Course Outline
School:
Business
Department:
Graduate Studies
Course Title:
Accounting Theory & Policy
Course Code:
ACCT 725
Course Hours/Credits:
56
Prerequisites:
N/A
Co-requisites:
N/A
Eligible for Prior Learning,
Assessment and Recognition:
Yes
Originated by:
Joe Toste
Creation Date:
Summer 2014
Current Semester:
Summer 2015
Approved by:
Chairperson/Dean
Students are expected to review and understand all areas of the course outline.
Retain this course outline for future transfer credit applications. A fee may be charged for
additional copies.
This course outline is available in alternative formats upon request.
ACCT 725
CENTENNIAL COLLEGE
Accounting Theory & Policy
Course Description
This is an advanced course in Accounting Theory and although it does not ignore the institutional
structure of accounting and standard setting, it is presented with a view toward a theoretical orientation
with contributions from other disciplines including economics and finance. Standards such as reserve
recognition, management discussion and analysis, employee stock options, post employment benefits,
financial instruments, ceiling tests, hedge accounting and comprehensive income are critically evaluated.
Integration of Canadian and U.S. standards with those of the International Accounting Standards Board is
presented to facilitate the transition toward the adoption of IASB standards in 2011 for public companies.
Practical and theoretical problems of the present value model, foreign exchange accounting, the process
and issues related to standard setting, agency theory and other topics relevant to current events are
discussed. Students will be able to select appropriate accounting policies for the specialized industry they
find themselves working in upon graduation.
Formerly ACCT-425
Program Outcomes
Successful completion of this and other courses in the program culminates in the achievement of the
Vocational Learning Outcomes (program outcomes) set by the Ministry of Training, Colleges and
Universities in the Program Standard. The VLOs express the learning a student must reliably demonstrate
before graduation. To ensure a meaningful learning experience and to better understand how this course
and program prepare graduates for success, students are encouraged to review the Program Standard by
visiting http://www.tcu.gov.on.ca/pepg/audiences/colleges/progstan/. For apprenticeship-based programs,
visit http://www.collegeoftrades.ca/training-standards.
Course Learning Outcomes
The student will reliably demonstrate the ability to:
1. Assess accounting standards in a broader context.
2. Apply present value techniques to calculate company value.
3. Explain stock market behavior from an accounting information perspective.
4. Evaluate behavioral implications of accounting policies.
5. Examine current or recent accounting issues.
Essential Employability Skills (EES)
The student will reliably demonstrate the ability to*:
3. Execute mathematical operations accurately.
5. Use a variety of thinking skills to anticipate and solve problems.
7. Analyze, evaluate, and apply relevant information from a variety of sources.
*There are 11 Essential Employability Skills outcomes as per the Ministry Program Standard. Of these 11 outcomes, the following will be
assessed in this course.
Global Citizenship and Equity (GC&E) Outcomes
N/A
THIS COURSE ADHERES TO ALL COLLEGE POLICIES (See College Calendar)
2
ACCT 725
CENTENNIAL COLLEGE
Accounting Theory & Policy
Text and other Instructional/Learning Materials
Text Book(s):
Financial Accounting Theory, Sixth Edition. William R. Scott. Prentice Hall, 2012.
ISBN 978-0-13-511915-0
Online Resource(s):
CICA Handbook, On-Line
Evaluation Scheme
➮ Research Paper (10 pages): Research Paper (10 pages)
➮ Mid Term Exam (closed book, case based, maximum 20% multiple choice): Mid Term Exam (closed
book, case based, maximum 20% multiple choice)
➮ Group Research Paper (10 pages): Group Research Paper (10 pages)
➮ Assignments, quizzes: Assignments, quizzes
➮ Final Exam (cumulative, closed book, case based, maximum 20% multiple choice): Final Exam
(cumulative, closed book, case based, maximum 20% multiple choice)
Evaluation Name
Research Paper (10 pages)
Mid Term Exam (closed book, case based,
maximum 20% multiple choice)
Group Research Paper (10 pages)
Assignments, quizzes
Final Exam (cumulative, closed book, case based,
maximum 20% multiple choice)
Total
CLO(s)
5
1, 2, 3
EES
GCE
Weight/100
Outcome(s) Outcome(s)
3, 7
15
3, 5
20
3, 4, 5
2, 3, 4
1, 2, 3, 4, 5
7
3, 5
3, 5, 7
15
10
40
100%
If students are unable to write a test they should immediately contact their professor or program Chair for
advice. In exceptional and well documented circumstances (e.g. unforeseen family problems, serious
illness, or death of a close family member), students may be able to write a make-up test.
