FACULTY OF MANAGEMENT ACCOUNTING THEORY MGT 4160 Y SPRING 2016

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1 FACULTY OF MANAGEMENT ACCOUNTING THEORY MGT 4160 Y SPRING 2016 FRIDAYS 6:00-8:50 PM ROOM: S5021 INSTRUCTOR OFFICE HOURS COURSE MATERIALS Required Textbook: Dr. Harjinder Deol, CPA, CGA deolhs@uleth.ca Phone: (Voice Mail Only) Fridays 5:00-5:50 PM (before class) Please make an appointment Financial Accounting Theory, 7 th Edition William R. Scott Pearson Canada, Toronto; ISBN-13: (Order through bookstore.uleth.ca) PREREQUISITES/ CO-REQUISITES Pre-requisite: MGT 3100 AND one of WRIT 1000 or a University English course (3.0 credit hours) Co-requisite: ECON 3030 AND MGT 3101 AND MGT 3160 ***All courses must have a minimum C- grade. COURSE DESCRIPTION The study of theoretical constructs such as efficient markets, agency and economic consequences which impact the preparation and use of accounting information. Focus is on applying the theories to understand and analyze current issues in accounting practice. The course is designed to provide students with the opportunity to exercise and improve skills in critical thinking, persuasive writing and oral communication. MGT 4160 Y Spring

2 This course is intended to provoke thoughtful questions about the use and preparation of accounting information, and the role of standards and regulation in these activities. To assist you in developing a framework for asking and providing responses to these questions, we will deploy several approaches. On some days, the instructor will lead the discussion regarding accounting theory, based on concepts provided in the textbook. You are expected to contribute to the discussions. Your ability to contribute will, to a large extent, depend upon your having done the assigned readings and/or suggested problems. On other days, students will lead the discussion by presenting and discussing assigned readings. For these days you are expected to read the assigned readings and prepare question and comments as preparation for the in class discussion. Finally, we will also have some classes where we focus on exercises and problems to further explore particular concepts. COURSE LEARNING OBJECTIVES This course is intended to improve students ability to exercise professional judgment in an accounting context, and to give students a better sense of why accounting looks the way it does, so that you can better understand the forces shaping the evolution of accounting. Unlike many accounting courses, this course will emphasize why rather than how. Some specific course objectives include: To help you better understand what characteristics are believed to make accounting information useful to investors, and the assumptions underlying these perceived relationships To examine how alternative accounting standards differentially affect accounting information characteristics To help you better understand the incentives of managers in preparing information released to the public, and the inherent conflicts in using accounting information for the evaluation of managers versus the evaluation of a company s prospects To make you familiar with some current controversies related to accounting standards To better understand the financial reporting regulatory framework in Canada To better understand International Financial Reporting Standards (IFRS), and Accounting Standards for Private Enterprises (ASPE) To extend your ability to gather and evaluate evidence related to issues in accounting; To exercise and improve your skills in persuasive writing and oral communication; and To further develop your team building skills. METHOD OF ASSESSMENT ASSESSMENT VALUE DUE DATE Term paper 15% Topic due: Mar 4 Paper due: April 15 Term paper presentation 10% April 15 Midterm exam # 1 20% Feb 12 Midterm exam # 2 20% Mar 18 Final exam 35% Apr 22 Total (cannot exceed) 100% MGT 4160 Y Spring

