A. General Information Assistant Professor CHO Young Jun Level 4 Room 4019 School of Accountancy ACCT105 Financial Accounting for Law G1, G2, G3, G4 Course Outline 2015/2016 Term 1 Tel: (65) 6808-5232 Email: yjcho@smu.edu.sg B. Course Prerequisites None is required. This course is designed as an introductory course, aimed primarily at students admitted to the School of Law and with NO prior academic preparation in accounting. C. Course Description This course is an introduction to financial accounting. Financial accounting is the reporting system used by businesses to convey financial information to parties outside the firm. The focus of this course will be on training you to be a knowledgeable consumer of accounting information, rather than a producer of such information. Primary emphasis, therefore, will be placed on understanding the financial reports that are the end product of this system - what they tell us and what they do not tell us about a business. For this purpose, this course makes it mandatory for all of you to actively participate in a group project where you can have hands-on experience to deal with financial reports from the real world. While we will introduce you to the basic concepts of financial accounting information, we feel that a firm grasp of the fundamental mechanics is also necessary to become an effective consumer of financial accounting information. Accordingly, the accounting principles, conventions and concepts underlying financial reporting will be examined with the objective of developing your ability to interpret and analyse the real world financial statements. D. Learning Goals, Course Objectives and Skill Developments All School of Accountancy courses are designed to meet certain learning goals and objectives. Some learning goals are addressed at course level, some at overall program level. This course specifically contributes to the development of the following course level learning goals: LG1.1 Our students can recognize, develop, measure, record, validate and communicate financial and other related information. LG1.2 Our students can analyse, synthesize and evaluate financial and other related information for decision making in a management context. In addition, the various class activities are designed to further develop students analytical skills [through case discussions and analysis], communication skills [through class participation and written report], active learning skills [through the accounting project and other class exercises] and professional ethics [through understanding role of ethics in accounting judgements]. Students must be prepared to go beyond prescribed cases, readings and textbooks. E. Learning Approach The pedagogical approach to this course consists of three interlocking elements: Instructor-facilitated Learning: Facilitation, Clarification, Synthesis Individual Learning: Preparation, Analysis, Action Collaborative Learning: Teamwork, Discussion, Sharing ACCT105 Financial Accounting for Law AY2015/2016 Term 1 CHO Young Jun (G1, G2, G3, G4) Page 1
F. Textbook and Other Resources 1. Primary Text: Harrison, Horngren, Thomas and Suwardy (2013), Financial Accounting: International Financial Reporting Standards, 9th edition, Pearson 2. Real World Examples: Annual reports available at Singapore Exchange (http://www.sgx.com) and U.S. Securities and Exchange Commission (http://www.sec.gov) 3. Course website: https://elearn.smu.edu.sg In addition, there are numerous basic financial accounting books in the library that you can further consult for additional references. G. Lesson Plan Class sessions are of 3-hour duration and will include a review of study materials, class discussions and other learning activities. All course materials will be published in e-learn. A typical outline of course schedule is provided below. Note that the following schedule and the choice of real world examples are tentative. It may change depending on the pace and interest of the class. Week Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Topic Conceptual Framework and Financial Statements Recording Business Transactions Accrual Accounting Internal Control, Cash, and Receivables (Case: Krispy Gets Kremed) Inventory and Merchandising Operations (Case: Dell s Warranty Accounting Questioned) PPE & Intangibles (Case: WorldCom: The Accounting Scandal) Investments (optional depending on the pace) (Case: Campbell Soup Company - Understanding Financial Statements) Recess Week Mid-term Exam (Case: Google Inc.- Earnings Announcements and Information Environment) Liabilities Group 1 Financial Analysis & Presentation: Apple Group 2 Financial Analysis & Presentation: Singapore Airline Shareholders Equity (Case: BP p.l.c. - Deepwater Horizon Oil Spill) Group 3 Financial Analysis & Presentation: Coca-Cola Group 4 Financial Analysis & Presentation: SingTel Statement of Cash Flows Group 5 Financial Analysis & Presentation: Nike Group 6 Financial Analysis & Presentation: CapitaLand Financial Statement Analysis ACCT105 Financial Accounting for Law AY2015/2016 Term 1 CHO Young Jun (G1, G2, G3, G4) Page 2
Group 7 Financial Analysis & Presentation: Starbucks Group 8 Financial Analysis & Presentation: SBS Transit Week 14 Study Week H. Assessment and Evaluation To pass the course, students are required to obtain a TOTAL mark of 50% or better. The assessment components are listed below: Components Weight 1. Class Activities 15% 1) Homework (5%) A+ >=86 % 2) Participation & Class Behavior (10%) A 83-85% A- 80-82% 2. Progress Assessment 25% 1) Short Quiz (5%) B+ 77-79% 2) Mid-term Exam (20%) B 74-76% B- 70-73% 3. Group Assignments 10% C+ 66-69% C 63-65% 4. Final Exam 50% C- 60-62% D+ 53-59% Sum 100% D 50-52% F <=49% 1. Class Activities (15%) Homework (5%) Individual homework is assigned every week. The homework assignments will aid you in understanding class discussion, and if you haven t tried them, class discussion will not be as useful. In addition, if you do not conscientiously attempt to solve the problems on your own, you may find it more difficult to prepare for the exams. Homework is expected to be submitted in the beginning of each class. All late homework is penalized. You are welcomed to stop by my office for consultation if you need any help. I expect students to spend reasonable amount of time and effort to figure out the answers to homework problems before your visit. Participation and Class Behavior (10%) A part of the course grade would be allocated to class participation and discipline. You will get participation points by providing constructive feedbacks. Maintain proper discipline and conduct yourself in a responsible manner. Students are encouraged to raise questions and to participate in the class (e.g., suggestions, comments, etc). There are several specific behavioural codes for this class: 1) Absolutely NO CELLPHONE (including SMS), 2) Use of notebook computer is NOT allowed, 3) No food is allowed in class (e.g., sandwich, noodle, rice, etc.), 4) Bring your name card each class. 2. Progress Assessment: Short Quiz (5%) & Mid-term Exam (20%) The short quiz and mid-term exam will be given in class. ACCT105 Financial Accounting for Law AY2015/2016 Term 1 CHO Young Jun (G1, G2, G3, G4) Page 3
