounting Literature; users, and preparers of financial reports.” Institutional/Cultural/Behavior Issues; and Enhanced Alan Falcon Business Reporting. ใ Professor of Accounting

 FACULTY & RESEARCH Earnings Management of IPO (Initial Public Offerings) Firms

Qintao Fan joined the Haas School earnings management. Data on IPO Qintao Fan, of Business in Fall 2003 as an firms from 1987 to 1997 confirm Assistant assistant professor of accounting that investors do pick up on signals Professor after graduating from Stanford such as earnings inflation and http://www. University. Her dissertation looks at ownership retention in valuing an haas.berkeley. “earnings management,” particularly IPO firm. This paper is forthcoming edu/faculty/ in cases where firms prepare in The Accounting Review. fan.html for IPOs. She explores whether Together with colleague companies are reporting inflated Xiao-Jun Zhang, co-chair of the earnings figures, and whether such accounting department at Haas, • Financial Reporting inflation renders accounting reports Qintao also studies the optimal • Capital Market Efficiency totally meaningless or serves a accounting system when a firm useful purpose. • Information Economics can control the accuracy of its • Managerial Accounting Qintao has found that, accounting information through surprisingly, earnings management unobservable action. In variance can be an effective way for “higher with the common view, accounting Xiao-Jun Zhang, quality” firms, those with potential conservatism, as a commitment E.R. Niemela to generate a higher stream of to an apparently inefficient Associate earnings to separate themselves classification scheme given the Professor of from lower quality firms in the eyes ex post information quality, may Accounting of investors. positively induce greater effort in http://haas. controlling information quality berkeley.edu/ Firms can also demonstrate their ex ante. As a result, commitment faculty/zhang. value to investors by strategically to conservatism may improve html combining earnings inflation with the overall information quality another “signal” such as retaining a and enhance the ex ante welfare • Financial Reporting certain degree of ownership in the of accounting information users. • Financial Statement Analysis company. The more ownership the This paper was presented at Duke- • Information Economics IPO insiders retain, the greater a UNC Junior Faculty Fall Camp • Performance Evaluation Control sign it is to the outside world that in September 2005, the HKUST • Voluntary Disclosures they believe in the IPO firm’s future Summer Symposium in June 2006 • Intenational Accounting earnings potential. Her explorations and the American Accounting • Financial Accounting Theory of how IPO firms use both Association 2006 Annual Meeting in ownership retention and reported Washington, D.C. earnings to signal firm value have generated a rich set of empirical Qintao’s most recent research implications regarding market interest is in issues related efficiency and the strategic use of to managerial incentives and compensation.

 Repricing Underwater Employee Stock Options and Firm Operating Performance

Nicole Johnson, Nicole Johnson’s most recent similar to the implementation of Assistant work examines the relationship a new stock option plan. As long Professor between a firm’s decision to as the options are underwater and http://www. reprice underwater employee employees do not expect the stock price to rebound, the outstanding haas.berkeley. stock options and future firm operating performance. Johnson options should have no effect on edu/faculty/ and her coauthors, UCLA professor employee behavior. When the johnsonnicole. David Aboody and Stanford options are repriced to the new, html professor Ron Kasznik, looked at lower market price, any behavioral companies with stock prices that incentives associated with the • Managerial Accounting had dropped significantly, leaving options should be restored. Their • Managerial Performance Evaluation many employees holding out- tests are designed to pick up the • Transfer Pricing of-the-money stock options. Of effect of those restored incentives 1,345 companies they examined, on firm operating performance. the group found 396 examples of Nicole cautions, however, publicly-traded firms that lowered Maria Nondorf, that it is difficult to draw a cause the exercise price of outstanding Assistant and effect relationship between stock options to a price at or near Professor executive option repricing and the then-current market price http://www.haas. firm performance because in many during the period 1990 to 1996. berkeley.edu/ cases, executives may have been faculty/nondorf. Using hand-collected repricing able to opportunistically influence html information from firms’ financial the repricing decision, pushing for statements, they measured whether a repricing when they knew that the repricing had any impact on the the firm’s prospects were good. company’s operating income over However, it is unlikely that non- • Auditing the next one to five years. Their executive employees would have • Financial Reporting results indicate that firms that this type of influence – thus, their • Mergers and Acquisitions reprice executive options performed findings regarding the repricing of • Performance Evaluation Control better over the next one to five non-executive employee options • PCAOB Expertise years than similar firms that did provide evidence that stock option • Sarbanes Oxley not reprice their options. Firms grants to non-executive employees • Voluntary Disclosures that repriced only non-executive may not translate into long-run options, however, did not see a improved firm performance. long-term boost in performance. Professor Johnson is also Nicole and her coauthors chose working on several other projects, this setting to examine the impact including an examination of of stock option grants on employee investors’ perceptions of earnings behavior because a stock option ending in round numbers repricing event is economically with Devin Shanthikumar at

