THE OPEN UNIVERSITY OF TANZANIA
FACULTY OF BUSINESS MANAGEMENT
DEPARTMENT OF ACCOUNTING AND FINANCE
OAF 311: Advanced Accounting
Module Outline
Module Aims
The module aims at providing students with ability to prepare financial reports
that conform to Generally Accepted Accounting Practices (GAAPs) (i.e. IFRS,
IPSAS and TFRS) suitable for presentation to a variety of users.
Introduction
This module is designed to broaden and deepen the students’ knowledge and skills in
exercising judgment and applying appropriate techniques in preparing and interpreting
corporate financial statements in a practical context. It is built on the basic techniques
in Principles of Accounting and Intermediate Accounting. The module equips students
with professional skills in preparing corporate financial reports and public sector
reports for publication in accordance with IFRS and IPSAS.
Module Objectives
At the end of this module the student will be able to demonstrate:
• Knowledge and understanding of accounting standards and the theoretical
framework in the preparation of financial statements of entities, including
groups for publishing.
• Ability to prepare financial statements which conform to International
financial Accounting Standards and International Public Sector Accounting
Standards (IFRS & IPSAS)
• Ability to analyse the social cost benefits associated with company's activities
• Competence in interpreting and applying laws relating to bankruptcy,
liquidation and executorships in the preparation of books of accounts
•
Ability to communicate relevant and reliable financial information to various
user groups.
LECTURE 1: Consolidated statement of financial position
Objectives
At the end of this lecture you will be able to:
• establish date and purchase consideration, group structure and ownership for
controlling interest and non-controlling interest
• Compute value of goodwill and non controlling interest as per IFRS 3
(Revised) and IAS 27(Revised)
• Make consolidation adjustments
• Prepare a consolidated statement of financial position for both simple and
complex groups.
Content
• Establishment of date of acquisitions
• Determination of purchase consideration and group structure
• Establishment of ownership for controlling interest and non-controlling interest
• Computation of goodwill and non controlling interest as per IFRS 3 (Revised) and IAS 27
(Revised).
• Computation of non-controlling interest in net assets
• Consolidation adjustments
• Preparation of consolidated statement of financial position
LECTURE 2: Consolidated statement of comprehensive income
Objectives:
At the end of this lecture you will be able to:
• Account for the effects of intra-group trading in the income statement
• Prepare a consolidated statement of comprehensive income for simple and complex groups
Content
• Adjustments for in intra-group sales and purchases, unrealized profits, intra-group dividends
received and paid
• Prepare consolidated statement of comprehensive income
LECTURE 3: Business valuation
Objectives
At the end of this lecture you will be able to:
• Explain the reasons for business valuation
• Apply business valuation approaches where there is a going concern
• Apply business valuation approaches where there is no a going concern
• Discuss the significance of each valuation approach.
Content
• motives for business valuation
• Valuation bases where there is no a going concern
• Valuation bases where there is a going concern
LECTURE 4: Accounting for business combinations
Objectives
At the end of this lecture you will be able to:
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•
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Explain the motives for business combinations
Describe methods of combinations and their accounting treatments
Prepare books of account of the vendor and the purchasing company or the new company
Content
• Motives behind business combinations
• Methods of business combinations
◦ Amalgamations
◦ Absorption
• Preparation of books of account of a vendor and purchaser or a new company
LECTURE 5: Capital re-organization and reconstruction
Objectives
At the end of this lecture you will be able to:
• Explain the reasons as to why companies may choose to reorganize themselves
• Suggest capital reduction schemes or reorganization schemes
• Prepare capital reduction/reorganization account
• Prepare the statement of financial position of the company after reconstruction exercise.
Content
• Principal reasons for capital reconstruction
• Stages involved in formulating a capital reduction/reorganization scheme
• Capital reduction/reorganization schemes
• Preparation of capital reduction/reorganization account
• Preparation of the statement of financial position of the company after reconstruction exercise.
