ACCOUNTING THEORY MGT 4160, Y SPRING 2012

ACCOUNTING THEORY MGT 4160, Y SPRING 2012 FRIDAYS 6:00 8:50 PM, Room N616 INSTRUCTOR OFFICE HOURS COURSE MATERIALS Required Textbook: Harjinder Deol deolhs@uleth.ca Phone: 403 440 8647 (Voice Mail Only) By appointment Financial Accounting Theory, 6 th Edition, William R. Scott Pearson Canada, Toronto ISBN: 978 0 13 511915 0 (Order through bookstore.uleth.ca) PREREQUISITES/ CO REQUISITES/EQUIVALENTS Pre requisite: MGT 3100; one of WRIT 1000 or a University English course Co requisite: MGT 3101 COURSE DESCRIPTION Calendar 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 Accounting Theory Spring 2012 1

Overview of Course Content, Focus and Approach: 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. Other classes will involve student group participation in debates about accounting issues. You will lead the discussion on the days where you are part of one of the debating groups, but all members of the class are expected to come to class prepared to participate in the general discussion. For the days involving debates, review of some or all of the readings for the topic in question should be helpful in preparing the class in general for 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) 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 ASSIGNMENT VALUE DUE DATE Debate Group 20% See class schedule Assignments Group 15% Jan 20, Feb 3, Mar 16 Position Paper / critique Individual 10% April 15 by email Midterm exam 25% Mar 2 Final exam (comprehensive) 30% Apr 27 Total 100% MGT 4160 Accounting Theory Spring 2012 2

PERFORMANCE ASSESSMENTS Group Assessment (35%): Debate (20%) Two teams will debate a particular topic in class. Each team will make a 15 minute main statement (which can be prepared in advance). Following the main statements there will be a five minute break during which each team will prepare their rebuttal to the main arguments posed by the opposition (rebuttals are limited to 6 minutes for each team). Presenting teams must prepare a 6 to 8 page paper (typed; double spaced; with a cover sheet giving team member names and debate number and topic) summarizing the team s position, the main arguments that will be used to support it, and the evidence related to each argument. This paper must be e mailed to the Instructor by 5 PM on the Wednesday preceding the date of the debate. Include a bibliography listing the sources used in preparing your position, keeping in mind that you should not list any papers that you have not cited in your summary paper. Any handouts or other audio visual debate aids you plan on using (e.g. overheads) must be submitted to the Instructor by 5 PM of the Thursday before your debate. Marks will be determined by the instructor using the criteria identified in the Debate Feedback and Evaluation Form provided by the instructor on the first day of class. Please make sure you consult this form before preparing your debate material so that you are clear on what is expected of you. Please note that when researching each debate topic a full understanding of relevant International Financial Reporting Standards (IFRS) and Accounting Standards for Private Enterprises (ASPE), which can be accessed from the Knotia database 1 is expected. Reference to readings, internet searches, the CICA website (http://www.cica.ca ) etc. is very valuable in this regard. I will be providing additional guidance on my expectations for the debates in a separate document, and will discuss it in class as well. Assignments (5% x 3 = 15%) I will have hand out three group assignments over the term, based on the chapter readings, end of chapter questions and problems, problems drawn from previous final exams, or relevant articles from the business press. These assignments will typically be done in class (although some preparation outside of class will likely be required on dates identified in the class schedule. Peer Evaluation At term end, each member of the group will assess the contribution each member of his/her group made to the debates and group assignments for which the member was present. Differential weighting of group members effort will be applied only if two or more of a group s members request it. If differential weighting is performed, each individual s mark for group work will typically be weighted by the group s assessment of his/her contribution to the team effort. However, the final determination of the weight to be applied will be at the sole discretion of the instructor. 1 Knotia: (Go the http://www.uleth.ca/lib/ > 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 "2011 edition" to see the table of contents for 2011 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 IASC 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 "2011 Edition" heading in Part I of the Financial Accounting Handbook, which is the IFRS section. MGT 4160 Accounting Theory Spring 2012 3