 FACULTY & RESEARCH

Harvard Business School and article on this broad topic for an of Accounting Studies, and a project with Haas professor accounting journal. In addition to Contemporary Accounting Research, Maria Nondorf exploring the serving on the editorial boards of he serves as an associate editor of effects of layoffs on future firm The Accounting Review, Review Management Science. performance. Johnson attended several academic conferences this year and was quoted in the San Information Asymmetry and the Increase in Francisco Chronicle on July 1, Cost of Equity before Earnings Announcements 2006, discussing the implications of alleged stock option back-dating by Disclosures that level the playing between information asymmetry – or KLA-Tencor and other firms. field between investors are critical extent to which private versus public for the functioning of an efficient information is available – and firms’ Cost Allocation for Capital capital market. By disclosing cost of equity and capital. Budgeting Decisions financial and other information, Shai and Xiao-Jun examine the a firm makes sure that a broad During the last year, Sunil Dutta change in cost of equity on the days base of investors is well informed wrote the paper “Cost Allocation before earnings announcements about the firm’s performance. In for Capital Budgeting Decisions” – when information asymmetry the absence of such disclosures, with Tim Baldenius (Columbia) tends to be at its highest levels. For a some investors might obtain private and Stefan Reichelstein (Stanford). sample containing 518,670 quarterly information through independent He presented the paper in the earnings announcements from market research, customers, accounting conference held at the 1971 to 2004, they find that cost of suppliers, or even firms’ employees. Norwegian School of Business equity on average start increasing This privately attained information and Economics. The paper has 6 trading days before the earnings may benefit the informed trader, been accepted for publication announcement. This increase but from the firms’ perspective its in The Accounting Review. Sunil reflects the divergence in the private existence can increase the cost of also finished a major revision information that traders gained about equity and decrease the stock price. of a paper entitled “Managerial the coming earnings announcements. Investors will pay less for a stock, Expertise, Private Information, and On the day before the earnings i.e. the cost of equity will increase, Pay-Performance Sensitivity”. He announcements, for example, the when they suspect that the trader presented this paper in accounting cost of equity is about 5 times higher selling the stock is better informed. seminars at Columbia University, than its average level in other days This reasoning, for example, led the University of Bern, and Indian during the fiscal year. School of Business. The paper is Arthur Levitt, the past chairman When separating firms based on currently under review. of the Securities and Exchange Commission, to suggest that “high their level of information asymmetry, Currently, Sunil is working on a quality accounting standards … Shai and Xiao-Jun find that this number of research projects which improve liquidity and reduce increase in cost of equity before focus on understanding the role capital costs.” Professors Shai Levi earnings announcements exists for of accrual accounting information and Xiao-Jun Zhang from the firms that usually have less public in managerial performance accounting group at UC Berkeley’s information, and correspondently measurement. He was also invited Haas School of Business, empirically more private information, available. to write a comprehensive review examine this important relationship Specifically, the increase in pre-

10 announcement returns is associated Shai Levi, Alan Cerf, with an upsurge in trading volume Assistant Professor of small firms, growth firms, firms Professor Emeritus with low analyst coverage, or http://www. http://www. firms with high earnings forecast haas.berkeley. haas.berkeley. error. For these firms, uninformed edu/faculty/ edu/faculty/cerf. traders and market makers are levi.htm html likely to attribute the increase in trading volume before the earnings announcement to informed traders. Reluctant to bear losses from • Equity Valuation • Financial Reporting Ethics trading against these informed • Financial Reporting • Professional Ethics traders, investors will demand • Financial Statement Analysis • Taxation higher returns for holding the stock • Voluntary Disclosures and the cost of equity will then increase.

The study of Shai and Xiao- Sunil Dutta, George Staubus, Jun contributes to the academic Egon and Joan Michael literature that links the cost of von Kaschnitz Chetkovich capital to information asymmetry, Associate Professor or the extent to which public Professor of Emeritus versus private information exists Accounting and http://www.haas. for firms. A firm’s cost of capital is fundamental to a variety International berkeley.edu/ of corporate decisions. From Business faculty/staubus. determining the hurdle rate for http://www. html investment projects to influencing haas.berkeley.edu/faculty/dutta.html • FASB Conceptual Framework the composition of the firm’s • Earnings and Management • Financial Reporting Ethics capital structure, the cost of capital • Information Economics • Financial Reporting influences the operations of the • Managerial Accounting firm and its subsequent profitability. • Performance Evaluation Control This line of research suggests • Transfer Pricing that firms can lower their cost of • Voluntary Disclosures capital by disclosing information, whether it is through financial reports, management discussion and analysis, management forecasts, analysts’ presentations, press releases, internet sites, or other means of communications with investors.

11 ADJUNCT FACULTY

Sam Berde Rada Brooks Solomon Darwin http://www.haas.berkeley.edu/faculty/ http://haas.berkeley.edu/faculty/brooks. http://www.haas.berkeley.edu/faculty/ berde.html html darwin.html

