International Financial Reporting III AY326
International Financial Reporting III
AY326
- Course Outline -
Objective
Lecturer(s)
This course is available as an optional course for any student who has taken
the prerequisite Financial Accounting II. The course is compulsory for 2nd
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.
Name
Dr Emer Curtis
Lectures:
Times
Week 1-4
Overall Learning
Outcomes
Contact E-mail
emer.curtis@nuigalway.ie
Day
Time
Venue
Mon
12-1
Fottrell Theatre (AM 200)
Tue
12-1
Fottrell Theatre (AM 200)
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
International Financial Reporting III AY326
Student Queries
Format
Programme(s)
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 1hour lectures for 7 weeks, plus one weekly 1-hour tutorial for 7 weeks.
2BCA (2nd year Bachelor of Commerce, Accounting)
3BC1 (3rd year Bachelor of Commerce)
4BC2 (4th year Bachelor of Commerce – French)
4BC3 (4th year Bachelor of Commerce – German)
4BC4 (4th year Bachelor of Commerce – Spanish)
4BC5 (4th 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 14th or 15th 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.
Course Material
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: 978-1-84480668-3
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
International Financial Reporting III AY326
The total marks for the course will be allocated as follows:
Group Assignment due 1st February 2013
MCQ tests
Final examination
Assessment
Workload
10%
15%
75%
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 14th February (Goodwill & Intangible
assets), February 28th (Foreign Currency) and March 14th (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
International Financial Reporting III AY326
Course Topics
(1)
Company financial Statements
At the end of this section students should be able to
• 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
Reading:
Lecture notes
Elliott & Elliott 14th : Chapter 27 – all sections; Chapter 28 (sections 28.1 to 28.5)
Elliott & Elliott 15th : 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
At the end of this section students should be able to
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.
Reading:
Lecture notes
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
International Financial Reporting III AY326
(3) Accounting for foreign currency translation
At the end of this section students should be able to
• 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
Reading
Lecture notes
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
At the end of this section students should be able to
• 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
Reading
Lecture notes
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
International Financial Reporting III AY326
(5) Provisions, Contingencies and post balance sheet events
At the end of this section students should be able to
•
•
•
•
•
•
•
•
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.
Reading
Lecture notes
IAS 37 Provisions, contingencies liabilities and contingent assets
IAS 10 Post balance sheet events
Elliott & Elliott 14th : Chapter 11 (sections 11.5 and 11.8)
Elliott & Elliott 15th : Chapter 13
(6) Taxation in Company Accounts
At the end of this section students should be able to
•
•
•
•
•
•
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)
Reading
Lecture notes
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