3 ASSESSMENTS Late assessments will NOT be accepted. Term paper (15%): In groups of 3 or 4, students will write a research-based term paper. The paper should be 2,000 to 2,500 words (roughly 8 to 10 pages, double spaced, 12-point font) long, excluding bibliography and appendices. Students can choose a topic of their own liking, provided it relates to the material covered in the course. Literature reviews are acceptable, as long as the paper provides a discussion of the implications of the findings of extant research. A theoretical discussion of a current exposure draft is also acceptable. Students must demonstrate a clear understanding of the underlying theory or theories applicable to the topic they choose. The topic of the term paper along with an annotated bibliography (short summaries of at least five articles related to the topic) is due on March 4. Although this submission will not be marked, I may provide you with feedback and/or suggestions if I deem necessary. If you are unable to identify a topic, contact me well in advance, and I will try to help you find a topic. All references on the final term paper must be in a format that is commonly accepted i.e. APA, MLA or Chicago. The final term paper is due on April 15, the last day of classes. Groups must submit both a printed copy and an electronic one. I will be using specialized software to check the term papers for possible plagiarism. Make sure you read about the plagiarism policy on page 4 of the outline. Wherever applicable, try to tie the technical accounting details to current standards, with references to relevant International Financial Reporting Standards (IFRS) and Accounting Standards for Private Enterprises (ASPE), which can be accessed from the Knotia database 1. Term paper presentation (10%): Teams must also prepare a presentation based on their term paper. These presentations would be held on April 15, the date the paper is due. The presentation should not be more than 10 minutes long, and should cover the following key issues: a) What is the term paper about, and why is the topic interesting? b) A brief description of the research you undertook for the paper. c) Key findings, and their implications for Accounting Theory All group members are expected to be prepared for the presentation, although not all of them are required to actually present. After each presentation, there would be 5 minutes allotted for questions from the rest of the class (or the instructor). These questions must be answered by group members who have not presented. Midterm exams (20% x 2): and Final Exam (35%): Students will be asked to apply the concepts studied in class to computational problems, short essay-type questions and cases similar in style to those assigned from the textbook, or to the articles presented in class. 1 Knotia: (Go the -> Databases by Subject tab (towards the bottom of the page)-> Management Accounting/Finance-> Knotia.ca -> Subscriptions. Then select (depending on what you are looking for): CICA Standards and Guidance Collection to access the CICA Handbook (After selecting this, select the plus sign beside accounting, then the plus sign beside either Part I International Financial Reporting Standards and then "2015 edition" to see the table of contents for 2015 IFRS, which is now Canadian GAAP for publicly accountable enterprises, or Part II "Accounting Standards for Private Enterprises", depending on what you are interested in) The Conceptual Framework for Financial Reporting not part of the standards, but provided by the IASB for use by managers and accountants where there is no IFRS, and as a basis for harmonizing new and existing standards. The Framework is included as one of the items under the "2015 Edition" heading in Part I of the Financial Accounting Handbook, which is the IFRS section. MGT 4160 Y Spring

4 GRADING SCHEME Percent Mark Letter Grade Percent Mark Letter Grade A A A B B B C C C D D 0-49 F COURSE POLICIES 1. Prerequisites. It is the responsibility of students to check the prerequisites for courses before registration. If students are found to be registered in a course for which they do not have the prerequisites and they have not received prior permission from the appropriate program chair, they can be de-registered. If this occurs after the drop/add date, tuition will not be refunded. 2. Mid-term Examinations. If the student is unable to write the midterm exam due to illness or extenuating circumstances and is able to provide documentation then the mark for the midterm exam will be transferred to the next exam. That is, if the student misses the first midterm exam, the mark can be transferred to the second midterm. If the student wrote the first midterm exam but misses the second midterm, the mark for the second midterm can be transferred to the Final exam. If a student misses both midterm exams, then the mark for only the second midterm can be transferred to the final exam, and he/she will receive a ZERO for the first exam. Work commitments, holidays or traffic are not considered legitimate reasons for missing an exam. It is the student s responsibility to inform the instructor within 48 hours after the exam is written, failing which he/she will receive a mark of ZERO for the midterm exam. 3. Final Examinations. Students who fail to write final examinations must provide satisfactory evidence of illness or extenuating circumstances AND must have the approval of the Dean for a makeup exam. Work commitments, holidays or traffic are not considered legitimate reasons for missing an exam. For unsubstantiated missed final exams that are not approved for makeup by a Dean, a grade of F (0 marks) will be given. Deferred final exams can only be written at times set by the school and instructor. Please note that if a final exam deferral is granted, the date will be set by the instructor and department. Students who fail to write a deferred final examination must provide satisfactory evidence of illness or extenuating circumstances AND must have the approval of the Dean for a makeup exam. Work commitments, holidays or traffic are not considered legitimate reasons for missing an exam. For missed deferred exams, a grade of F (0 marks) will be given. 4. Conduct of Examinations: The instructor may articulate regulations for late entry to and early exit from the examination room. Instructors may also prescribe or restrict materials that may be used during the exam. No material aids including such items as: mobile phones, computers, or other digital devices, may be brought into the examination site without prior approval from the instructor. Please see additional examination policies in the 2015/2016 University Calendar page 80. MGT 4160 Y Spring