Sam Berde joined the Haas School as Rada Brooks has been a lecturer in Solomon Darwin teaches in the MBA and a Lecturer in the Accounting Group in accounting at the Haas School of Business Executive Development programs at Haas. 2005. He is an Audit and Assurance since 1998 and has also served as the He was formerly Associate Professor of Partner with PMB & Company, LLP. Sam Executive Director of the Center for clinical accounting at the Marshall School provides auditing and assurance services Financial Reporting and Management of Business at the University of Southern to publicly and privately held companies, from 2002 to 2004. She started her California. Solomon brings more than ten and provides consulting services related career with Deloitte and Touche, and years of national and international teaching to SEC reporting and compliance matters, then held financial management positions experience in financial and managerial merger and acquisition transactions, with Wells Fargo Bank and Citicorp. In accounting, along with 14 years of senior interim CFO services, and forensic 1992, she decided to pursue a career in management experience as corporate accounting services. academics and has taught at the Loyola officer at Bank of America, First Interstate University of Chicago and International Bank, Glendale Federal Bank and Motorola Sam was a manager in the San University of Japan before coming to the Inc. Francisco office of KPMG prior to joining Haas School of Business. PMB. During his seven years at KPMG, he He also serves as chairman of the worked in both the audit and consulting Rada has a BS in Accounting from board for Project India, a nonprofit divisions and provided litigation support the University of Colorado, an MBA humanitarian organization, and and business valuation services to from the London Business School and spearheaded the establishment of a consulting services clients. He spent is a Certified Public Accountant. She charity hospital and an international several years working in Kuwait preparing is a member of the American Institute school in Mori, India. financial compensation claims for Persian of Certified Public Accountants and is Solomon holds a BA from San Gulf War damages, which were filed currently serving on a CPA Simulations Francisco State University and an with the United Nations Compensation Development committee. She also serves MBA from Golden Gate University. He Commission. as a board member for several nonprofit completed an executive management organizations in San Francisco. Sam earned a BA in Business program at Harvard University’s Graduate Economics from University of California, School of Business. Santa Barbara, is a Certified Public Accountant.

12 Dennis Geyer Vic Stanton Suneel Udpa http://www.haas.berkeley.edu/faculty/ http://www.haas.berkeley.edu/faculty/ http://www.haas.berkeley.edu/faculty/ geyer.html stantonv.html udpa.html

Dennis Geyer has an international Vic Stanton has been a Senior Lecturer Suneel Udpa is a Visiting Lecturer at the reputation as an expert in cost at Haas since 1997. His consulting Haas School of Business. He received management and is recognized as an activities include corroborating expert his M.S. in Business and his Ph.D. in authority on activity-based management witness for litigation representing Accounting from Washington University, (ABM) including activity-based costing Fortune 500 firms and International Law St. Louis, MO. From 1997-99, Professor (ABC) and activity-based budgeting firms and assisting start up companies. Udpa was the Chair of the Department (ABB). His consulting practice specializes Currently, he is working for Ford Motor of Accounting at St. Mary’s College of in strategic pricing, cost & performance Company in litigation matters. He has California. From 1990-93, he was an measurement, cost reduction strategies, taught several executive seminars for Assistant Professor of Accounting at Emory and strategic operations analysis. By companies like Oracle, AT&T, PG&E, University in Atlanta. He won the Earl F. linking business process analysis State Farm Insurance, CSAA Insurance Cheit Outstanding Teaching award at the with finance, Dennis helps his clients and audit/consulting seminars for several Haas School of Business in 2003 and has identify opportunities to increase CPA firms. Vic assisted several authors been runner-up for the Cheit award three financial performance through improved and publishers with texts in Advanced times in the past five years. His consulting operational design. Dennis has provided Accounting, Intermediate Accounting, interests are in the areas of cost systems, strategic advisory and systems design Financial Statement Analysis, Managerial incentive contracts, and valuation for services to numerous clients in a wide and Financial Accounting. mergers & acquisitions. Professor Udpa’s variety of industries including banking, research interests include: activity-based Vic has been a successful CFO, manufacturing, telecommunications, cost systems, information content of Corporate Secretary and Board Member transportation and healthcare. earnings announcements, and valuation. for companies in the high tech and Dennis is also sought after as a publishing industries. He was a Corporate speaker and educator. Besides serving on Controller in high tech manufacturing the faculty at the Haas School of Business, and senior auditor at PWC. He has raised Dennis travels extensively, conducting large sums of capital from the public public and customized seminars primarily market, venture capital and angel investor to executive audiences in the U.S., Latin communities. He holds a CPA, CMA, America and Southeast Asia. and a BA and MBA with concentrations in accounting and finance.

13 CAREER ENHANCEMENT

Team members Sana Ahmed, BS 07; Margaretha Margaretha, BS 07; Daisy Cazares, BS 07; and Carlos Montesinos, BS 06, beat out teams from the University of Southern California, the University of Arizona, and the University of Washington, among others. “Our students were assigned a challenging case on mergers and acquisitions in which they demonstrated their knowledge, research ability, and communication skills with great dexterity and competence,” says Solomon Darwin, executive director of the Center of Financial Reporting & Management and faculty advisor for the team. “They confidently addressed the tough questions posed by the judges relating to the tax Daisy Cazares, Sana Ahmed, Solomon Darwin, Carlos Montesinos, and Margaretha Margaretha accounting issues and legal structure of the business combination.” Haas Undergraduate Team Takes Top Haas alumna Teresa Gayton, BS 91, a KPMG advisory Honors in KPMG’s Accounting Competition partner, served as the professional advisor for the Haas A team of four Haas School undergraduate students team. Lecturer Victor Stanton, who teaches managerial won the western region finals of the2 006 KPMG Alpha accounting at the undergraduate level, worked with the Case Competition on April 21, held at the KPMG students to prepare them for the competition; Professor headquarters in Los Angeles. Emeritus Alan Cerf advised on tax issues.