All submitted work may be reviewed for authenticity and originality utilizing Turnitin®. Students who do not
wish to have their work submitted to Turnitin® must, by the end of the second week of class,
communicate this in writing to the instructor and make mutually agreeable alternate arrangements.
When writing tests, students must be able to produce official College photo identification or they may be
refused the right to take the test or test results will be void.
Student Accommodation
It is College Policy to provide accommodation based on grounds defined in the Ontario Human Rights
Code. Accommodation may include modifications to standard practices. Students with disabilities who
require academic accommodations must register with the Centre for Students with Disabilities. Students
requiring accommodation based on other human rights grounds should talk with their professors as early
as possible. Please see the Student Accommodation Policy.
THIS COURSE ADHERES TO ALL COLLEGE POLICIES (See College Calendar)
3
ACCT 725
CENTENNIAL COLLEGE
Accounting Theory & Policy
Use of Dictionaries
•
Dictionaries may be used in tests and examinations, or in portions of tests and examinations, as long
as they are non-electronic (not capable of storing information) and hard copy (reviewed by the
invigilator to ensure notes are not incorporated that would affect test or examination integrity).
Program or School Policies
N/A
Course Policies
N/A
College Policies
Students should familiarize themselves with all College Policies that cover academic matters and student
conduct.
All students and employees have the right to study and work in an environment that is free from
discrimination and harassment and promotes respect and equity. Centennial policies ensure all incidents
of harassment, discrimination, bullying and violence will be addressed and responded to accordingly.
Academic honesty is integral to the learning process and a necessary ingredient of academic integrity.
Academic dishonesty includes cheating, plagiarism, and impersonation. All of these occur when the work
of others is presented by a student as their own and/or without citing sources of information. Breaches of
academic honesty may result in a failing grade on the assignment/course, suspension or expulsion from
the college.
For more information on these and other policies, please visit www.centennialcollege.ca/aboutcentennial/college-overview/college-policies.
Students enrolled in a joint or collaborative program are subject to the partner institution's academic
policies.
PLAR Process
This course is eligible for Prior Learning Assessment and Recognition (PLAR). PLAR is a process by
which course credit may be granted for past learning acquired through work or other life experiences. The
PLAR process involves completing an assessment (portfolio, test, assignment, etc.) that reliably
demonstrates achievement of the course learning outcomes. Contact the academic school to obtain
information on the PLAR process and the required assessment.
This course outline and its associated weekly topical(s) may not be reproduced, in whole or in
part, without the prior permission of Centennial College.
