International Financial Reporting II AY325
International Financial Reporting II
AY325
- Course Outline 2012/2013 -
Objective
Lecturer(s)
The objectives of this course are to introduce students to some more
complex problems in accounting practice, auditing and governance
issues. This course must be taken by students pursuing the
accounting stream; it is also open to students not taking the
accounting stream. International Financial Reporting I is not a formal
prerequisite, however, the vast majority of those taking this course will
have passed it, so students who have not done so should consult the
lecturer. Visiting students should consult the lecturer, as inadequate
background has led to a significant failure rate in previous years.
Name
Office
Ext
E-mail
Frank
Conaty
Room 351
Cairnes
Building
2589
francis.conaty@nuigalway.ie
Lectures:
Times
Tutorials:
Overall
Learning
Outcomes
Day
Time
Venue
Tues
11-12
Fottrell Theatre (AM 200)
Wed
1-2pm
Fottrell Theatre (AM 200)
From Week 4/5 onwards. Times and location to be
advised.
Upon completion of this course you will be able to:
• Describe and explain the fundamental legal and other rules in
relation to the preparation of group accounts
• Prepare consolidated financial statements for a simple two
company group
• Prepare calculations of goodwill on the acquisition of a
subsidiary
• Explain the need for and the techniques used in consolidation
adjustments for inter-company transactions
• Describe the essential elements of the audit process and
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International Financial Reporting II AY325
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Format
Programme(s)
Course
Material
understand in particular the auditors responsibility in relation to
the prevention and detection of fraud
Understand ethical considerations for accountants
Explain the development of corporate governance codes and
understand the principles of best practice in this area
Explain the accounting problems posed by topics covered by
the course and understand the approach adopted by
International Accounting Standards to addressing them
Apply International Accounting Standards to practical problems
This course comprises two weekly 1-hour lectures across 12 weeks,
plus one weekly 1-hour tutorial across 8 weeks.
2 BCA1 (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)
A course pack including course notes, question bank and past exam
papers has been prepared and should be purchased directly from
Print That on the concourse. The contents of the pack will also be
available for download on Blackboard. Additional lecture notes and
relevant material will be added to blackboard during the semester:
http://blackboard.nuigalway.ie
Assessment
Course work
10%
End of Semester Examination
90%
The end of semester examination will be for a duration of 2 ½ hours.
A sample of past papers are available in the course pack and on the
library website:
http://www.library.nuigalway.ie/services/exam_papers/index.html.
Please note a number of changes in recent years:
(a) Content change in 2009-2010
(b) Format change in 2007-08
(c) Change of accounting standards (examination using
International Accounting Standards since 2004-05)
Although the format of the exam paper and standards applied have
changed somewhat in recent years, past exam questions remain a
good guide to the style and standard of questions which will be set.
Workload
Credit weighting:
Lecture hours:
Tutorial hours:
Independent study:
Course work:
Examination:
Total Student Effort:
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5 ECT
24
7
76.5
15
2.5
125 hours
International Financial Reporting II AY325
Core Text: (Students need their own copy)
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Financial Accounting and Reporting, 15th Edition, Prentice Hall. Barry Elliott and
Jamie Elliott. ISBN: 978-0-273-71231-2 (Note Earlier Editions to13th and International
Edition 2nd are also suitable)
Supplementary Text(s):
•
Financial Accounting Reporting and Analysis, 2nd Edition, FT Prentice Hall. Barry
Elliott and Jamie Elliott. ISBN: 978-0-273-70253-5
[This international version of the core text will have a lot of the same chapters.]
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International Financial Reporting and Analysis, 3rd Edition, Thomson. David
Alexander, Anne Britton and Ann Jorissen. ISBN: 978-1-84480-668-3
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Principles of Auditing, 2nd Edition, FT Prentice Hall. Rick Hayes, Roger Dassen,
Arnold Schilder and Philip Wallage. ISBN: 978-0-273-68410-8
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Principles of External Auditing, 3rd Edition, Wiley. Brenda Porter, David Hatherly and
Jon Simon. ISBN: 978-0-470-01825-5
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International Financial Reporting. A Practical Guide. FT Prentice Hall. Alan Melville.
