UNIVERSITI UTARA MALAYSIA
COLLEGE OF BUSINESS
______________________________________________________________________________
COURSE CODE : BKAF3083
COURSE : ACCOUNTING THEORY AND PRACTICE
PRE-REQUISITE : BKAF3073 FINANCIAL ACCOUNTING AND REPORTING IV
This course is an advanced level course focusing on financial accounting theory; and as such, it differs from other accounting courses learnt previously. It is designed to further enhance students’ understanding of the concepts and issues in accounting theory and practices. This course involves the study of the practical and theoretical issues involved in the development, implementation and changes in accounting theories and regulatory framework. As this course will be seminal-like, this course will provide students with some generic skills required in the accounting profession such as team working, interaction, leadership, follower-ship, critical and creative thinking skills, decision making skills, analytical skills, communication skills as well as professional demeanor.
2.0 OBJECTIVES
Upon completion of this course, students are expected: 2.1 to understand the principles, concepts and issues in accounting theory, financial accounting theory and reporting practices, 2.2 to critically evaluate the development in theoretical and regulatory framework of accounting reporting practices, 2.3 to appreciate the importance of research in understanding accounting practices in relation to accounting theory, and 2.4 to be aware of current issues in financial accounting and reporting practices through case study-based learning.
3.0 LEARNING OUTCOMES
Upon completion of this course, students should be able to: 3.1 Explain the development of accounting, accounting theory, and reporting practices from early ages to present. 3.2 Critically evaluate the evolution of the conceptual financial accounting reporting framework. 3.3 Critically evaluate the accounting standard setting process from economic and political perspective, both nationally and internationally. 3.4 Differentiate the different types of earnings management patterns and explain the incentives for earnings management. 3.5 Explore the role of professional ethics, values, attitude, and education for professional accountant. 3.6 Distinguish the various paradigms in accounting research in the development of financial accounting theory and practices. 3.7 Critically evaluate the recognition and measurement issues in financial reporting. 3.8 Critically evaluate the relevance versus reliability debate in current financial reporting regime. 3.9 Explore the economic consequences of accounting standards compliance. 3.10 Discuss and explain current issues in financial reporting practices and their impact. 3.11 Explain the need for Islamic accounting and evaluate critically the differences between conventional accounting and Islamic accounting. 3.12 Evaluate the importance of ethics in financial reporting practices.
4. REFERENCES
The importance of regular and extensive reading is very much emphasized in this course. There are four (4) main references that have been chosen as the text for this course. Students are also expected and encouraged to read widely from other additional recommended books, articles from accounting journals, business bulletin and pronouncements by the Malaysian Accounting Standard Board (MASB), the Malaysian Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants (MICPA).
Main References: Godfrey, J., Hodgson, A., Holme, S., & Tarca, A., (2006). Accounting Theory, 6th ed., John Wiley & Sons, Australia (GHHT) Scott, W.R., (2009). Financial Accounting Theory, 5th ed., Pearson Prentice Hall International Inc., Toronto (SWR) Belkaoui A.R., (2009). Accounting Theory, 6th ed., Business Press, U.K. (ARB) Deegan, C. & Unerman, J., (2007). Financial Accounting Theory, 2nd ed., McGraw Hill, Australia