LECTURE 6: Accounting for bankruptcy
Objectives
At the end of this lecture you will be able:
• Describe and distinguish the terms insolvency and bankruptcy
• Identify stages of bankruptcy proceedings
• Explain acts of bankruptcy
• Apply doctrine of relating back in establishing the date of bankruptcy
• Distinguish between property vested to the trustee and property not vested to the trustee
• Identify claims against the bankrupt
• Establish the order of payments in the distribution of property
Content
• Meaning of and distinction between insolvency and bankruptcy
• Stages of bankruptcy proceedings
• Acts of bankruptcy
• Doctrine of relating back
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•
•
Difference between property vested to the trustee and property not vested to the trustee
Claims against the bankrupt
Order of payments in the distribution of property
LECTURE 7: Bankruptcy of Sole proprietorship
Objectives
At the end of this lecture you will be able to:
• Describe the terms statement of affairs and deficiency account
• Identify the contents of statement of affairs
• Prepare a statement of affairs and deficiency account for a sole proprietorship
Contents
• Meaning of statement of affairs and deficiency account
• The content of statement of affairs
• Preparation of statement of affairs and deficiency account for a sole proprietorship
LECTURE 8: Bankruptcy of a partner and partnership
Objectives
At the end of this lecture you will be able to:
• Explain an act of bankruptcy by a partner
• Explain procedures involved in the treatment of joint and separate estates
• Prepare Partnership statement of affairs and deficiency account.
Contents
• An act of bankruptcy by a partner
• Procedures involved in the treatment of joint and separate estates
• Preparation of partnership statement of affairs and deficiency account.
LECTURE 9: Company liquidation
Objectives
At the end of this lecture you will be able to:
• Describe winding up of companies
• Explain types of winding up
• Explain stages in winding up proceedings by court
• Discuss the effects of winding up order
• Describe the order of distribution of property
• Prepare statement of affairs and deficiency account
Content
• Meaning of liquidation
• Types of winding up (liquidation)
• Stages in winding up proceedings by court
• Effects of winding up order
• Companies' distribution of property
• Preparation of statement of affairs and deficiency account
LECTURE 10: Accounting for estates of deceased persons
Objectives
At the end of this lecture you will be able:
• Define a will
• Differentiate between a testate person and interstate person
• Determine the matters which determine the validity of the will
• Explain the ways in which a will may be revoked
• Explain the means of appointment of executor, administrator and legal personal representative
• Explain the duties, powers and liabilities of legal personal representative
• Describe the composition of the claims against the deceased
• Distinguish between legacies and devises
• Explain the lapse of legacy
• Describe the order of priority for distribution of estate
• Prepare a distribution statement of estate
Content
• Meaning of a will
• Distinction between a testate person and interstate person
• Validity of the will and its revocation
• Appointment of executor, administrator and legal personal representative
• Duties, powers and liabilities of legal personal representative
• Claims against the deceased estate
• Distinction between legacies and devises
• Lapse of legacy
• Preparation of a statement showing the distribution of estate
LECTURE 11: Corporate social responsibility
Objectives
At the end of this lecture you will be able to:
• Describe corporate social responsibility (CSR)
• Explain as to why corporations adopt corporate social responsibility
• Explain the ways the business interact with society
• Discuss how companies may benefit from practicing corporate social responsibility
• Identify and explain arguments in support of and against corporate social responsibility.
• Discuss what entails the good corporate citizenship.
Content
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Meaning of Corporate social responsibility and reasons for its adoption
Interactions between business and society
Benefits accruing to companies practicing corporate social responsibility
Arguments in support of and against corporate social responsibility.
Good corporate citizenship.
LECTURE 12: Environmental reporting
Objectives
At the end of this lecture you will be able to:
• Describe environmental reporting
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•
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Discuss environmental responsibilities facing organizations
Explain why it is important for companies to publish environmental reports
Describe the content of environmental reports
Indicate challenges in environmental reporting
Describe environmental costs
Content
• Meaning of environmental reporting
• Environmental responsibilities facing organizations
• Environmental reports- their content and importance
• Challenges in environmental reporting
• Environmental costs
LECTURE 13: Human resource accounting
Objectives
At the end of this lecture you will be able to:
• Describe human resource accounting
• Describe and evaluate the main approaches employed in valuation of human resource
• Discuss the arguments surrounding the human resource accounting issue
Content
• Meaning of human resource accounting, its objectives and advantages
• Approaches employed in valuation of human resource
• Arguments for and against the human resource accounting issue.