ISBN: 978-0-273-70872-8
Agenda:
Topic 1: Group Accounts
Consolidated Balance Sheet
Elliott and Elliott (15th Ed) Chapter 22 & 23
Elliott and Elliott (14/13th Ed) Chapter 20 & 21
Elliott and Elliott [Intl] (2nd Ed) Chapter 15 & 16
Alexander, Britton and Jorissen (3rd Ed) Chapter 25
Melville (1st Ed) Chapter 18
Lecture Notes
IAS 27 (Blackboard)
Consolidated Income
Statement
Elliott and Elliott (15th Ed) Chapter 24
Elliott and Elliott (14/13th Edition) Chapter 22
Elliott and Elliott [Intl] (2nd Ed) Chapter 17
Alexander, Britton and Jorissen (3rd Ed) Chapter 25
Melville (1st Ed) Chapter 19
Lecture Notes
IAS 27 (Blackboard)
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International Financial Reporting II AY325
Outcomes: at the end of this section you will be able to
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Describe the circumstances that give rise to the preparation of consolidated financial
statements
Explain the parent-subsidiary relationship and discuss the relevance of control in
that relationship
Prepare a set of consolidated financial statements for a two company group
Prepare calculations of goodwill arising on the acquisition of a subsidiary and show
how this is accounted for on consolidation
Explain the concept of minority interest, calculate and show how this is accounted
for on consolidation
Explain the concept of consolidated reserves, calculate and show how they are
accounted for on consolidation
Explain the need for and the techniques used in consolidation adjustments for intercompany transactions
Apply IAS 27 to practical examples of consolidation
Topic 2: Financial Reporting Environment
Part 1: Introduction to Auditing
Hayes, Dassen, Schilder and Wallage: Chapter 1
Introduction to Auditing
Porter, Hatherly and Simon: Chapters 1,4 and 6
Outcomes: at the end of this section you will be able to
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Describe the basic concepts which give rise to the demand for auditing
Explain the respective roles of directors and auditors in financial reporting
Understand the audit process in terms of planning, testing and completion
Describe the format and content of an audit report
Explain the circumstances that give rise to an unqualified and qualified audit report
Understand the respective responsibilities of auditors and directors in relation to the
prevention and detection of fraud.
Describe the different types of fraud i.e. misappropriation of assets and fraudulent
financial reporting
Describe the reporting requirements of auditors to various stakeholders
Part 2: Introduction to Ethics for Accountants
Elliott and Elliott (15th Ed) Chapter 11
Elliott & Elliott (13th Ed): Chapter 32
Introduction to ethics for
accountants
Elliott and Elliott [Intl] (2nd Ed) Chapter 27
Hayes, Dassen, Schilder and Wallage: Chapter 3
Porter, Hatherly and Simon: Chapter 4
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International Financial Reporting II AY325
Outcomes: at the end of this section you will be able to
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Understand the background and nature of business ethics
Appreciate the ethics framework within which accountants operate i.e. legal
frameworks, regulations and codes of ethics
Describe the basic ethical principles for accountants i.e. integrity, objectivity,
professional competence, due care and confidentiality.
