30292 - INTERMEDIATE FINANCIAL ACCOUNTING
Course taught in English
Go to class group/s: 31
Class 31: CLAUDIA IMPERATORE
To feel comfortable in this course, you should be familiar with basic financial accounting. Nevertheless, given the initial different background attending students are coming from, an overall review of the main concepts of financial accounting are presented at the beginning of the course.
Financial statements provide relevant and reliable information about the business operations of a company and stakeholders use this information to make their economic decisions. Given that, accounting information plays a crucial role in the allocation of resources in the economy. However, financial statements are affected by the subjectivity and the discretion that accounting standards leave to financial statement preparers. Such accounting discretion can impair the trustworthiness of the financial statements and the extent to which they truly reflect firm’s business activities. As a result, stakeholders can make incorrect choices with negative implications for the overall economy. Hence, it is crucial to understand the accounting choices that firms can make and their impact on financial statement analysis. The mission of this course is to explore the implications of the application of international accounting standards on stakeholders’ evaluation of the company.
The most important topics that are covered during the course are the following:
- Financial statement and cash flow analysis that stakeholder run to assess the goodness of their investment in the firm.
- Accounting analysis to identify earnings management instances as well as accounting frauds.
- IAS 2 for inventories and its impact on financial statement analysis, cash flow analysis as well as accounting analysis.
- IAS 16 and 38 relative to tangible and intangible assets and their impact on financial statement IAS 36 disciplining the impairment test of tangible and intangible assets.
- IFRS 16 relative to accounting for leases and its impact on financial statement analysis, cash flow analysis as well as accounting analysis.
- Accounting and taxation issues: IAS 12.Disclosure of operating segments (IFRS 8) and accounting treatment of exchange rate differences (IAS 21).
- IFRS 9 relative to financial instruments (i.e. initial recognition and subsequent measurement) and its impact on financial statement analysis, cash flow analysis as well as accounting analysis.
- Refine their knowledge and understanding of complex accounting choices.
- Identify potential accounting issues that can undermine reliability of financial statements and negatively affect outsiders’ assessment of firm business.
- Identify and assess the linkages between accounting choices and financial statement analysis.
- Interpret firms’ accounting choices and their impact on outsiders’ evaluation of the firm.
- Run a critical analysis of financial statements where accounting and comparability issues are acknowledged at the moment of computing and interpreting traditional profitability, activity, liquidity and solvency ratios as well as assessing cash flows generated by the company.
- Perform an accounting analysis to detect potential cases of manipulation of financial statements.
- Apply the acquired technical knowledge and analytical skills to advise investors, banks and any other stakeholder interested in the company as well as accounting standard setters and regulators.
- Face problems and questions related to international accounting standards and their changes through analytical reasoning and critical thinking.
- Face-to-face lectures
- Exercises (exercises, database, software etc.)
- Case studies /Incidents (traditional, online)
The learning experience of this course includes face-to-face lectures, case discussions and real examples.
- In the first part of the course, the students learn the tools underlying financial statement analysis, cash flow analysis and accounting analysis.
- These tools are used in the second part of the course to critically assess the implications of accounting choices following international accounting standards.
- In order to better learn how to apply the tools and interpret the results of the critical analyses, case studies and real examples are used. Thanks to real examples describing “real-life” situations, students learn how to identify and analyze real firms’ accounting choices and assess their impact on investors’ evaluation. This is expected to develop a critical approach towards accounting issues. Learning how to identify and critically analyze salient accounting choices is a relevant skill as a naïve approach can decrease the chances to detect accounting mistakes and irregularities that are not rare nowadays.
- Hence, the examination of real cases is definitely important for their future career. Moreover, as real examples are based on newspaper articles and financial statement repositories, students become familiar with and learn how to use key tools in the business world.
- Lastly, active participation and discussion trigger the use of their communication skills to debate on technical and complex issues.
|Continuous assessment||Partial exams||General exam|
The students can choose between two options:
- The first option is to take two written exams. Each partial exam represents 50% of the final grade. Hence, the final grade is an equally-weighted average of the two partials. In order to pass the exam, the student has to pass each partial. The first partial covers the first part of the course relative to financial statement analysis, cash flow analysis, accounting analysis and IAS 2. The second partial covers the remaining accounting standards. Both partials are based on a mix of multiple choices and exercises. The exercises require the application of the accounting standards and the assessment of its impact on financial ratios, cash flows and earnings management measures. Hence, questions based on computations and open questions are combined. The purpose is to verify:
- Student’s learning level of the main concepts and methods shared in the course.
- Student’s ability to identify potential accounting issues.
- Apply their analytical reasoning and critical thinking at the moment of analyzing the consequences of accounting choices on investors’ assessment of the firm.
- The second option is to take only a final written exam. The final written exam is a combination of the two partials described above. Hence, it is based on a mix of multiple choices and exercises relative to topics covered in class where computations and open questions are combined.
The assessment of non-attending students is entirely based (100% of the final grade) on the final written exam, which has the same content as the one applied to attending students.
The main course material, for both attending and non-attending students, is:
- S. CASTOLDI, A. CORTESI, U. SCACCABAROZZI, et al. (edited by), Advanced Financial Accounting, Castoldi, Egea, 2015, ISBN: 978-88-238-4481-9.
- In addition to the textbook, slides and other materials (i.e., academic articles, newspaper articles, exercises and useful links, etc.) are provided during the course. Students need to refer to the Bboard platform.