LECTURE 14: Creative accounting
Objectives
At the end of this lecture you will be able to:
• Describe creative accounting
• Explain various ways in which creative accounting can be undertaken
• Explain the approaches that can be employed in curbing creative accounting
• Discuss why companies' directors engage in creative accounting
• Discuss how to detect creative accounting tactics
Contents
• Meaning of creative accounting
• Ways in which creative accounting can be undertaken
• Prevention of creative accounting
• Reasons for companies' directors to engage in creative accounting
• Detection of creative accounting tactics
LECTURE 15: Investment Accounts
Objectives
At the end of this lecture you will be able to:
• Describe major categories of trade investments based on interest rates
• Describe and apply the following quotations: cum- div/int or ex- div/int in the sales and
purchases of investments
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•
Compute the amount of dividend or interest based on cum- div/int or ex-div/int purchases and
make entries in the books of the purchaser
Compute the amount of dividend or interest based on cum div/int sales or ex div/int sales and
make entries in the books of the seller
Contents
• Major categories of trade investments based on interest rates
• Meaning and application of cum- div/cum- int and ex- div/ ex- int quotations in the sales and
purchases of investments
• Computation of the amount of dividend or interest based on cum- div/int purchases or excum/int purchases and make entries in the books of the purchaser
• Computation of the amount of dividend or interest based on cum div/int sales or ex div/int
sales and make entries in the books of the seller
LECTURE 16: Public Sector Accounting
Objectives
At the end of this lecture you will be able to:
• Distinguish between public sector accounting and commercial accounting
• Explain the advantages and disadvantages of cash and accrual bases of accounting
• Identify sources of government revenues
• Classify government revenues and expenditures
• Explain the responsibilities of officers and organs responsible for public sector accounting
• Account for government revenues and expenditures
Contents
• Meaning of public sector accounting
• Public sector accounting Vs. commercial accounting
• Advantages and disadvantages of cash and accrual bases of accounting
• Sources of government revenues
• Classification of government revenues and expenditures
• Officers and Organs involved in Government Financial Report Reporting and Accountability:
• Accounting for government revenues and expenditures
LECTURE 17: Impairment of Assets
Objectives
At the end of this lecture you will be able to:
• Identify the circumstances that may indicate impairment of assets
• Describe what is meant by a cash generating unit
• State the basis on which impairment losses should be allocated and allocate impairment loss
to cash generating unit.
Contents
• Meaning of impairment loss and cash generating units
• Circumstances that may indicate impairment to assets
• Basis for allocation of impairment losses to cash generating units.
LECTURE 18: Income Tax
Objectives
At the end of this lecture you will be able to:
• Identify components of income tax
• Account for current taxation in accordance with IAS 12
• Compute deferred tax amounts in the financial statements
Contents
• Meaning of taxation and its components
• Measurement, recognition and presentation of both current and deferred tax
• Accounting for deferred tax
Module Assessment
Compulsory student progressive portfolio
1 Timed test
Final Exam
(ungraded)
30%
70%
100
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The pass mark shall be 40%
Recommended readings
• Alexander, D., Britton, A. & Jorissen, A. (2008) International financial reporting and ana
(Place of publication): Thomson Learning.
• Elliot, B. & Elliot, J. (2004) Financial accounting and reporting (Place of
publication): Prentice Hall
• IFAC (2009) International public sector accounting
standards (IPSAS), IFAC
• International Accounting Standards Board (2009), International financial reporting Standards
international accounting standards (IAS): IASB
• Jennings, A. R. (2004) Financial accounting. London: Thomson Learning
• The United Republic of Tanzania (2004) The Public Finance Regulations. Dar es Sal
Government Printer
• The United Republic of Tanzania (2001) The Public Finance Act No. 6. Revised edition in 2
Dar es Salaam: Government Printer.
• Wood, F. & Sangster, A. (2009) Business accounting 2. 11th Edition. Harlow: Prentice Hall
Hrishkesh Chakraboty, Financial Accounting
Web resources
http://www.iasplus.com
http://www.iasb.org
http://www.accaglobal.co.uk