Financial Reporting

Bachelor 2024/2025

Type: Compulsory course (International Programme in Economics and Finance)

Area of studies: Economics

Delivered by: International College of Economics and Finance

Where: International College of Economics and Finance

When: 3 year, 1-4 module

Mode of studies: offline

Open to: students of one campus

Instructors: Кравцова Мария Владимировна

Language: English

ECTS credits: 8

Full Syllabus

Abstract

The course is designed to introduce a number of theoretical approaches to financial accounting and develop background for preparing financial statements of the company under alternative accounting conventions (mainly under International Financial Reporting Standards (IFRSs)). The course describes a number of regulatory issues relating to financial accounting and explores the detailed issues and problems of financial reporting. It provides basic skills in recording and interpretation of financial data and covers basic techniques of financial analysis. The course requires the knowledge of basics of accounting and microeconomics. This is a two-semester course designed to prepare students for UoL examination. If taken as part of a BSc degree, the following course must be passed before this course may be attempted: Principles of accounting.

Learning Objectives

The student should be able to prepare consolidated financial statements for the group of companies.
The student should be able to use financial, accounting and other information contained in the statements of enterprises of various forms of ownership, organizations, departments, etc., for making management decisions.

Expected Learning Outcomes

account for compound instruments according to IAS32
apply the pyramid of ratios and other ratios to a set of accounts
appreciate ethics in relation to accounting
appreciate key aspects of the treatment of share-based payments under IFRS 2
appreciate the difference between short-term and long-term employee benefits and key aspects of the prescribed accounting for these benefits in IAS 19
appreciate the importance of the transaction date and the difference between pre- and post-transaction profits/income in consolidated accounts
be aware of the main ideas underpinning the now disallowed merger method
compare and contrast the various historical approaches (capitalization with no follow-up expensing of goodwill; immediate write-off; capitalisation and amortisation of goodwill) with the current approach to test periodically for impairment
compute real gains and losses on monetary items
compute the value of goodwill and non-controlling (minority) interest
convert HCA to CPP by following the step-by-step guide
define a conceptual framework
define construction contracts
define intangible assets, R&D and goodwill
define inventories, describe and explain the accounting treatment of inventories
demonstrate accounting for both operating and finance leases, and explain possible implications for accounts’ users
demonstrate the accounting treatment for an equity issue (and show how the interaction with equity financing and debt financing impacts on accounting ratios
demonstrate the accounting treatment for provisions, contingent liabilities and contingent assets
describe a “group”, the composition of the group
describe and apply the basic workings of the UK imputation system
describe and explain the accounting treatment of construction contracts
describe and explain the accounting treatment of intangibles, R&D and goodwill
describe and use both the closing rate and the temporal method of foreign currency translation
describe associates and joint ventures and how to account for them in consolidation
describe both operating leases and finance leases under IAS17
describe objectives of financial reporting as per IASB conceptual frameworks
describe the difference between monetary and non-monetary items
describe the effect of intangible assets, R&D and goodwill for both the consolidated accounts and ratio analysis
describe the rationales used to develop different models of consolidation (acquisition, merger, equity, proportional)
describe the three approaches to accounting for deferred tax
discuss accounting regulation
discuss capital and reserves
discuss different concepts of capital maintenance and their implications for corporate reporting
discuss off-statement of financial position financing in relation to operating leases
discuss provisions, contingent liabilities and contingent assets
discuss replacement cost (RC), net realisable value (NRV) and present value (PV)
discuss some of the fundamental differences between tax bases and tax systems
discuss tangible non-current assets, directly owned and leased and borrowing costs
discuss the arguments for and against accounting standards
discuss the basis, the advantages and disadvantages of HCA
discuss the character and role of accounting in society
discuss the different treatment of foreign subsidiaries and branches
discuss the reactions of standard setters to mitigate against the potential distortions caused by operating leases and know the concept introduced by IFRS16
discuss why CPP was proposed as an alternative to HCA
elaborate upon what IAS1 and IAS7 of IASB prescribe in relation to the preparation and presentation of financial statements
explain and discuss the implications of the IASB
explain differences between the deferred versus liability approach under the full provision method
explain how different non-current asset investments are distinguished and accounted for
explain the approaches taken by IAS 39 and IFRS 9 in the measurement and recognition of financial instruments in key areas
explain the basic character in this context of the statement of financial position, the statement of income, the statement of other comprehensive income, the statement of changes of equity and the notes to the accounts
explain the basic ideas behind the move towards fair values (FV)
explain the character of financial instruments and the accounting issues involved
explain the concepts of current operating income and holding gains
explain the difference between accounting profit and taxable profit
explain the difference between permanent and timing differences
explain the implications of revaluation on interpretation of the financial statements
explain the importance of events after the balance sheet date
explain the importance of the exchange rate and how to treat exchange differences
explain the way ethics for accountants have been articulated in practice, based partly on issues deemed to arise
explain why foreign currency translation is necessary
explain why the definition of a subsidiary is important
identify the main efforts by the USA, the IASC/IASB and the UK to introduce a conceptual framework
interpret a set of accounts using a number of techniques
know how to distinguish adjusting and non-adjusting subsequent events
perform trend and vertical analysis
prepare a statement of financial position and income statement using specific price indices, including calculating holding gains and losses
prepare an income statement and statement of financial position entries for the three approaches for accounting for deferred tax
prepare consolidated accounts (statement of financial position and profit and loss or income statements) using the acquisition method
prepare consolidated accounts (statement of financial positions and income statements) using the equity methods
understand the "business model" concept and SPPI test concept
understand the concept of fair value (“exit price”) according to IFRS13
understand the methods of accounting for investment property