goals to increase privatization, spur growth, and maintain equity and fairness in the tax system. The teams were given two weeks to research, formulate their tax reform suggestions, and prepare a 12-minute presentation to PWC judges on November 16. After all the presentations, the participating teams were invited to a dinner, where team “High Caliber” was named the winner. The team is composed of Dell Hutchinson, Davis Liu, Jennifer Zhou, PWC mentor Brian juniors Johnson Lieu, Ben Wu, and Jennifer Zhou, Hunt, Stephanie Chien, Ben Wu, Johnson Lieu and David Marston and sophomores Stephanie Chien and Davis Liu. High Caliber Students Win PWC They won $1,000 and interviews with PWC. It was Case Competition recently announced that they were selected as one of the five xTax national finalists and will represent In the beginning of November, twelve teams from UC UC Berkeley at the National xTax Competition in Berkeley competed in PricewaterhouseCoopers’s xTax Washington, D.C. Haas School Lecturer, Rada (short for extreme tax) Case Competition. The case Brooks was recognized by PWC for being the Haas consisted of tax reform for a hypothesized country, with mentor to the students.

14 What is Accounting Jeopardy?

Undergraduate students answered the question in a game of Jeopardy at a “Back to School Ice Cream Social” after Spring Break on April 18 in the Wells Fargo Room at the Haas School of Business. Executive Associate Dean Rich Lyons opened the event with a welcome to the students. This was an opportunity for undergraduate students to learn more about career options in accounting. Representatives from KPMG, Deloitte & Touche, and PricewaterhouseCoopers hosted the event. It was a great opportunity for networking as well as answering questions relating to Accounting profession myths, accounting skills and qualities, beyond public accounting, and non-accounting careers in public accounting. They also watched a brief video “Bring it Partners answer students’ questions at ACES event. On” about accounting careers. Besides winning prizes, networking and enjoying ice cream, the students gained more insight about the Speakers at the Spring Welcome Back accounting profession. event and the Fall ACES event included:

On the Right Path KPMG: Teresa Gayton - Advisory Partner “Career Opportunities in Accounting….What it Hans Gude - Advisory Director Could Mean For You” was the topic of a presentation Anne Hwang - Advisory Associate by CFRM’s sponsors Deloitte & Touche, KPMG and Dean Kamahele - Tax Partner PWC on September 25 at International House. A Mark McComb - Audit Partner Career Enhancement Session (ACES) is offered each Stephen Son - Advisory Associate year by CFRM for the benefit of students interested in accounting careers. PricewaterhouseCoopers: Tyler Chapman - Associate Students were asked to think about how they Nicole Havlicek - Associate knew which career path was right for them. Other Jill Shurie - Campus Recruiting Manager topics discussed were: Accounting Fact vs Fiction; John Volk - Partner Common Misconceptions About Accounting; Deloitte & Touche: Core Skills of Future Accountants; Professional Jennifer Chow – Audit in Charge Certification; Becoming a CPA; Internships; and Monica Jones – Campus Recruiting Manager Average Salaries in the Accounting Profession. Anna Mok – Audit Partner Kinman Tong – Audit Senior

15 TEACHING ENHANCEMENT

Practitioners in the Classroom Educate Students with Real-World Cases and Experiences

MBA students developed Balanced Scorecards for real companies and made presentations to judges (from left to right): Teresa Gayton, KPMG; Tim van Oppen, Deloitte; Dell Hutchinson, PWC; Solomon Darwin, CFRM; Michael Bobroff, Ernst & Young; and Leroy Elkins, Apple Computers. The Managerial Accounting course was taught by Solomon Darwin as a part of the Full Time MBA program.

CFRM invites accounting professionals into the • Financial Accounting Careers – Growth and classroom to share their “true-life” experiences of Prospects working in the accounting field. • Accounting for Leases This year’s topics included: • Tax Considerations in Choosing a Form of Business • Estate Planning Organization • Stock Options – Pros and Cons of Backdating • Federal Income Tax Accounting • Special Topics in Forensic Accounting • PCAOB Audit Issues and Fraud Testing • Activity-Based Cost Modeling in a Sales Process • Taking the CPA Exam • Engagement Planning and Risk • Content of Audit Reports • Accounting for Software Companies

Students learn about opportunities in the accounting profession.

