Bachelor 2021/2022

Financial Reporting

Type: Elective course

Area of studies: Economics

Delivered by: International College of Economics and Finance

Where: International College of Economics and Finance

When: 3 year, 1-4 module

Mode of studies: distance learning

Open to: students of one campus

Instructors: Кравцова Мария Владимировна, Maria Kravtsova

Language: English

ECTS credits: 8

Contact hours: 120

Course Syllabus

Abstract

The course is designed to introduce a number of theoretical approaches to financial accounting and develop background for preparing financial statements of the company under alternative accounting conventions (mainly under International Financial Reporting Standards (IFRSs)). The course describes a number of regulatory issues relating to financial accounting and explores the detailed issues and problems of financial reporting. It provides basic skills in recording and interpretation of financial data and covers basic techniques of financial analysis. The course requires the knowledge of basics of accounting and microeconomics. This is a two-semester course designed to prepare students for UoL examination. If taken as part of a BSc degree, the following course must be passed before this course may be attempted: Principles of accounting.

Learning Objectives

• The student should be able to prepare consolidated financial statements for the group of companies.
• The student should be able to use financial, accounting and other information contained in the statements of enterprises of various forms of ownership, organizations, departments, etc., for making management decisions.

Expected Learning Outcomes

• account for compound instruments according to IAS32
• apply the pyramid of ratios and other ratios to a set of accounts
• appreciate ethics in relation to accounting
• appreciate key aspects of the treatment of share-based payments under IFRS 2
• appreciate the difference between short-term and long-term employee benefits and key aspects of the prescribed accounting for these benefits in IAS 19
• appreciate the importance of the transaction date and the difference between pre- and post-transaction profits/income in consolidated accounts
• be aware of the main ideas underpinning the now disallowed merger method
• compare and contrast the various historical approaches (capitalization with no follow-up expensing of goodwill; immediate write-off; capitalisation and amortisation of goodwill) with the current approach to test periodically for impairment
• compute real gains and losses on monetary items
• compute the value of goodwill and non-controlling (minority) interest
• convert HCA to CPP by following the step-by-step guide
• define a conceptual framework
• define construction contracts
• define intangible assets, R&D and goodwill
• define inventories, describe and explain the accounting treatment of inventories
• demonstrate accounting for both operating and finance leases, and explain possible implications for accounts’ users
• demonstrate the accounting treatment for an equity issue (and show how the interaction with equity financing and debt financing impacts on accounting ratios
• demonstrate the accounting treatment for provisions, contingent liabilities and contingent assets
• describe a “group”, the composition of the group
• describe and apply the basic workings of the UK imputation system
• describe and explain the accounting treatment of construction contracts
• describe and explain the accounting treatment of intangibles, R&D and goodwill
• describe and use both the closing rate and the temporal method of foreign currency translation
• describe associates and joint ventures and how to account for them in consolidation
• describe both operating leases and finance leases under IAS17
• describe objectives of financial reporting as per IASB conceptual frameworks
• describe the difference between monetary and non-monetary items
• describe the effect of intangible assets, R&D and goodwill for both the consolidated accounts and ratio analysis
• describe the rationales used to develop different models of consolidation (acquisition, merger, equity, proportional)
• describe the three approaches to accounting for deferred tax
• discuss accounting regulation
• discuss capital and reserves
• discuss different concepts of capital maintenance and their implications for corporate reporting
• discuss off-statement of financial position financing in relation to operating leases
• discuss provisions, contingent liabilities and contingent assets
• discuss replacement cost (RC), net realisable value (NRV) and present value (PV)
• discuss some of the fundamental differences between tax bases and tax systems
• discuss tangible non-current assets, directly owned and leased and borrowing costs
• discuss the arguments for and against accounting standards
• discuss the basis, the advantages and disadvantages of HCA
• discuss the character and role of accounting in society
• discuss the different treatment of foreign subsidiaries and branches
• discuss the reactions of standard setters to mitigate against the potential distortions caused by operating leases and know the concept introduced by IFRS16
• discuss why CPP was proposed as an alternative to HCA
• elaborate upon what IAS1 and IAS7 of IASB prescribe in relation to the preparation and presentation of financial statements
• explain and discuss the implications of the IASB
• explain differences between the deferred versus liability approach under the full provision method
• explain how different non-current asset investments are distinguished and accounted for
• explain the approaches taken by IAS 39 and IFRS 9 in the measurement and recognition of financial instruments in key areas
• explain the basic character in this context of the statement of financial position, the statement of income, the statement of other comprehensive income, the statement of changes of equity and the notes to the accounts
• explain the basic ideas behind the move towards fair values (FV)
• explain the character of financial instruments and the accounting issues involved
• explain the concepts of current operating income and holding gains
• explain the difference between accounting profit and taxable profit
• explain the difference between permanent and timing differences
• explain the implications of revaluation on interpretation of the financial statements
• explain the importance of events after the balance sheet date
• explain the importance of the exchange rate and how to treat exchange differences
• explain the way ethics for accountants have been articulated in practice, based partly on issues deemed to arise
• explain why foreign currency translation is necessary
• explain why the definition of a subsidiary is important
• identify the main efforts by the USA, the IASC/IASB and the UK to introduce a conceptual framework
• interpret a set of accounts using a number of techniques
• know how to distinguish adjusting and non-adjusting subsequent events
• perform trend and vertical analysis
• prepare a statement of financial position and income statement using specific price indices, including calculating holding gains and losses
• prepare an income statement and statement of financial position entries for the three approaches for accounting for deferred tax
• prepare consolidated accounts (statement of financial position and profit and loss or income statements) using the acquisition method
• prepare consolidated accounts (statement of financial positions and income statements) using the equity methods
• understand the "business model" concept and SPPI test concept
• understand the concept of fair value (“exit price”) according to IFRS13
• understand the methods of accounting for investment property

