Accounting scandals cross into academia: demand accountability from firms whose actions can impact your reputation.

WITH THE RECENT AND VERY PUBLIC RESIGNATION OF TWO TIAA-CREF trustees for tripping over federal auditor independence statutes, the corporate accounting scandals have officially crossed into higher education. Clearly, academe has the same vulnerabilities to fraud that corporate America has, and any thought to the contrary is naive.

TIAA-CREF is the nation's largest pension system, serving, the Wall Street Journal says, 3.2 million people and managing $326 billion in assets. College professors and administrators from a large number of the nation's campuses have their retirement accounts through the firm's College Retirement Equities Fund. It has a nearly sacred position in U.S. education.

Ernst and Young LLP, which is TIAA-CREF's independent auditor, made a separate business clear with two TIAA-CREF trustees, one of whom is a university professor of finance. This is a transparent violation of auditor independence. It's astounding in the post-Enron, Sarbanes-Oxley world and seems to show that nothing has been learned from the wreck of the venerable Arthur Anderson accounting firm on the shoals of auditor independence not long ago.

Has the only lesson learned here been, "make sure you don't get caught"? Increasingly, I am tempted to think so--especially after receiving a note the other day from an insurance company with which my cortege does business. Our insurer's president e-mailed that he had just spoken with the new president and CEO of Marsh, Inc., the nation's largest insurance broker which has been charged with taking major kickbacks from insurance companies to steer business their way.

In essence, the new reader of Marsh assured our insurer that the firm's sins were the result of actions by only a few Marsh employees and that safeguards have been put in place to make certain that it won't happen again. I urged our insurer by return e-mail to believe nothing that Marsh says and to measure them only by constant inspection if they feet they have to continue to do business with them.

The deathbed conversion, once the province of religious life, is becoming a staple of the corporate world. But it's hard to escape the conclusion that the regrets expressed and the forgiveness requested stem more from getting caught than from sinning.

They say "mea culpa," then ask us to go back to steep again. Too often, we do! The auditing industry is in tatters. The largest firm, Anderson, is gone and others, such as Ernst and Young, are already under draconian sanctions from the Securities and Exchange Commission.

In such a climate colleges and universities must be vigilant to ensure that the trust placed in us by society is upheld. We must do several things:

* Be sure our own fiscal house is in order by reviewing the actions, policies, and procedures of our own audit committees and demanding absolute independence from our outside auditing firms.

* Demand accountability from TIAA-CREF, Marsh, Inc., and other firms whose actions have the ability to impact our bottom lines and our reputations.

* Teach business ethics to our students in ways that will truly engage them.

As a former CEO and an audit committee chairman on two public corporation boards, my academic experience as professor and dean has led me back to the study and teaching of business ethics. One thing I can say is that preaching (as opposed to teaching) business ethics doesn't work. Colleges must make sure that students in ethics classes are engaged by studying real-life cases and that they understand the human toll extracted from corrupt business practices. One need took no further for an example than the immense public embarrassment of Air Force weapons buyer Darleen Druyun, whose distinguished career recently crash-landed in a prison term for improprieties with the Boeing company.

"Eternal vigilance is the price of freedom," Thomas Jefferson said. I believe that higher education still commands a better reputation that most other institutions in our society. But we have no special armor against corruption. This is clearly a time for vigilance.

John F. Brennan is president of Green Mountain College in Poultney, Vt., where he also teaches courses in business ethics.