The panel consisted of partners from the accounting profession, moderated by Solomon Darwin, Director of CFRM. 16 PANELS AND GUEST SPEAKERS: John Hildebrand, Partner, PWC Rachel Bell, Director, Protiviti Alan Cerf, Federal Income Tax Accounting Bill Betts, Consultant in Internal Audit, Protiviti Dell Hutchinson, Tax Partner, PWC Susie Choy, Tax Partner, KPMG Vic Stanton, Intermediate Accounting Eric Lee, Deloitte & Touche Joe Hoffman, Professional Practice Partner, KPMG Nancy Young, Seiler & Co. Jennifer Lindsay, Forensics Partner, KPMG David Kanner, Partner, Seiler & Company, LLP Shivani Sopory, KPMG Brian Rowbotham, Partner, Rowbotham & Company Vic Stanton, Advanced Financial Accounting Ed Silicani, Partner, KPMG LLP Dave Marston, Partner, PWC Larry Varellas, Partner, Deloitte & Touche LLP Laura Martinez, Partner, PWC Alan Cerf, Intermediate Financial Accounting Sam Berde, Auditing Tim van Oppen, Partner, Deloitte & Touche Mike Berg, Managing Partner, PMB & Company Rada Brooks, Introduction to Financial Dean Skuppen, Partner, Stonefield Josephson Accounting Doug Hart, SEC Audit Partner, BDO Seidman Zain McKinney, Partner, Deloitte & Touche Roger Phillip, CPA, CEO, Roger Philip CPA Review David Kanner, Partner, Seiler & Co. Dennis Geyer, Evening MBA Managerial Mark McComb, Partner, KPMG Accounting Thai Trihn, Audit Associate , KPMG Adam Gittler, Bus. Dev. Manager, Flextronics

Students were educated about “Recent Stock Option Events and Forensic Practices” by KPMG’s Jennifer Lindsay (Partner-Forensic); Joe Hoffman (Partner-Audit) and Shivani Sopory (Audit Associate).

17 TEACHING ENHANCEMENT

Dean Campbell Hosts Roundtable Discussions with CFO’s

Solomon Darwin, Mary Beth Fritzsimmons, Tom Campbell, Ed Scheuer

Dean Tom Campbell hosted two lunches for key Solomon Darwin, Executive Director of CFRM joined financial executives – one in the Spring and one in the the Dean in these discussions. Fall. The guest list was intentionally kept small for personal interaction. Chief Financial Officers were Guests included: brought together to discuss issues of common interest Howard Atkins, Wells Fargo Bank and exchange ideas. Simon Bax, Pixar Animation Studios Dean Campbell said, “Of great interest to me is what business schools can be doing to prepare our Christina Cook, Bank of Marine graduates for positions of responsibility in financial Mary Beth Fritzsimmons, Levi Strauss & Co. reporting and management.” He invited suggestions Byron Pollitt, Jr., Gap, Inc. from the attendees on how Haas can further enhance Steve Rossi, Knight-Ridder, Inc. the accounting curriculum and work towards creating Ed Scheuer, Protiviti quality students and future CFO’s.

From left Byron Pollitt, Simon Bax, Tom Campbell, Steve Rossi, Howard Atkins, Christina Cook, Solomon Darwin

18 STUDENT ACTIVITIES

Beta Alpha Psi’s Lambda Chapter Receives Superior Chapter Award A Prominent International Student Fraternity at Berkeley

For the last 85 years, Beta Alpha Psi has provided its members with opportunities for academic, professional and personal development. As a premier international honors business fraternity, Beta Alpha Psi is globally recognized and resonates outstanding scholarship and professionalism. The Lambda Chapter, established in 1925, continues this legacy as a Walter A. Haas sponsored business fraternity on the University of California, Berkeley campus. U.C. Berkeley is celebrated as an institution that is home to distinguished students with a diversity of interests and endless opportunities. Like the university, our Beta Alpha Psi chapter suits students’ multitude of academic and career goals. This past summer, our chapter attended Beta Alpha Psi’s national conference in Washington D.C. With over 260 chapters and close to 300 professionals in attendance, The Lambda Chapter yet again received the Superior Chapter Award and solidified our presence as a leading chapter in the Western Region for Beta Alpha Psi. This fall semester started off strong as we recruited 12 new individuals into our organization to embody the rich traditions of the Lambda Chapter. Our unique blend of activities included company presentations, mock interviews, professional development workshops, career development workshops, and more to strengthen the interpersonal, communication and leadership skills among our new initiates. In preparation for successful futures, we not only honed their professional skills, but also their social capabilities through team-building activities, community service events, and alumni bonding activities to foster brotherhood and solidarity between our members. We have established a strong presence and have reached the campus wide population at U.C. Berkeley through our semi-annual career fair, Meet the Firms. With over 40 firms and 120 professionals, the Lambda Chapter has provided career opportunities to over 250 students during the fall recruiting season. Moreover, we also hosted the Big Four Forum and a Deloitte Consulting informational session. On October 25, our chapter hosted the fourth semi-annual Executive Series forum to the student population on Careers in Law. In addition to a Boalt School of Law professor who was the former Director of Real Estate Tax in Washington, D.C., six law firms shared various backgrounds in law ranging from corporate and securities law to employment and intellectual property rights law. The Lambda Chapter of Beta Alpha Psi is ecstatic about this semester. We would like to thank Solomon Darwin, our Faculty Advisor, for his leadership, and our alumni, faculty, and professionals for their strong support. Their contributions have allowed us to continually put on these quality events and provide a solid educational training program for our members. It has definitely been a privilege to be part of such a wonderful network of people that are determined to provide professionalism and academic knowledge to the business community and beyond. With that in mind, feel free to contact our fraternity if you would like to discuss possible events by emailing [email protected]