Course Contents

• 1. Introduction to the course. Rationale for financial reporting and its regulation.
• 2. Conceptual framework.
• 3. Preparation of financial statements.
• 4. Ethics for accountants.
• 5. Fair value and other accounting systems of price adjustments. Accounting for changing prices/values.
• 6. Accounting for tangible non-current assets.
• 7. Accounting for intangible assets.
• 8. Accounting for inventories and construction contracts.
• 9. Accounting for financial instruments.
• 10. Accounting for equity and liabilities.
• 11. Accounting for employee benefits.
• 12. Accounting for provisions, contingent assets, contingent liabilities. Events after reporting period.
• 13. Consolidated accounts. Business combinations.
• 14. Consolidated accounts. After date of acquisition.
• 15. Consolidated accounts. Associates and joint arrangements.
• 16. Accounting for foreign currencies
• 17. Accounting for taxation
• 18. Analysis and interpretation of financial reports

Assessment Elements

• autumn MOCK exam
  Online format.
• winter internal exam
  Online format
• written home assignments
• Final exam (spring internal exam or UoL exam)
• class participation
  Attendance and tests.
• spring MOCK exam

Interim Assessment

• 2021/2022 2nd module
  0.5 * winter internal exam + 0.12 * class participation + 0.26 * autumn MOCK exam + 0.12 * written home assignments
• 2021/2022 4th module
  0.5 * Final exam (spring internal exam or UoL exam) + 0.25 * 2021/2022 2nd module + 0.125 * spring MOCK exam + 0.06 * written home assignments + 0.065 * class participation

Bibliography

Recommended Core Bibliography

• International financial reporting and analysis, Alexander, D., 2017

Recommended Additional Bibliography

• Bakker, E. (2017). Wiley IFRS 2017 : Interpretation and Application of IFRS Standards. Hoboken, NJ: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1477431
• Koppeschaar, Z. R., Rossouw, J., & Van Wyk, H. A. (2017). Introduction to IFRS (Vol. Seventh edition). Durban: LexisNexis SA. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=2139934