3. Group Assignments (10%) Teamwork is an essential quality for professionals in the business world. In this class, you will have the opportunity to work within a team extensively. Students will be assigned into groups (of 4-6 members) for financial analysis and presentation. See the Appendix for a further guideline. More information on group assignments will be provided as the term progresses. 4. Final exam (50%) 1PM, November 23 (Mon), 2015. The venue is to be announced. The exam covers topics from the entire course and is closed-book. Requests by students to take the final exam on other than the officially scheduled date/time will not be approved except under extremely extenuating circumstances entirely beyond the student s control. Students who believe they may be unable to take the final exam on the scheduled date and time should not enrol for this course this term. I. Other Course Policies 1. Academic Integrity All acts of academic dishonesty (including, but not limited to, plagiarism, cheating, fabrication, facilitation of acts of academic dishonesty by others, unauthorized possession of exam questions, or tampering with the academic work of other students) are serious offences. All work (whether oral or written) submitted for purposes of assessment must be the student s own work. Penalties for violation of the policy range from zero marks for the component assessment to expulsion, depending on the nature of the offense. When in doubt, students should consult the instructors of the course. Details on the SMU Code of Academic Integrity may be accessed at http://www.smuscd.org/resources.html. 2. Quiz / Exam Policy Students should not share the quiz/exam contents with others (including students in other sessions) until exam grading has been fully completed. There will be no make-up for quizzes and exams unless a well-written medical document for true emergency is provided. 3. Copyright Any copy-righted materials posted on the course website or distributed in class are for students learning purpose only. The copyrights belong to the respective authors/publishers. Students usage of the material is governed by the law. 4. Other comments The general approach of this course is lecture, problem-solving, and discussion of cases relevant to the topic. Students who read the chapter ahead of attending class will benefit most from the class presentation. As an alternative, students may study the lecture notes ahead of the class. Please check the course website regularly in order not to miss important announcements. Although major announcements will be made both in classroom and course website, it is the sole responsibility of the students to find out what has been announced during their absence from class. I strongly encourage you to let me know any problems related to this course as soon as they arise. Please do not allow problems to accumulate because it will be more difficult to solve them later. In this course, each chapter builds on the previous chapters. It is like constructing a building the foundation first, then the ground floor, then the first floor so on. If you have problems in the earlier parts, you will not be able to understand the later parts. Moreover, the level of difficulty increases as lectures progress. ACCT105 Financial Accounting for Law AY2015/2016 Term 1 CHO Young Jun (G1, G2, G3, G4) Page 4
Appendix: Guideline for Group Project Your group assumes the role of a financial analyst and conducts research for a client. Your client is financially illiterate and thus asked you to analyze the financial statements of a target company. As a professional financial analyst, you are expected to hold a 20-minute presentation and deliver a written report of your analysis to your client. Your client wants to listen to your opinion before making an important investment decision. Thus your report should include your conclusion regarding whether you would recommend the client to invest in the target company. Your conclusion must be supported by the results of your financial analysis. The presentation should include at least (but not be limited to) the following information. 1. Overview of Company: a. Business Organization b. Products & Industry c. Competition d. Risks e. Intangible Assets f. Discuss any significant events or legal issues that are likely to affect the company s future performance. 2. Summary of Financial Results (Read Chapter 12.) a. Horizontal analysis of balance sheet (over the past 3-5 years) b. Horizontal analysis of income statement (over the past 3-5 years) c. Vertical analysis of income Statement d. Ratio analysis e. Determine if there are any red flags in financial statement analysis f. Provide forecasts of future net income (in year t+1) and discuss its effects on future financial statements. Make sure you discuss the assumptions you use when making your forecasts. The assumption must be reasonably sound and supported by the facts you provide as grounds. 3. Benchmarking: a. Choose one company that you want to benchmark, and explain why you choose the company as your benchmark. The benchmark could be your direct competitor or just any other aspiration entities. But the choice should not be random. I expect you to provide a good account of how your choice of the benchmark can help your client better understand your company. b. Provide horizontal, vertical, and ratio analysis (as in Section 2. Summary of Financial Results) and determine if there are any red flags in financial statement analysis. c. Provide forecasts of future net income (in year t+1) and discuss its effects on future financial statements. Make sure you discuss the assumptions you use when making your forecasts. The assumption must be reasonably sound and supported by the facts you provide as grounds. 4. Conclusion: a. Summarize take-away of your presentation. b. Discuss the implication of the results of the above analyses to investors. To prepare for the presentation, you will need to use the company s annual report as the basic source of information. You can download the latest annual report from the company s website. In addition, you can also use other sources of information (e.g., press release, newspaper clippings, company s website, or stock market data such as Yahoo Finance) if you feel necessary. Vetted by: Seow Poh Sun, 5 August 2015 ACCT105 Financial Accounting for Law AY2015/2016 Term 1 CHO Young Jun (G1, G2, G3, G4) Page 5