Individual Assessment (65%): Position Paper/Critique (10%) You will write one position paper on one of the topics to be debated in class OTHER than the debate topic which your group presents. Each paper is to be approximately three pages in length, double spaced, paragraph form. Please also include a cover sheet showing your name and the topic name. Papers on a given debate topic are normally due one week after the debate. Marks will be determined by the instructor using the criteria identified in the Position Paper Feedback and Evaluation Form provided by the Instructor in class. Please make sure you consult this form before preparing your position paper so that you are clear on what is expected of you. Note that you can start your research on the topic before the debate takes place, if you want more time to prepare. Midterm Quiz (25%)and Final Exam (30%) Students will be asked to apply the theories studied in class to problems similar in style to those assigned from the textbook, or to the articles researched and presented in class through the debates. Roughly 20% of the exam will consist of multiple choice questions. GRADING SCHEME Percent Mark Letter Grade Grade Points Percent Mark Letter Grade Grade Points 95 100 A+ 4.0 90 94 A 4.0 86 89 A 3.7 82 85 B+ 3.3 78 81 B 3.0 74 77 B 2.7 70 73 C+ 2.3 66 69 C 2.0 62 65 C 1.7 58 61 D+ 1.3 50 57 D 1.0 0 49 F 0 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. Examinations. Alternative arrangements for writing a missed exam may be made at the discretion of the instructor. Deferrals may only be granted in extenuating circumstances such as extreme illness or other serious circumstances beyond the student s control. Work commitments, holidays or traffic are not considered legitimate reasons for missing an exam. Students who fail to write final exams must provide satisfactory evidence of illness or extenuating circumstances AND must have the approval of the Dean for a makeup exam. For missed exams, 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 final exams MGT 4160 Accounting Theory Spring 2012 4

must provide satisfactory evidence of illness or extenuating circumstances AND must have the approval of the Dean for a makeup exam. For missed exams, a grade of F (0 marks) will be given. 3. Exam policies: For security reasons, students may not leave the examination site during the first thirty (30) minutes nor enter after the first thirty (30) minutes. Data or internet enabled phones (i.e. Blackberry, I Phone etc.), laptops or other electronic devices may not be used during examinations without prior approval of the instructor. Students, who are found to have an electronic device on their person or desk during an examination, could be in breach of the electronic devices policy, which could result in a 0 grade on the exam. Please see additional examination policies in the 2011/2012 University Calendar, page 86. 4. Academic Dishonesty. In cases of academic misconduct, you will receive an F on the assignment and/or you will receive an F in the course. Students can find further information in the 2011 2012 Calendar. Ethical Conduct: The University s policies are described in the calendar and all students are expected to read and comply with them. Special care should be taken to understand and avoid the Academic Offenses of Plagiarism and Cheating listed in the Student Discipline Policy. Students will respect the basic standards of intellectual integrity, including, but not limited to, refraining from plagiarism, cheating or copying 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. Plagiarism: to steal and pass off the ideas and words of another as one s own (Webster s). 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. For the current university policy on Cheating and Plagiarism, please consult University of Lethbridge calendar. The University of Lethbridge subscribes to a plagiarism detection service. Students may be required to submit their written work in electronic form for plagiarism checking. 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 Accounting Theory Spring 2012 5

CLASS SCHEDULE Below is merely a tentative outline. Depending on how coverage of various issues progresses, we may spend more time on certain topics and less time on others. DATE TOPIC PRE CLASS READING Jan 13 Introduction, course overview, Group Sign up Ch 1: Introduction to Accounting Theory Jan 20 Jan 27 Feb 3 Feb 10 Feb 17 Feb 24 Ch 2: Accounting Under Ideal Conditions Group Assignment #1 Requests to change group (one time only) Ch 4: Efficient securities markets Ch 6: Are Securities markets fully efficient? (pp 186 207) Ch 3: The Decision Usefulness approach to financial reporting Group Assignment #2 Ch 5: The information perspective on decision usefulness Debate #1: Increased disclosure has improved investor decision making Ch 6/7 (excluding pp186 207): Measurement perspective Debate#2: Fair value accounting has improved financial reporting s usefulness to investors No class Reading Week Chapter 2 Problems 12, 17 Chapter 4 and pp186 207 Problems 3, 9 (Ch 4) Chapter 3 Problems 6, 13 Chapter 5 Problems 8, 16 Chapters 6/7 Problems 10, 13 (Ch 6) 10, 14 (Ch 7) Mar 2 MIDTERM EXAM (Ch 1 7) Mar 9 Ch 8: Positive Accounting Theory (pp 304 318) Ch 9: An analysis of conflict Mar 16 Ch 10: Executive Compensation Group Assignment #3 Mar 23 Ch 11: Earnings Management Debate#3: Changes in accounting for and disclosure of executive compensation have improved monitoring and alignment of managers and shareholders interests Mar 30 Ch 8: Economic Consequences (pp 293 304) Ch 12: Standard Setting: Economic Issues Ch 13: Standard Setting: Political Issues Apr 6 No class Good Friday Chapters 8/9 Problems 13 (Ch 8); 10, 13 (Ch 9) Chapter 10 Problems 13, 17 Chapter 11 Problems 8, 16 Chapters 8/12/13 Problems 8, 16 (Ch 12) and 13 (Ch 13) Apr 13 Debate#4: Principles based accounting standards provide managers with a greater opportunity to manage earnings Debate#5: Accounting Standards setters should develop disclosure requirements for firms to report on their environmental and sustainability performance Review Apr 27 FINAL EXAM (Ch 1 13) MGT 4160 Accounting Theory Spring 2012 6