University of Virginia

1．You find yourself on an elevator with the Dean of the McIntire School of Commerce at the University of Virginia. Please tell him why this is the right school for you.

Dear Dean of the McIntire School of Commerce, I believe that your school is precisely the institution where I would like to pursue my M.S. in Accounting. Over the past 30 years, as one of the top accounting programs in the United States, your program is well established for its innovative curriculum, world-class faculty, and dedication to excellence in teaching. Your indisputable reputation is itself the symbol of the value of your well-respected program.

Your program offers two tracks from which I can choose according to my interest a Financial Reporting and Assurance Track and a Tax Consulting Track. Your program will enable me to acquire not only the necessary specialized technical knowledge, but also a better understanding of the broad context within which professional decisions are made. Apart from learning how to recognize potential issues and opportunities and to solve complex, multidimensional problems, I will be instructed as to how to operate with integrity and with a firm grounding in ethics to create strong, trusting relationships.

I also like the way classes are taught in your dynamic academic environment. Experienced faculty operate classes in a rigorous yet informal seminar format that fosters a culture of collaboration among students and between students and faculty. Students actively participate in discussions, team-based exercises, case studies, presentations, and written assignments. Perhaps the most exciting feature about your program is that the McIntire School of Commerce seeks well-rounded individuals who bring exceptional intellectual capabilities, a strong academic background, and a passion for their chosen field of study. By missing with this outstanding student community, I will enhance many of my own personal qualities and develop a competitive edge necessary to achieving professional success in the rapidly changing business world. All those factors convince me that the McIntire School of Commerce at the University of Virginia is definitely the perfect fit for me.

2．Why are you seeking an MS in Accounting? Please include information on why you wish to pursue the concentration you have selected. What do you to this decision? What are your plans and goals after you receive your degree?

The Department of Economics and Management, Beijing XX University, where I am currently studying, by entering a cooperative agreement with the U.K.-based the Association of International Accountants (AIA), has introduced a standard undergraduate program in accounting officially recognized by AIA. This unique program has well prepared me for a more advanced academic program and for my short- and long-term goals. In my proposed program, I would like to acquire in-depth accounting concepts and knowledge in financial reporting and analysis, auditing and assurance, advanced financial accounting, advanced management accounting, cost management systems, subjects in the Financial Reporting and Assurance Track. Through your program which lays emphasis on professional integrity and ethics, I would also like to examine how accounting and auditing are practiced in real world situations and what lessons the accounting and auditing industries have been drawing from the Anderson and Enron scandals, which will further shed light on China’s own industries which I enter upon the completion of your program.

My short-term goal is to complete your M.S. program according to the schedule and obtain my degree. I will spend the following two years gaining tentative practical experiences at public accounting firms, financial services organizations, corporate business organizations or consulting firms either through internships or formal employment. This knowledge about the financial market will further give me perspectives about the global financial market and how standard accounting and auditing procedures are taken in the mature financial industry of the United States.

However, my long-term goals will definitely unfold in China, my home country. It is not all surprising that, considering the fact that China promulgated its first “Accounting Principles of Corporate Organizations” in 1992 and that the stock market has only a limited history of less than 20 years, the country has a long way to go in perfecting its accounting system. On the other hand, with the economic integration gathering momentum, China is to open its financial industry to foreign financial institutions on a comprehensive basis in the very near future. To meet the rapidly changing circumstances and to keep pace with the country’s vibrant economic growth, the Chinese accounting industry has yet to improve its institutional management, conformity to international conventions, professional standards, and to broaden areas of service. I wish to become a well-trained accounting professional with both international academic training and practical professional experience who can meet this immense demand.

With my international backgrounds, I will return to China to work at leading multinational accounting and auditing firms based in China like PriceWaterCoopers. My international experiences and my vast knowledge of China will set me apart from average Chinese employees in those organization because I am well equipped to think globally and act locally. In five years time, I expect to become a senior manager. My long-term goal is to work in a leading Chinese investment bank where I expect to become a department manager or a CFO in the top management. Another long-tern alternative is to launch my own accounting and auditing firm to offer consulting services to China’s medium and small enterprises that engage in international trade or seek to become listed companies on the international stock market.

In choosing your M.S. program, I am fully convinced of its ability to help me achieve those professional objectives. Your program is intimate and interactive, allowing students to have access to faculty, staff, other students, alumni and executives. Your program is also flexible, enabling me to use my core curriculum combined with electives to pursue one of the two “tracks” that is geared to my individual needs and interest. Your program, apart from imparting theoretical knowledge, is also highly practical and professionally oriented, and the great diversity of your elective course structure is purposely designed to provide a wide range of choices of future career paths. Considering the fact that my ultimate career is to unfold in China where top-notch accounting and auditing professionals are most sought after, it is all the more facile for me to achieve a fulfilling and high-flying career.