Course Contents

1. Introduction to the course. Rationale for financial reporting and its regulation.
2. Conceptual framework.
3. Preparation of financial statements.
4. Ethics for accountants.
5. Fair value and other accounting systems of price adjustments. Accounting for changing prices/values.
6. Accounting for tangible non-current assets.
7. Accounting for intangible assets.
8. Accounting for inventories and construction contracts.
9. Accounting for financial instruments.
10. Accounting for equity and liabilities.
11. Accounting for employee benefits.
12. Accounting for provisions, contingent assets, contingent liabilities. Events after reporting period.
13. Consolidated accounts. Business combinations.
14. Consolidated accounts. After date of acquisition.
15. Consolidated accounts. Associates and joint arrangements.
16. Accounting for foreign currencies
17. Accounting for taxation
18. Analysis and interpretation of financial reports

Assessment Elements

2nd half-year class participation
Autumn mock exam
1st half-year class participation
1st half-year written home assignments
Spring mock exam
2nd half-year written home assignments
Final exam
The exam is failed if the student gets less than 27 points out of 100.
Winter exam

Interim Assessment

2024/2025 4th module
0.1 * 1st half-year class participation + 0.1 * 1st half-year written home assignments + 0.1 * 2nd half-year class participation + 0.1 * 2nd half-year written home assignments + 0.1 * Autumn mock exam + 0.1 * Final exam + 0.3 * Spring mock exam + 0.1 * Winter exam

Bibliography

Recommended Core Bibliography

International financial reporting and analysis, Alexander, D., 2017

Recommended Additional Bibliography

Bakker, E. (2017). Wiley IFRS 2017 : Interpretation and Application of IFRS Standards. Hoboken, NJ: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1477431
Koppeschaar, Z. R., Rossouw, J., & Van Wyk, H. A. (2017). Introduction to IFRS (Vol. Seventh edition). Durban: LexisNexis SA. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=2139934

Authors

KRAVTSOVA Mariia VLADIMIROVNA
KRAVTSOVA MARIYA VLADIMIROVNA

Course Syllabus