International Financial Reporting III AY326 - Course Outline - Objective This course is available as an optional course for any student who has taken the prerequisite Financial Accounting II. The course is compulsory for 2 nd year B. Comm Accounting Students. The objectives are to develop in students an awareness of the methods available for dealing with advanced problems of financial reporting, the ability to apply complex accounting standards to practical situations and to consolidate their ability to prepare and analyse company financial statements. Visiting students should consult Emer Curtis, as inadequate background has led to a significant failure rate in previous years. Lecturer(s) Name Dr Emer Curtis Day Time Venue Contact E-mail emer.curtis@nuigalway.ie Times Overall Learning Outcomes Lectures: Mon 12-1 Fottrell Theatre (AM 200) Tue 12-1 Fottrell Theatre (AM 200) Week 1-4 Wed 10-11 AM 150 Tutorials: From Week 4 onwards. Times and location tba. At the end of the course students should be familiar with the format and content of a complex set of financial statement and should be able to explain how to approach the analysis of a complex set of financial statements prepare a univariate ratio analysis for a complex set of financial statements describe the difficulties faced in the analysis of complex financial statements With respect to each of the topics 2 7 which address advanced problems of financial reporting, students should be able to explain the accounting problems posed by the topics covered by the course understand the approach adopted by International Accounting Standards to addressing these problems apply International Accounting Standards to practical problems The course aims to build on students existing accounting knowledge and continue to develop in students an ability to read the often complex material in accounting standards and to apply it to problem situations. Students should be aware that this course builds on existing accounting skills, developed in prerequisite courses, and as such students are expected to be able to prepare financial statements for companies, in a form suitable for publication and Dr Emer Curtis International Financial Reporting III AY326 Page 1 of 6
Student Queries Format Programme(s) Course Material International Financial Reporting III AY326 simple consolidated financial statements. For students with queries please address those to me immediately after lectures. Otherwise please email me with your queries or to arrange an appointment. This course comprises 3 weekly 1-hour lectures for 4 weeks and 2 weekly 1- hour lectures for 7 weeks, plus one weekly 1-hour tutorial for 7 weeks. 2BCA (2 nd year Bachelor of Commerce, Accounting) 3BC1 (3 rd year Bachelor of Commerce) 4BC2 (4 th year Bachelor of Commerce French) 4BC3 (4 th year Bachelor of Commerce German) 4BC4 (4 th year Bachelor of Commerce Spanish) 4BC5 (4 th year Bachelor of Commerce Italian) 1EM1 (Erasmus) 1OA1 (Occasional Arts) Lecture slides will be posted on blackboard in advance of lectures and students are expected to print these in advance of each lecture to avoid the need for large amounts of transcription during the lecture. This is intended to facilitate students in taking good lecture notes to supplement the slides. Students should note that the information provided on the slides is not considered to be sufficient for examination purposes. Students are expected to study lecture notes, material referenced for each topic in the required course text and the original documents of accounting standards included in the course pack. Core text Detailed readings are given below under each course heading. The required textbook is Financial Accounting and Reporting 14 th or 15 th Edition by Elliott and Elliott. A course pack which includes copies of relevant accounting standards published by the EU, past exam papers and some question banks is available from Media Services. Supplementary texts Two other texts which can be used for reference and are available in the library are as follows: International Financial Reporting and Analysis, 3rd Edition, Thomson. David Alexander, Anne Britton and Ann Jorissen. ISBN: 978-1-84480-668-3 International Financial Reporting. A Practical Guide. FT Prentice Hall. Alan Melville. ISBN: 978-0-273-70872-8 Attempting the problem questions that are supplied in the course pack is of great importance. Some of these are the subject of the tutorials, attendance at and participation in which is strongly advised, partly because some material will be covered at greater length which is presented only in summary form in the lectures and notes. Solutions for the problems in the question pack, which do not form the basis of tutorials or class discussion, will be posted on blackboard. Dr Emer Curtis International Financial Reporting III AY326 Page 2 of 6
The total marks for the course will be allocated as follows: Group Assignment due 1 st February 2013 10% MCQ tests 15% Final examination 75% Assessment Workload Details of the group assignment are attached to this course outline. 3 interim MCQ tests will be conducted through blackboard. Examples of the MCQ questions for the MCQ tests can be found on the exam papers from 2008 and 2009 and 2011. Provisional dates for these tests are 14 th February (Goodwill & Intangible assets), February 28 th (Foreign Currency) and March 14 th (Leasing). 75% of the course marks will be awarded for the final examination. This will be a two and a half hour paper. The paper will comprise 4 questions for 33.33 marks each, of which students are required to do any 3. Credit weighting: 5 ECT Lecture hours: 24 Tutorial hours: 7 Assignment 10 Independent study: 60 Associated time: 25 Final exam 2.5 Total Student Effort: 125 hours Dr Emer Curtis International Financial Reporting III AY326 Page 3 of 6