Explain the concept of independence i.e. professional skepticism, accountability and
social responsibility
Understand how conflicts of interest should be managed
Explain what is meant by unethical behaviour
Appreciate and understand the existence of ethical dilemma’s
Part 3: Introduction to Corporate Governance
Elliott and Elliott (15th Ed) Chapter 31
Elliott & Elliott (13th Ed): Chapter 30
Introduction to Corporate
Governance
Elliott and Elliott [Intl] (2nd Ed) Chapter 25
Hayes, Dassen, Schilder and Wallage: Chapter 14
Outcomes: at the end of this section you will be able to
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Understand the need for corporate governance guidelines
Appreciate the directors responsibility to key stakeholders especially shareholders
Describe the principles of good corporate governance
Explain the development of codes of best practice in corporate governance
Appreciate the role of auditors in corporate governance
Understand the application of codes of corporate governance in an Irish context
Topic 3: Accounting Standards
IAS 8 Accounting policies, changes in accounting estimates and errors
Elliott and Elliott (15th Ed) Chapter 3
Elliott and Elliott (13th Ed) Chapter 9
IAS 8 Accounting policies,
changes in accounting
estimates and errors
Elliott and Elliott [Intl] (2nd Ed) Chapter 4
Alexander, Britton and Jorissen (3rd Ed) Chapter 24
Melville (1st Ed) Chapter 4
Lecture Notes
IAS 8 (Blackboard)
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International Financial Reporting II AY325
Outcomes: at the end of this section you will be able to
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Define the term “accounting policy” and explain how an entity should select its
accounting policies
Explain the circumstances in which an entity can change an accounting policy
Describe how a change in accounting policy is reported in accordance with IAS 8
Describe what is meant by an accounting estimate and discuss the accounting
treatment for a change in accounting estimate in accordance with IAS 8
Define an error and explain the appropriate treatment of prior period errors in
accordance with IAS 8
IAS 11 Construction Contracts
Elliott and Elliott (15th Ed) Chapter 21
Elliott and Elliott (13th Ed) Chapter 19
Elliott and Elliott [Intl] (2nd Ed) Chapter 14
IAS 11 Construction Contracts
Alexander, Britton and Jorissen (3rd Ed) Chapter 16
Melville (1st Ed) Chapter 10
Lecture Notes
IAS 11 (Blackboard)
Outcomes: at the end of this section you will be able to
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Define the term “construction contract” and identify circumstances necessary for
recognition of a construction contract per IAS 11
Identify the timing of revenue and cost recognition relating to specific contracts as per
IAS 11
Describe the treatment (and demonstrate with examples) of cost and revenues where
no reliable estimate of contract outcome is possible
Describe the treatment (and demonstrate with examples) of expected losses on
contracts
Outline the appropriate presentation and disclosure requirements from IAS 11 regarding
construction contracts
IAS 20 Grants
Elliott and Elliott (15th Ed) Chapter 17.14
Elliott and Elliott (13th Ed) Chapter 15 (Section 15.14)
IAS 20 Accounting for
Government Grants and
Disclosure of Government
Assistance
Elliott and Elliott [Intl] (2nd Ed) Chapter 10 (Section 10.13)
Alexander, Britton and Jorissen (3rd Ed) Chapter 12
Melville (1st Ed) Chapter 5
Lecture Notes
IAS 20 (Blackboard)
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International Financial Reporting II AY325
Outcomes: at the end of this section you will be able to
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Explain the requirements of IAS 20 – Accounting for Government Grants and
Disclosure of Government Assistance and apply them to practical accounting
problems.
Record the accounting entries in relation to recognition and amortisation of
government grants
Outline the disclosure requirements for IAS 20
Please note that knowledge of topics previously covered in Financial Accounting 1
(AY206) is assumed for this course and in particular IAS1 and IAS 16 are considered
revision topics.
Approach to learning:
Blackboard will be used to provide students with relevant overhead slides and course notes
in advance of lectures. Students are strongly advised to print out such notes in advance of
lectures. In addition to gaining the broader perspective that comes from supplementing the
lectures/notes with reading of the recommended text, students will also be expected to read
the original documents of accounting standards; accounting standards are constantly revised,
and the purpose of the course is not so much to teach an outline of the current rules but more
to develop in students an ability to read the often complex material in accounting standards
and to apply it to problem situations.
Of great importance is the attempting of the problem questions which are supplied in the
course pack. 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. Apart from giving the
chance to raise questions on aspects of the course which students do not understand, they
provide an opportunity to improve the communication skills which are regarded as an
essential attribute of the accountant and which are a vital element in the recruitment process.
Attempting problems, discussing with fellow students the difficulties that arise and arguing
about these in tutorials constitute the best focus for study. Solutions for the problems in the
question pack, which do not form the basis of tutorials or class discussion will be posted on
blackboard. The examination papers for 2007/2008, 2008/2009, 2009/2010 and 2010/2011
are included in the course pack together with outline solutions to the numerical problems.
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