Best Regards, Jessica Shu President, Lambda Chapter

19 STUDENT NEWS

Haas School Undergraduates Students Awarded CPA Society Accounting Scholarships

Seven Haas undergraduate students were honored with scholarships from the East Bay Chapter of the Congratulations to Undergraduate Certified Public Accountants Society at a special Accounting Award Recipients of the dinner held on January 17 in Oakland. L.H. Penney Grant-in-Aid Award Eric Fleekop, BS 06, and Catherine K. Ho, Bixian Christoph Robert Gross Ning-Feng Wang Liao, John Lee, Yi Yun Shen, Sachin R. Thadani, and Edmund Gerard Hall Elisa LeeHua Wong Benji Williams, all BS 07, received seven of the nine Cam Thao Thi Huynh Yuri Yakubov scholarships granted this year to students interested Juyoung Kim Vicky Wei-Chi Yin in becoming certified public accountants (CPAs). Krista Colleen Maguglin Shahrzad Zarrabian The scholarships range from $750-$2,500 and Anna Shian Shyan Wang benefit students of East Bay colleges or universities. To be eligible, students must be accounting or business majors in their junior or senior years with 2006 Haas Academic Standing an accounting or tax emphasis, or graduate business Undergraduate Program: students with an accounting emphasis. • #3 (Business Schools) Rada Brooks, Lecturer at the Haas School of • #9 (Accounting Programs) Business said, “We are fortunate that the East Bay US News & World Report Chapter of the CPA Society is so committed to MBA Program: helping the next generation of CPA’s achieve their • #5 Wall Street Journal educational goals by providing scholarships. Given • #7 US News & World Report the unprecedented number of Haas students who • #8 BusinessWeek received scholarships, this group of students was really • #6 Financial Times (Faculty research) impressive in how dedicated and hard working they are • #10 The Economist Intelligence Unit in pursuing a career in accounting.” 20 Haas Welcomes Accounting New Student Orientation Offers Students Doctoral Students An Opportunity to Learn About the Accounting Profession Jenny Chu, from Hong Kong, graduated from the Bachelor of Business Administration program at the The Haas School welcomed 348 new undergraduate University of Michigan, Ann Arbor in 2000 with business majors with an afternoon carnival July 7 in the High Distinction and received her MBA in 2005 school’s courtyard. from UC Berkeley. Jenny worked as an Investment This year’s undergraduate class was selected from Banking Analyst at Credit Suisse First Boston, and a pool of 1,614 applicants. The total enrollment of was an Assistant Portfolio Manager at Barclays Global students in the undergrad program at Haas now sits at Investors. Her research interests include the role of about 700. accounting information in firm valuation, and the role The New Student Welcome Carnival introduced of sell-sell analysts in financial markets. the incoming undergrad business majors to the many Jung Hoon Kim, from Seoul Korea, received student organizations that they can join at Haas. high honor awards while earning his BS in Radio Students played games and won prizes while getting Communication Engineering with a minor in Business acquainted with such organizations as the Latin Administration from Yonsei University in Korea in American & Hispanic Business Association and Beta 2000. He received his MBA in 2005 from INSEAD, Alpha Psi, the honors fraternity for accounting and Fontainebleau, France and Singapore, where he was financial information professionals. honored with the Eli Lilly and Company Innovation The Center for Financial Reporting and Management Scholarship. His research interests are in valuation again hosted a booth at the orientation and was joined of early stage companies, earnings management and by Haas alumni and friends from its sponsoring firms. intangibles and R&D activities. Jung Hoon was Representatives bring logo gift items that the students awarded the US Army Commendation Medal while win while playing a “Toss Across” game. Accounting serving in the 501st Military Intelligence Brigade in firm representatives answer students’ questions about the US Army from 1993 to 1995. He has a diverse accounting careers and it also gives the firms an early career background: he was an Assistant Manager for opportunity to meet the students. SBSi (Seoul Broadcasting System Media Group), an Officer at The Korea Development Bank in Seoul, and worked as the Asia Pacific Regional Finance Manager Firm Representatives: for Syngenta. Deloitte & Touche Kwang June Lee, born and raised in the Republic Anna Mok, Partner Jessica Ross, Manager of Korea, received a BS in Engineering from Seoul PricewaterhouseCoopers National University in 2000. In 2004 he received a Jean Hauser, Assurance and Bus. Advisory Services Master of Public Policy from KDI School of Public Manager Peter Tang, Tax Associate Policy and Management in Seoul. Kwang came to the KPMG United States in 2004 to begin his graduate studies Manisha Patel, Audit Associate and completed the PhD coursework in Finance at Michelle Thomsen, Senior Recruiter the University of Illinois at Urbana-Champaign in Seiler & Company August 2006 before transferring to UC Berkeley for Anthony Rozenvasser, Senior Accountant Bryan Blythe, Staff Accountant his PhD studies in Accounting. His research interest Julie Wang, Staff Accountant is in Empirical Financial Accounting (Capital Market Research) and Behavioral Finance. 21 THANKS TO OUR DONORS

Benefits of Your Contribution

The Center for Financial Reporting and • Enhancing interactions between students and Management values its relationships with the potential employers; corporate community and alumni. The Center • Maintaining the high quality curriculum. depends heavily on corporate and individual • Providing information to students about the sponsorship for its annual operating funds--all of accounting program and accounting careers the Center’s resources come from private donations. through career fairs, guest lecturers; External financial support is vital to sustaining and • PhD student aid. strengthening the accounting program at Haas. To those of you who have supported the Center in Sponsorship of the Center supports efforts in: the past, we thank you and hope that you’ll be able to • Attracting and retaining the best faculty, staff, continue your support. To those of you who have not and students; yet been able to support us financially, we hope that • Funding cutting-edge research; our mission and purpose will inspire you to help. • Organizing topical conferences and seminars For information on how to make a contribution to to be presented to outside constituents; CFRM, please visit our webpage: http://groups.haas. • Strengthening Haas’s accounting fraternities; berkeley.edu/accounting/cfrm/giving.