5 5. Academic Dishonesty and Plagiarism: Academic Dishonesty and Plagiarism will not be tolerated and will automatically result in a zero grade for the submission. Any student caught plagiarizing may also be subject to additional University sanctions. The University of Lethbridge subscribes to an electronic plagiarism detection service. Students may be required to submit their written work in electronic form for plagiarism checking. 6. Student Conduct: The University s policies are described in the calendar and all students are expected to read, familiarize, and comply with them. Special care should be taken to understand the Student Discipline Policy for academic and non-academic offenses as listed in part 4, sections 4 through 8 of the 2015/2016 Academic Calendar. Students will respect the basic standards of intellectual integrity, including, but not limited to, refraining from plagiarism, cheating or duplicating someone else s work. In addition, students are expected to take an active role in encouraging other members of the academic community to refrain from academic dishonesty, and are asked to advise the instructor if they are aware of any such violations. This provision applies to any work submitted as a group project. CLASSROOM EXPECTATIONS In all class discussions, I expect you to treat every participant with respect and courtesy. Part of your development as professional accountants requires that you learn how to listen carefully and express your own opinion objectively, but politely. Remember that there are rarely right answers to the questions we will raise but that there are always stronger and weaker arguments. Your learning of the relevant theory will help you develop better arguments. MGT 4160 Y Spring

6 CLASS SCHEDULE (May be revised, following consultation with class) Below is a tentative outline, which may be revised, following consultation with the class. Recognizing that teaching excellence requires a degree of flexibility and responsiveness to both students' needs and emergent circumstances, adjustments to the course outline may sometimes be necessary, provided that no student is disadvantaged by the change. Depending on how coverage of various issues progresses, we may spend more time on certain topics and less time on others. Week # DATE Lecture Topic (Additional readings, if applicable, will be announced later) Pre-Class Reading 1 Jan 8 Ch 1: Introduction Ch 2: Accounting Under Ideal Conditions Ch 1/2 2 Jan 15 Ch 2: Accounting Under Ideal Conditions (cont d) Ch 2 3 Jan 22 Ch 3: The Decision Usefulness approach to financial reporting Ch 3 4 Jan 29 Ch 4: Efficient securities markets Ch 4 5 Feb 5 Ch 5: The Value Relevance of Accounting Information Ch 5 6 Feb 12 Ch 6: The Measurement Approach to Decision Usefulness Ch 6 MIDTERM EXAM #1 at 7:15 PM (Chapters 1 5) Feb 19 Reading Week, NO CLASS 7 Feb 26 Ch 6: The Measurement Approach to Decision Usefulness (cont d) Ch 6 / 7 Ch 7: Measurement Applications 8 Mar 4 Ch 8: The Efficient Contracting Approach to Decision Usefulness Ch 8 Term paper topic with annotated bibliography due 9 Mar 11 Ch 9: An analysis of conflict Ch 9 10 Mar 18 Ch 10: Executive Compensation Ch 10 MIDTERM EXAM #2 at 7:15 PM (Chapters 5 9) Mar 25 Good Friday, NO CLASS 11 Apr 1 Ch 10: Executive Compensation (cont d) Ch 10/11 Ch 11: Earnings Management 12 Apr 8 Ch 12: Standard Setting: Economic Issues Ch 12/13 Ch 13: Standard Setting: Political Issues 13 Apr 15 Term paper due with presentations 14 Apr 22 FINAL EXAM (Chapters 1 13) at 6:00 PM MGT 4160 Y Spring