Scholarship Application

1. Describe any leadership, teaching, tutoring or public speaking experiences that would help the selection committee assess your potential for leading group instruction or class discussion.

An important leadership experience of mine happened toward the end of the fall semester in my sophomore year while attending the course Financial Cost Management. Our instructor assigned a course project in which students were required to form teams to do case studies by investigating the corporate behavior in any fields related to financial cost management. As team leader, by discussing with the other two members of the team, I decided to focus on investigating the incipient auditing scandal of China Southern Airlines Co., Ltd (CSN, website: www.cs-air.com), which is a listed company on New York Stock Exchange and Hong Kong Stock Market.

According to the coverage by the mainstream media, there were two versions of annual financial report for the year 2003 issued by CSA. The one prepared according to international financial principles and procedures and reported to overseas investors indicated a loss of 3.5827 billion RMB while the report prepared for domestic investors indicated a slight profitability of 0.1449 billion RMB. With a gap of 3.7276 billion RMB, the irregularity rate reached 2572.85%.

According to the knowledge we had acquired from the course, the extent of abnormality far exceeded the tolerable level and we decided to find out the truth. It would be a Herculean task because rigorous analysis of a wealth of statistics must be carried out. To ensure the success of our undertaking, as team leader, I made a well-defined division of labor. I assumed responsibility for collecting the CSN’s annual reports over a period of three years since 2001, including its balance sheets, income statements, and statements of cash flows. A second member was made responsible for constructing mathematic models to analyze and predict about CSN’s financial performance. A third member was in charge of collecting the annual reports of three other listed companies in China’s airline industry. When we put all the statistics together and compared CSN’s data with those of three other airlines, we found lots of problems about CSN’s annual report oriented to domestic investors.

In 2003, while the majority of China’s listed companies raised the proposed percentage in 8 cost-related areas according to the country’s updated accounting principles, CSN did the contrary by lowering the percentage in each of the 8 areas. CSN’s 2003 annual reports showed that, by the end of the year, the accounts receivable totaled 0.961824 billion RMB and 1-year accounts receivable was 0.89672RMB, accounting for 93.2% of the total accounts receivable. CSN prepared a 0.5% bad debts rate for the 1-year accounts receivable, which only totaled 4.895 million. However, in 2002, the bad debts rate for the 1-year accounts receivable that CSN prepared was 3.7% and if the 2003 report had followed this same rate, then the bad debts for 2003 would have reached 33.1787 million RMB. By this change of bad rates rate, a total of 28.2837 million RMB bad debts were left out. There were also problems about other accounts receivable—by the end of 2003, CSN’s 2-year and 3-year accounts receivable were 7.33 million RMB but no preparations for bad debts were made.

By lowering the bad debts rate from 3.7% to 0.5% for 1-year accounts receivable and for 2-and 3-year accounts receivable, CSN excluded a loss of 33.2386 million RMB in the form of bad debts in its 2003 annual report. Plus a 15% corporate income tax, the total net profit was reduced by 28.2528 million RMB.

In order to conceal its de facto loss, CSN applied a 0.5% bad debts rate so that the company’s financial performance showed a slight profitability. We knew that listed companies are absolutely entitled to adjust their bad debts rate from year to year based on their sound judgments; yet, if the rates differ too radically between two immediate years, listed companies are under the obligation to make reasonable explanations. Otherwise, their motives become highly suspect.

By taking advantage of the China’s immature auditing procedures, CSN forged an apparent profitability. By manipulating the magic cube of accounting, CSN only sought to fulfill one ulterior purpose—using the false profitability to undertake a new round of financing on the stock market. This is because, for China’s domestic listed enterprises, profitability is the most important precondition for new attempts of financing in a new fiscal year.

At the end our investigation, I authored a 10,000-word report, detailing all the statistics we collected, the mathematic models involving time sequence and regressive method we constructed, the rigorous analyses we performed, and the conclusions we reached. I demonstrated my leadership by masterminding the project, designing the specific steps and procedures of investigation, becoming actively involved in the entire process of investigation, finding appropriate quantitative and qualitative approaches, and preparing the final report. The course Financial Cost Management essentially teaches students how to be “physicians of corporate management” and all the three members worked in close unity because we knew we were involved in something meaningful—we were improving our analytical and problem-solving skills and we were undertaking a project that prepared us to be observers of accounting and auditing ethics. Throughout our entire teamwork, each member did his or her best to fulfill his or her responsibilities. This gave me an important experience about teamwork—the best way to avoid conflicts or resolve a conflict is when you involve your team members in an intellectually stimulating and ethically worthy and ennobling project.

