Developing financial literacy in budding entrepreneurs

Abstract

Most engineering curricula devote little time to the development of financial literacy among engineering students. Many civil and industrial engineers obtain some exposure in an undergraduate engineering economics course; but these courses generally focus primarily on the time value of money and the comparison of alternatives based upon discounted cash flow. Even the ubiquitous topic of taxes on income is deferred until late in the course. Resolving this dilemma, short of enrolling in Accounting 101, appears to be difficult at best. Fortunately, there are materials which can convey the concepts required to understanding accounting principles, processes and underlying concepts at a level that will enable engineers to work productively with the bankers, investors and accountants who will play a huge role in any new venture. These materials can accomplish that in a finite numbers of class sessions through the use of case materials. Cases based upon an entrepreneurial scenario both motivate and energize class discussions. This paper will review the materials available to develop financial literacy and explain their use in a three-session module which could be included in an entrepreneurship course or a senior design course The presentation will focus on the use of a specific case to convey the essentials of accrual accounting to a novice audience.