After working with the Securities and Exchange Commission in Washington D.C., an ISU professor is bringing back his experiences and newly-acquired expertise on government-level accounting to Ames.

David Smith, professor of accounting, returned to Ames in August after spending a year working in the SEC’s corporation finance division.

Smith spent most of his time reading annual and quarterly disclosures, or financial reports, that investing companies are required to hand into the commission.

While reviewing these reports, Smith checked to see if the statements accurately described what was going on with the company in question. The disclosures ranged in length from 50 to several hundred pages.

“All companies that are involved in public trading and raising external capital are required to file with the SEC,” Smith said.

He cited Union-Pacific and John Deere as just two examples of the more than 16,000 companies nationwide required to file with the SEC.

“It’s not illegal to sell a bad product or invest in a bad company,” Smith said.

“But it is illegal to misrepresent the riskiness and profitability of a company [on a financial report].”

Smith got the opportunity to work with the commission through a competitive fellowship offered through the American Accounting Association.

Once Smith learned he had received the fellowship, Smith and his wife had three months to pack up their things, rent out their house and move to Alexandria, Va.

“The biggest problem was finding a place that would allow [my] dog,” Smith said.

Michael Piwowar, assistant professor of finance, was on a fellowship in the office of economic finance with the SEC at the same time as Smith, and decided to stay on for another year before returning to Iowa State.

Smith said his experiences with the SEC have helped him be a better professor for the students taking his classes.

“I’m [now] very current in my field,” Smith said. “If I was reviewing a company’s finances, I had to know what I was looking for.”

What he has learned has also helped him identify what could be wrong with financial statements since he is teaching a financial statements analysis class this semester. His experiences have also helped him in providing topics for graduate students working on their two-credit critical component projects.

Cindy Jeffrey, associate professor of accounting and overseer of the critical component project, said Smith has affected many faculty and students with his mentoring.

“[Smith’s] experiences have had a tremendous influence on the faculty and students at the graduate level,” Jeffrey said.

Labh Hira, dean of the College of Business, said experiences like Smith’s help bridge the gap between the university and the working world.

“[Smith] had a front row seat at the SEC working with disclosure statements,” he said.

“He can now link theory and research with practice, which is what we try to do with all classes.”

Smith said the aspect of his job he appreciated most was the chance to meet the people at the SEC and get a feel for what they do every day. Although he enjoyed his experiences in Washington, D.C., he said he isn’t anxious to apply for another fellowship just yet.

“This was a one-time shot,” he said. “Teaching at ISU is my one ambition in life.”