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Current Issues in Accounting (DLMBACCE02)

Course No.:

DLMBACCE02

Course Title:

Current Issues in Accounting

Hours Total:

150 h

Credit Points:

5 ECTS

Course Type: Wahlpflicht

Course Availability: WS, SS

Course Duration: 1 Semester

Admission Requirements:

None

Course Coordinator / Instructor:

See current list of tutors in the Learning Management System

References to Other Modules:

Please see module description

Course Description:

Management accounting and financial accounting are constantly changing and adapting to internal and external circumstances. Financial accounting according to IFRS is continually evolving; developments occur in accounting rules and instruments for financial management are constantly emerging. Following the financial and economic crisis in 2008, accounting changed significantly following the introduction of additional regulatory rules and operating requirements.

This course gives students an insight into selected issues and provides practical examples in management accounting and financial accounting. Students are introduced to specific tasks of a CFO with regard to accounting and financial management. The course will also facilitate students to develop an in-depth understanding of working capital optimization and capital restructuring. Finally, students will apply their financial and management accounting knowledge in an integrated financial modeling exercise.

 

Course Objectives and Outcome:

Upon completion of this course, students will be able to:

  • Explain selected management and financial accounting issues.
  • Analyze relevant issues specific to the level of financial accounting established in a company.
  • Identify and explain the specific tasks of a CFO with regards to the different functions of financial accounting and financial management.
  • Describe the regulatory changes following the economic crisis, e.g. Basel III, and identify their impact of financial accounting and control.
  • Discuss recent developments concerning IFRS.
  • Develop processes and strategic plans that recognize the increased importance of working capital optimization and capital restructuring.
  • Identify the functions of a chief treasurer or controller in a multinational corporation.

Teaching Methods:

A variety of learning materials are offered to students: depending on the course, these include printed and online course books, vodcasts, podcasts, online tutorials, case studies, and online knowledge tests. This range of learning materials is offered to students so they can study at a time, place, and pace that best suits their circumstances and individual learning style.

Course Content:

1. Preparation of Financial Statements

1.1 Accrual and Deferral Concepts for Recording Transactions

1.2 End-of-Period Adjustments and the Use of Accounting Estimates

1.3 Preparation of Financial Statements and the Classified Balance Sheet

1.4 The Accrual Basis of Accounting and the Interpretation of Financial Statements

1.5 Financial Analysis and the Company’s Liquidity: Working Capital Ratio, Current Ratio, and Quick Ratios

2. Optimization of Receivables and Inventory

2.1 Receivables and Uncollectibles

2.2 Accounting for Receivables and Uncollectibles

2.3 Inventories Classification

2.4 Inventory Cost Flow Assumptions and Their Impact on Financial Statements

2.5 Financial Analysis: Accounts Receivable and Inventory Turnover Ratios

3. Optimization of Liabilities and Equity

3.1 Financing Using Current Liabilities, Notes Payable, and Contingencies

3.2 Long-Term Sources of Finance

3.3 Debt and Equity Financing and Earnings Per Share

3.4 Financial Statement Analysis Using Price-Earnings Ratio

4. Current Issues in Financial Accounting

4.1 International Financial Reporting Standards (IFRS)

4.2 Principle- Versus Rule-Based Standards and IFRS Fair Value Measures

4.3 Specific IFRS Standards

4.4 Financial Statement Presentation under IFRS

4.5 Integrated Revenue Recognition and the Implications of Adopting IFRS

5. Valuing Businesses

5.1 Financial Statements and Valuation

5.2 Accrual Accounting and Valuation: Pricing Book Value

5.3 Accrual Accounting and Valuation: Pricing Earnings

5.4 Business Valuation Methods in Practice

5.5 Corporate Restructuring, Corporate Governance, and Auditor’s Role in Firm Valuation

6. Capital Budgeting

6.1 Capital Budgeting Decisions

6.2 Non-Discounting Models: Payback and Accounting Rate of Return

6.3 Discounting Models: The Net Present Value (NPV) Method and Internal Rate of Return (IRR)

6.4 NPV Versus IRR for Selecting Mutually Exclusive Projects

6.5 Basics of Modeling Capital Budgeting

7.Financial Modeling and Valuation

7.1 Using Assumptions and Building a Financial Model

7.2 Analysis, Valuation, and Planning

Literature:

• Bank for International Settlements. (2011). Basel III: A global regulatory framework for more resilient banks and banking systems. Retrieved June 21, 2016 from http://www.bis.org/publ/bcbs189.pdf
• Bodmer, E. (2014). Corporate and project finance modelling: Theory and practice. New York, NY: John Wiley & Sons.
• Chapman, C. S., Hopwood, A. G., & Shields, M. D. (2009). Handbook of management accounting research (Vol. 3). Amsterdam: Elsevier.
• Chew, D. H. (2001). The new corporate finance: Where theory meets practice (3rd ed.). Boston, MA: McGraw-Hill.
• Copeland, T. E., Weston, J. F., & Shastri, K. (2004). Financial theory and corporate policy (4th ed.). Reading, MA: Addison-Wesley.
• Cotter, D. (2012). Advanced financial reporting: A complete guide to IFRS. New York, NY: Financial Times Press.
• DePamphilis, D. (2015). Mergers, acquisitions, and other restructuring activities (8th ed.) (pp. 592–627). San Diego, CA: Academic Press.
• Gaughan, P. A. (2015). Mergers, acquisitions, and corporate restructurings (6th ed.). Hoboken, NJ: John Wiley & Sons.
• Groot, T., & Lukka, K. (2000). Cases in management accounting: Current practices in European companies. New York City, NY: Pearson Education.
• Jain, N.K. (2004). Working capital management. New Delhi, Dehli: A.P.H. Publishing Cooperation
• Koller, T., Goedhart, M., & Wessels, D. (2015). Valuation: Measuring and managing the value of companies (6th ed.). New York, NY: John Wiley and Sons.
• Sagner, J. (2014). Working capital management: Applications and case studies (pp. 1–32, 89–141). New York, NY: John Wiley & Sons.
• Shefrin, H. (2005). Behavioral corporate finance. Boston, MA: McGraw-Hill.
• Weston, F. J., Mitchell, M., & Mulherin, H. (2003). Takeovers, restructuring and corporate governance (4th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

Prerequisites to Qualify for Assessment:

• Depending on the course: Completion of online knowledge tests (approx. 15 minutes per unit, pass / not pass)
• Course evaluation

Assessment:

Exam, 90 min.

Student Workload (in hours): 150

Self-study: 90
Self-testing: 30
Tutorials: 30