Corporate Sponsorship Founding/Executive Sponsors CFRM is grateful to the corporate community for their ($30,000) support. The Center seeks sponsors and affiliates from Deloitte & Touche LLP public accounting, industry, consulting, investment Ernst & Young LLP banking, and money management firms. KPMG LLP Our Executive Sponsors contribute $30,000 an- PricewaterhouseCoopers LLP nually on a renewable three-year term and are repre- sented on the Center’s Executive Committee. Corporate Corporate Sponsors Sponsors contribute $10,000 annually for a renewable Apple Computer, Inc three-year term and are asked to appoint one member Blanding, Boyer & Rockwell, LLP to the advisory board. Affiliate organizations and indi- Englund Family Trust viduals contribute $5,000. Fidelity Investments Charitable Gift Fund There are more than a dozen benefits of being a Leiba & Bowers Sponsor of CFRM including opportunities to guest lec- Mervyn L Brenner Foundation Inc. ture in the classroom and access to accounting faculty Pacific Gas & Electric Company and students. Visit our webpage to view the full ben- Protiviti efits at: http://groups.haas.berkeley.edu/accounting/cor- Seiler & Company porate_sponsorship. 22 Donors to the Center for Financial Reporting and Management (July 1, 2005 - June 30, 2006)

Dean’s Circle Lisa A. Nicolini & Andrew Ingram, Donald J. Moulin, BS 54 Barbara M. & Norman M. Mundell, ($10,000+) BS 77 KPMG LLP, Retired BS 39, MBA 40 Deloitte & Touche LLP University of California, Retired Ellen Dale, BA 66 & Frithjof J. Gail & Warren Solt, BS 63, MBA 64 Warren Solt & Associates Anita & Marvin N. Nathan, MBA 56 (Joffa) Dale, BS 66, MBA 67 Director’s Club Khadra International Folk Ballet Berg & Company ($1,000 - $2,499) George Staubus Wade A. Morehouse, Jr., MBA 59, University of California Margaret & Michael A. Amorose Friend’s Club PhD 65 ($100 - $249) Capital Research & Management Ernst & Young LLP Michael Sutton SEC Company Connie & John Banker, Jr., BS 68 Stephen R. Blough Donald Seiler, BS 49, MBA 50 Ernst & Young LLP, Retired Mary & Peter K. Swentzel, BS 63, KPMG LLP Seiler & Company LLP MBA 68 Dennis Beresford Deloitte & Touche LLP, Retired April Chen FASB KPMG LLP Chairman’s Club Patricia Doran Walters ($5,000 - $9,999) Russell T. Bigelow, BS 53 AIMR Rossella A. Curci, BS 95 KPMG LLP, Retired KPMG LLP Pamela S. Claassen, MBA 78 Rebecca & Ronald Yee, BS 76 KPMG LLP Edgar J. Bostick, BS 39 RPR Company, Inc. Steve Michael Gaeta, BS 75 Deloitte & Touche LLP, Retired KPMG LLP Christopher G. Lee, BS 75, MBA 79 President’s Club & Marjorie A. Lee Linda Brennan Hans Gude Deloitte & Touche LLP KPMG LLP ($500 - $999) KPMG LLP Barbara Fanning Roberts, BS 78 Tom Campbell Lois & Hector R. Anton Myrna Y. Hennessy, BS 88 & Patrick Wright Engineered Plastics University of California Haas School of Business, Retired Hennessy Deloitte & Touche, LLP, Retired Wham-O, Inc. Eric R. Roberts, BS 67, MBA 68 Susie K. Choy, BS 91 Morrison & Foerster KPMG LLP John D. Caldwell Jean Lee Deloitte & Touche LLP, Retired KPMG LLP KPMG LLP Colleen Cunningham Jack F. Russi, BS 82 Financial Executives International Carolyn Carlson, BA 63 & Timothy Robert S. McIlroy, BS 58, MBA 63 & Jodie M. Russi E. Carlson, BS 63 McIlroy & Associates Deloitte & Touche LLP Carolyn & Mark Dentinger, MBA 89 Blanding, Boyer & Rockwell, LLP Bea Systems, Inc. Kenneth Allen Merchant, PhD 78 Timothy F. van Oppen, MBA 76 & Lily & Calvin W. Chu, BS 75 University of Southern California Ann Van Oppen, BA 76 Laura B. & Raymond J. Depole Pacific Gas & Electric Company Deloitte & Touche LLP Ernst & Young LLP Donald Rogoff Chris R. Dyer, BS 84 Barbara A. Ellis, BS 88 & Ford Ellis KPMG LLP Jill Sigler, BS 87 & Michael Sigler Egon von Kaschnitz, BA 52, MA Cohn & Wells, Inc. 54, MBA 59 & Joan von Kaschnitz, Ernst & Young LLP BA 57 Rand M. Meyer Nancy Englund, BA 46 & Gene H. KPMG LLP Theodore Sougiannis, PhD 90 Zierer Visa Service Inc., Retired Englund, BA 46, BS 49, MBA 51 University of Illinois at Urbana- Deloitte & Touche LLP Eva Ng, BS 06 Champaign Vice Chairman’s Club PricewaterhouseCoopers LLP ($2,500 - $4,999) Arthur Fliegelman Linda Verheecke Moody’s