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May 28, 2002

Enron is latest subject for Hartgraves

By Eric Rangus

At Commencement, President Bill Chace described the recipient of the 2002 Scholar/Teacher Award, Al Hartgraves, as “an academic triple threat.”

He lauded Hartgraves’ contributions to the Goizueta School of Business as an administrator, a teacher and a researcher. In conclusion, Chace said as the two stood on stage at Commencement, that Hartgraves was most deserving because of a “remarkable dedication to your school, this University and your colleagues.”

“It was a surreal experience,” said Hartgraves, professor of accounting. “I never expected to be chosen for an award of this magnitude. There are so many great faculty throughout this University, and you always assume someone else is going to get the award. I was extremely honored.”

With 22 years on the business school faculty, Hartgraves is second in seniority, as well as one of the most highly regarded professors in the school. Five times he has been selected for Goizueta’s Distinguished Educator Award—most recently by this year’s MBA graduates.

It’s clear to see the respect the students have for him. When his name was announced at Commencement, the entire business school graduating class stood and cheered. Hartgraves said that was his favorite part of the ceremony.

A self-described throwback, Hartgraves has never shied away from multiple responsibilities. He has held a variety administrative positions, including several deanships and director of graduate programs.

He has written or co-written more than 50 publications, his latest being the third edition of Management Accounting: A Strategic Management Approach, a textbook that helped redefine accounting pedagogy.

Hartgraves’ most recent research is on the Enron scandal, and he is venturing into areas where few academics have gone. He and George Benston, John H. Harland Professor of Finance, have co-written two journal articles that investigate a previously unexamined area of the Enron case: the company’s use of Special Purpose Entities (SPEs).

SPEs are created by corporations but are independent of them. They exist, however, to perform a certain service for the original corporation. The original corporations often do business with them, and any funds they create are left off the parent’s balance sheet. While most every company creates SPEs, very little is known about them and—until recently—even less had been written.

Hartgraves searched every index and table of contents of every financial accounting book on his shelf. Not a single one mentioned SPEs. “The academic community was out of touch with this area of accounting,” he said.

Now, Hartgraves said, there is talk of SPE money being accounted for as part of the parent corporation, rather the current system of off-balance sheet accounting.

“This has the potential of bringing hundreds of billions of dollars of assets and liabilities onto corporate balance sheets that previously have been off them,” Hartgraves said.