THIS COURSE ADHERES TO ALL COLLEGE POLICIES (See College Calendar)
4
ACCT 725
CENTENNIAL COLLEGE
Accounting Theory & Policy
Topical Outline (subject to change):
Week
Topics
Readings/Materials
1
Introduction to
Financial accounting
theory;
Accounting under
ideal conditions
Chapter 1
Chapter 2
2
Decision Usefulness Chapter 3
Approach to Financial
Reporting
3
Efficient Securities
Markets
Chapter 4
4
The Information
approach to decision
usefulness
Chapter 5
Weekly Learning Outcome(s)
•Historical perspective
•2007-08 market meltdowns
•Ethical behavior
•Rules-based versus principles-based
accounting standards
•Complexity of information and financial
accounting and reporting
•Role of accounting research
•Information Asymmetry
•Regulation
•The fundamental problem of financial
accounting theory and associated regulation
•Relevance of financial accounting theory to
accounting practice
•Accounting under ideal conditions of
certainty and uncertainty (present value
model)
•Reserve Recognition Accounting
•True net income
•Decision usefulness approach
•Single-person decision theory
•The rational risk-averse investor
•The principle of portfolio diversification
•The optimal investment decision
•Portfolio risk
•The reaction of the profession to the decision
usefulness approach
•Efficient securities markets
•Implications for financial reporting
•The informativeness of price
•A capital asset pricing model
•Information asymmetry
•The social significance of markets that work
well
•An example of full disclosure
•Outline of the research problem
•The Ball and Brown Study
•Earnings response coefficients
•A caveat about the best accounting policy
•The information content of other financial
THIS COURSE ADHERES TO ALL COLLEGE POLICIES (See College Calendar)
Instructional Strategies
Lecture and class
discussion
Evaluation
Evaluation
Name
Date
End of chapter
assignments
Lecture and class
discussion
Research
paper #1
Handed out
End of chapter
assignments
Lecture and class
discussion
End of chapter
assignments
Lecture and class
discussion
End of chapter
assignments
5
ACCT 725
Week
CENTENNIAL COLLEGE
Topics
Readings/Materials
5
The Measurement
Chapter 6
Approach to Decision
Usefulness
6
Measurement
Applications
Chapter 7
7
8
Mid-Term Exam
Economic
Consequences and
Positive Accounting
Theory
Chapters 1 - 7
Chapter 8
9
An Analysis of Conflict Chapter 9
10
Executive
Compensation
Chapter 10
Weekly Learning Outcome(s)
statement information
•Are Securities markets fully efficient?
•Other reasons supporting a measurement
approach
•The value relevance of financial statement
information
•Ohlson’s Clean Surplus Theory
•Auditors’ legal liability
•Asymmetry of investor losses
•Current value accounting
•Long standing measurement examples
•Financial instruments
•The 2007-08 market meltdown again
•Derivative instruments
•Accounting for intangibles
•Reporting on risk
20%
•The rise of economic consequences
•Employee stock options
•The relationship between efficient securities
market theory and economic consequences
•The positive theory of accounting
•Understanding game theory
•A non cooperative game model of managerinvestor conflict
•Models of cooperative game theory
•Managers information advantage
•Agency theory: a bondholder-manager
lending contract
•Implications of agency theory for accounting
•Reconciliation of efficient securities market
theory with economic consequences
•Incentive contracts
•A managerial compensation plan
•The theory of executive compensation
•Empirical compensation research
•The politics of executive compensation
•The power theory of executive compensation
•The social significance of managerial labour
markets that work well
THIS COURSE ADHERES TO ALL COLLEGE POLICIES (See College Calendar)
Accounting Theory & Policy
Instructional Strategies
Evaluation
Name
Lecture and class
discussion
End of chapter
assignments
Lecture and class
discussion
End of chapter
assignments
N/A
Lecture and class
discussion
Lecture and class
discussion
Research
paper #1 due
Research
paper #2
handed out
End of chapter
assignments
End of chapter
assignments
Lecture and class
discussion
End of chapter
assignments
Evaluation
Date
6
ACCT 725
Week
CENTENNIAL COLLEGE
Topics
Readings/Materials
11
Earnings
Management
Chapter 11
12
Standard Setting:
Economic Issues
Chapter 12
13
Standard Setting:
Political Issues
Final exam
preparation – course
review
Chapter 13
14
Final Examination
Comprehensive
Weekly Learning Outcome(s)
markets that work well
•Patterns of earnings management
•Evidence of earnings management for bonus
purposes
•Other motivations for earnings management
•The good side of earnings management
•The bad side of earnings management
•Regulation of economic activity
•Ways to characterize information production
•First-Best Information
•Market failures in the production of
information
•Contractual and Market – based incentives
for information production
•How much information is enough
•Decentralized regulation
•Two theories of regulation
•Conflict and compromise
•Rules-based versus principled-based
accounting standards
•Criteria for standard setting
•International integration of capital markets
40%
THIS COURSE ADHERES TO ALL COLLEGE POLICIES (See College Calendar)
Accounting Theory & Policy
Instructional Strategies
Lecture and class
discussion
Evaluation
Name
Evaluation
Date
End of chapter
assignments
Lecture and class
End of chapter
discussion
assignments
Final exam preparation
– course review
Lecture and class
Research
discussion
paper #2 due
Final exam preparation
– course review
N/A
7