Course Topics (1) Company financial Statements Identify difficulties that arise in the interpretation of financial statements in relation to historical cost accounting, choice of accounting policy and earnings management. Understand the role and importance of knowledge of the business in understanding financial statements. Explain the problems associated with the interpretation of consolidated accounts. Outline different benchmarks used in the analysis of financial statements Describe the requirements for the presentation of segmental information Prepare an analysis of a complex set of financial statements : Elliott & Elliott 14 th : Chapter 27 all sections; Chapter 28 (sections 28.1 to 28.5) Elliott & Elliott 15 th : Chapter 28 all sections; Chapter 29 (sections 29.1 to 29.5). Assignment: See assignments page on Blackboard (also in course pack) (2) Intangible Assets and Goodwill Give examples of intangible assets Explain the definition of intangible assets set out in IAS 38 Describe the recognition criteria, initial measurement and subsequent measurement rules for intangible assets acquired separately, in a business combination or generated internally. Understand the circumstances where revaluation of intangible fixed assets is allowed and the accounting entries required to account for a revaluation. Apply IAS 38 to practical examples of accounting for intangible assets. Describe and prepare the disclosure requirements of IAS 38. Explain where goodwill arises in company and consolidated financial statements Describe the relative merits of six different methods of accounting for goodwill that have been considered by accounting standard setters in the past. Explain how goodwill should be accounted for in accordance with IFRS 3 and apply this accounting treatment to practical situations. Explain what is meant by an impairment review. Outline the conceptual problems with the current accounting treatment of goodwill. : IAS 38 Intangible assets Elliott & Elliott 14th: Chapter 17 all sections Elliott & Elliott 15th: Chapter 19 all sections Dr Emer Curtis International Financial Reporting III AY326 Page 4 of 6
(3) Accounting for foreign currency translation Explain the problems posed by foreign currency transactions Explain and apply the definition of a functional currency Explain how foreign currencies are accounted for in the accounts of individual companies in accordance with IAS 21 and apply these rules to practical examples Apply the provisions of IAS 21 relating to the translation of financial statements from functional currency into another presentation currency for the purposes of consolidation with a parent company. Calculate the exchange gains arising on the translation of foreign currency financial statements. Prepare simple consolidated financial statements including a foreign subsidiary Outline the impact of changes in foreign currencies on financial statements. Describe the disclosure requirements of IAS 21 IAS 21 The Effects of Changes in Foreign Exchange rates Elliott & Elliott 14th: Chapter 24 all sections Elliott & Elliott 15th: Chapter 26 all sections (4) Off balance sheet finance and accounting for leases Distinguish between operating leases and finance leases Describe the accounting treatment of a finance lease and operating lease in accordance with IAS 17. Apply the accounting treatment to practical examples of operating leases and finance leases using either the actuarial method or sum of the digits method. Prepare the disclosures required by IAS 17 Explain the problems posed by off balance sheet financing. Describe other typical examples of off-balance sheet financing IAS 17 Leases Elliott & Elliott 14th: Elliott & Elliott 15th: Chapter 11 (sections 11.1 to 11.4); Chapter 16 all sections Chapter 18 all sections Dr Emer Curtis International Financial Reporting III AY326 Page 5 of 6
(5) Provisions, Contingencies and post balance sheet events Explain the problem caused by uncertainty in financial statements Explain the differences between liabilities, accruals and provisions Describe the historical abuses of provisions for earnings management purposes Define provisions, contingent liabilities and contingent assets in accordance with IAS 37 Explain how provisions should be measured Be familiar with the application of the recognition and measurement rules set out in IAS 37 Prepare the disclosure requirements of IAS 37 Describe and apply the requirement of IAS 10 post balance sheet events. IAS 37 Provisions, contingencies liabilities and contingent assets IAS 10 Post balance sheet events Elliott & Elliott 14 th : Chapter 11 (sections 11.5 and 11.8) Elliott & Elliott 15 th : Chapter 13 (6) Taxation in Company Accounts Explain the accounting treatment of current taxation Understand and describe the purpose of a provision for deferred taxation. Identify typical situations where deferred taxation arises Explain and identify temporary taxable differences and temporary deductible differences. Calculate a provision from deferred taxation both where the taxation rate stays the same and where it changes Outline the main provisions of IAS 12 as covered in lectures (coverage of the text of IAS 12 is not required) Elliott & Elliott 14th: Chapter 14 (sections 14.6 to 14.11) Elliott & Elliott 15th: Chapter 16 (sections 16.6 to 16.11) Dr Emer Curtis International Financial Reporting III AY326 Page 6 of 6