4. To be considered for funding and/or endowed scholarships, please provide the selection committee with the reasons:

(1) Your ability to enhance the classroom learning environment through unique contributions based on your background or diversity of perspective

The first year I entered the high school, I had the chance to go on an exchange program with the Larmar High School in Houston City, our sister school. For three weeks, I attended classes there, participated in classroom learning environment and contributed my unique perspectives as a Chinese student. My American classmates found my views on many issues informative and stimulating, and together we made progress in a mutually enriching manner.

By now, seven years have passed and I long for another chance to be part of a dynamic learning environment in which I can make unique contributions based on my background and my perspectives. First of all, I would like to share with my American and other international students that with China’s rapid economic growth, accounting is assuming increasing importance in China’s economic life. In particular, China’s accession into the WTO has created important opportunities as well as challenges for China’s accounting industry. To promote the healthy economic development, a series of measures have been adopted to perfect the system of accounting standards and accounting services. The accounting profession as a whole has been undergoing reforms in response to the changes in the economic environment. Codes of accounting standards and independent auditing standards are more and more oriented to international conventions and the rule of law becomes firmly established. In particular, a supervisory system dominated by 60, 000 CPA and 100, 000 practitioners has been established. However, important challenges remain in the following fields—the industrial management and institutional construction, the adoption of international standards, the overall market environment, and level of service quality and the expansion of services. This unique background will enable me to share with my future teachers and classmates many important issues in accounting profession of a country where dramatic social and economic changes are happening. I hope that in the future learning environment, I can make presentations on each of those subjects.

Throughout my undergraduate career, I have written dozens of course papers on accounting practices, one of which is a comparative study between China and the United States in dealing with the accounting reports of the merger, a study triggered by my reading of the book Advanced Accounting by Debra Jeter and Paul Chaney. Of the two approaches “the Purchase Method and “the Pooling of Interests”, APB used to impose harsh restrictions on the latter and FASB went even a step further by abolishing it. China made a similar move in 1997 when the Treasury Ministry promulgated the Accounting Regulations Regarding Corporate Merging in which the Purchase Method was highly recommended. However, in read practice, in dealing with a number of mergers, the Pooling Method was also accepted. I made an in-depth case study regarding this irregularity and I have come up with some important perspectives to account for it. I believe that I will have much to contribute to your learning environment by presenting my thoughts and discoveries concerning the prevailing practices in China and their underlying reasons.

(2) Demonstrated or potential leadership despite a disadvantage

I have demonstrated my leadership for undertaking accounting and auditing research, as in uncovering the auditing scandal of China Southern Airlines. As a listed company, China Southern Airlines presented two different annual financial statements in 2003. The one prepared according to international financial principles and reported to overseas investors indicated a loss of 3.5827 billion RMB while the report prepared for domestic investors indicated a slight profitability of 0.1449 billion RMB. With a gap of 3.7276 billion RMB, the irregularity rate reached 2572.85%. By studying the balance sheets, income statements, and statements of cash flows issued by the company over a period of three years, constructing mathematical models, and making comparative cost accounting with three other major corporations in the airline industry, I discovered how China Southern Airlines manipulated the accounting and auditing procedures by significantly reducing the proposed write-down and the bad debts to forge an apparent profit. The corporation only sought to fulfill one purpose—using the false profitability to undertake a new round of financing on the stock market. For China’s domestic listed enterprises, profitability is one of the major conditions for new attempts of financing.

It required careful and complicated analysis, the proper application of auditing principles and the collection of a large amount of data and publications. Moreover, it required courage to expose such dishonesty. As team leader, I worked closely with my classmates and I must make effective and creative division of labor among the members. In addition, in order to prepare the final 10000-word investigative report, I had to collect detailed information, make an outline, process the date and draw rigorous conclusions based on concrete facts and statistics and cogent analysis. Perhaps the greatest disadvantage was the patience and persistence required to glean information bit by bit and piece by piece so as to develop a complete picture. Nevertheless, through this project, I enhanced my awareness of the level of responsibility that auditors and CPA must exhibit and I become well prepared to assume the anticipated future career responsibilities.

(3) financial need

As I delve deeper into accounting, I become all the more fascinated with it as both an art and a science. The countless figures that I will have to deal with have a charm of their own and for this reason I will pursue a lifelong career in accounting, despite all the difficulties and disadvantages. For this reason, I need to undertake a Master’s program so that I may hone my professional knowledge and caliber to their fullest extent.

Nevertheless, as a young student from an ordinary family background, it is difficult for my parents to support my graduate education. They have already spent much of their income to support my undergraduate education. On my own part, I have no formal professional employment so that I have no income of my own, nor do I have any potential sponsor. Therefore, the only source of financial aid is likely to be your assistance provided by your institution. What I have is my past academic excellence, my commitment to accounting profession and the determination to excel in future academic study. Therefore, if granted, your financial assistance is very much a recognition of my aspirations which will be made possible through your program.