Investors Service Rose & John J. J. Woo, BS 76 KPMG LLP City & County of San Francisco Mary & Christy P. Armstrong, BA 37 Steve Yee PricewaterhouseCoopers LLP, Retired Max D. Gray KPMG LLP, Retired San Francisco Airports Comm Executive’s Club Mollie & Edward J. Arnold, BS 40 ($250 - $499) Teresa W. Yee, BS 75 The Edward Arnold Family 1994 Edward G. Harrison, BS 87 Deloitte & Touche LLP Blank Aires & O’Sullivan CPA Trust Goro Araki, BS 96 Peggy Yip Stanley H. Breitbard, BA 60, MBA Laura J. Hay KPMG LLP KPMG LLP KPMG LLP 63 & Ronda Breitbard, BA 63 Ramona & Edwin Caplan, PhD 65 PricewaterhouseCoopers LLP, Retired Barbara & George Kelly, MBA 61 University of New Mexico Joseph Yuen Deloitte & Touche LLP, Retired KPMG LLP Sue Anne & Richard G. Carson Franco Cirelli, BS 88 PricewaterhouseCoopers LLP Janet & George E. Kelts, MBA 82 Valerie Goings Under $100 Donors Deloitte & Touche LLP Robin L. Crawford, BS 75 & Gail KPMG LLP Fletcher Crawford, BS 75 Colleen & Henry Angerbauer, BS 55 Joon K. Kim, BS 81 Deloitte & Touche LLP Carol Ida, BA 68 & James H. Ida, City of Pleasant Hill KPMG LLP MBA 71 Ritva and Clancy Houghton, BS 60 Trinet Realty Martha & Donald A. Corbin, BS 42, Haas School of Business, Retired Ned A. Leiba, BS 74, MBA 83 MBA 44, PhD 54 Leiba & Bowers Deloitte & Touche, LLP, Retired Vivian & Glenn L. Johnson, PhD 65 University of Hawaii Foundation Washington State University Carol Inberg, MBA 60, PhD 70 Carol S. Liu Loreen A. Kozn KPMG LLP California State University East Paul A. Johnson CPA, BS 79 KPMG LLP Bay, Retired Mark E. McComb, BS 86 Neeka Accountancy Corporation KPMG LLP Newsletter published by Donald J. Moulin, BS 54 & Barbara Julie Locke, BS 03 CFRM. Moulin KPMG LLP Patricia McConnell For further information KPMG LLP, Retired Bear Stearns & Company May & Robert Mah, BS 69, MBA 70 contact : Bonnie & James Robert Mountain, Mah & Associates LLP Dayna Haugh MBA 87 Linda Kazares & Peter Meeks, BS 68 Deloitte & Touche LLP BDO Seidman, LLP (510) 642-6334 or [email protected] . . . 23 Center for Financial Reporting and Management

Founding/Executive Sponsors Corporate Sponsors

Deloitte & Touche LLP Apple Computer, Inc. Ernst & Young LLP Protiviti KPMG LLP Seiler & Company LLP PricewaterhouseCoopers LLP

About the Center As part of the Haas School of Business, the Center for Financial Reporting and Management (CFRM) provides the accounting community with opportunities to get involved in the development of academic programs and professional activities. The Center has organized many conferences regarding issues in the current accounting world, including topics such as special-purpose entities, stock options and off-balance sheet financing. Its annual conference on financial reporting is especially noteworthy. Mission Statement • To promote the most innovative financial and managerial accounting education in the country through cutting edge research, outstanding teaching, globally focused curriculum and attention to ethical behavior. • To enhance interaction between students, faculty, practitioners, standard-setters, regulators and business leaders. Our Commitment As part of an internationally acclaimed research university, we are committed to promoting high quality financial reporting in the business community worldwide. Our Core Values 1. Instruction Teach innovatively to produce highly-sought-after graduates and tomorrow’s global leaders through continuous enrichment of the curriculum in response to changing needs in the market place. 2. Research Engage in cutting edge research relevant to the dynamic global business environment. 3. Interaction Facilitate dialogue between academicians, accountants, regulators, national/international standard setters and the business community at large. 4. Relationships Build productive partnerships with business leaders, employers, and alumni, to explore and seek guidance regarding educational issues that are critical to the future of the accounting profession. 5. Ethics Nurture and promote corporate and social responsibility including ethics and values to govern businesses and personal behavior.

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