Other References: Hendriksen, Eldon,S. (1990). Accounting Theory, 4th ed., Richard D. Irwin Inc., Illinois Littleton, A.C., (1985). Structure of Accounting Theory, American Accounting Association, Monograph No. 5 Schroeder, R.G., Clark, M.W., & Cathy, J.M., (2001). Financial Accounting Theory and Analysis: Text Readings and Cases, 7thEd., John Wiley & Sons, Inc . Statement on Accounting Theory and Theory Acceptance, AAA Susela, S.D., Hooper, K., Davey, H., (2006). Accounting Theory and Practice: A Malaysia Perspective, Pearson Prentice Hall Kuala Lumpur, Malaysia (SHD)
5. COURSE CONTENT
|NO. / WEEK |TOPICS |CONTACT HOURS |TEXT REFERENCES |
|1.0 |INTRODUCTION |2 hrs |ARB |
| |1.1 Historical development of accounting | |Ch 1 |
|Week |1.1.1 The Importance of Accounting History | | |
|1 – 4 |1.1.2 Early Development of Double Entry Bookkeeping: Bookkeeping vs. | |SHD |
| |Accounting | |Ch 1,2 & 3 |
| |1.1.3 Accounting History and Ideology | | |
| |1.1.4 Institutional Development of Accounting Practices | |Journal Articles |
| |1.1.5 Early Accounting in Muslim Civilization | | |
| |1.2 Introduction to Accounting Theory |4 hrs |GHHT |
| |1.2.1 Overview of Accounting Theory | |Ch 1 & 2 |
| |1.2.2 Nature and Purpose of Theory | | |
| |1.2.3 Theory and Method | |DU |
| |1.2.4 Accounting Theory Construction and Formulation | |Ch 1, 2 & 3 |
| |Approaches to the Development of Accounting Theory: Paradigms in | | |
| |Accounting Research | |GHHT |
| |Pragmatic theories | |Ch 3 |
| |Syntactic & semantic theories | | |
| |Normative theories | | |
| |Positive theories | | |
| |1.2.5 Accounting Theory Approaches |3 hrs |ARB |
| |1.2.5.1 Traditional Approach | |Ch 3,4,9 &10 |
| |1.2.5.2 Regulatory Approach | | |
| |1.2.5.3 Positive Approach | |DU |
| |1.2.5.4 Behavioral Approach | |Ch 11 |
| |1.2.5.5 Accounting Paradigms | | |
| |1.2.6 Need and Importance of Accounting Theory | |ARB |
| |1.2.7 Accounting Theory and Policy Making | |Ch 6 |
| |1.2.8 The Structure of Accounting Theory | | |
|NO. / WEEK |TOPICS |CONTACT HOURS |TEXT REFERENCES |
|2.0 |THE CONCEPTUAL FRAMEWORK AND STANDARD SETTING PROCESS: CONVENTIONAL VERSUS |4 hrs |GHHT |
| |ISLAMIC | |Ch13 |
|Week | | | |
|5 – 7 | | |SHD |
| | | |Ch 8,9 & 11 |
| | | | |
| | | |DU |
| | | |Ch 6 |
| | | | |
| | | |ARB |
| | | |Ch 5 |
| | | | |
| | | |Websites & |
| | | |Journal Articles |
| |2.1 What is Conceptual Framework? | | |
| |2.2 Why Conceptual Framework is needed? | | |
| |2.3 Components of Conceptual Framework | | |
| |2.4 Objectives of Conceptual Framework | | |
| |2.5 Alternative Views of Conceptual Framework | | |
| |2.5.1 Conventional versus Islamic views | | |
| |2.5.2 Islamic Accounting | | |
| |2.5.2.1 Philosophy of Islamic Accounting | | |
| |2.5.2.2 Global Islamic Resurgence | | |
| |2.5.2.3 Need for Islamic Accounting | | |
| |2.5.2.4 Current initiatives on Islamic Accounting | | |
| |2.6 Accounting Standards and the Needs for Accounting Standards |4 hrs |SHD |
| |2.7 Standard Setting Process | |Ch 7 & 12 |
| |Standard Setting: | | |
| |Economic Issues | |SWR |
| |Political Issues | |Ch 12 & 13 |
| |Global CF | | |
| |Due Process of Standard Setting in Malaysia | |Websites Articles & |
| |2.10 FRS and the Adoption of FRS in Malaysia | |Journal Articles |
|3.0 |RECOGNITION AND MEASUREMENT ISSUES |2 hrs |SHD |
| |4.1 Introduction to Measurement Theory | |Ch 10 |
|Week |4.1.1 What is measurement? | | |
|8 |4.1.2 Types of measurement | | |
| |4.1.3 What do we measure? | | |
| |4.1.4 Reliability and accuracy | | |
| |4.1.5 Measurement in accounting | | |
| |4.1.5.1 Measurement concepts: from standard setters | | |
| |4.1.5.2 Recognition and measurement – standard setters current activities | | |
| |4.2 Relevance and Reliability Issues |2 hrs |GHHT |
| |4.1.1 Adopting an Accounting Perspective | |Ch 6,7,8,14 & 15 |
| |4.1.2 Historical Cost vs Fair Value Accounting | | |
| |4.1.3 Current Cost Accounting | |ARB |
| |4.1.4 Exit Price Accounting | |Ch 12 & 13 |
| |4.1.5 Reliability versus relevance | | |
| | | |DU |
| | | |Ch 5 |
|NO. / WEEK |TOPICS |CONTACT HOURS |TEXT REFERENCES |
|4.0 |SPECIFIC ISSUES |3 hrs |SWR |
| |3.1 Economic Consequences and Positive Accounting Theory | |Ch 8 |
|Week |3.1.1 The Rise of Economic Consequences | | |
|9 – 10 |3.1.2 Relationship Between Efficient Market Theory and Economic | |DU |
| |Consequences | |Ch 7 |
| |3.1.3 Economic Consequences of Accounting Standards | | |
| |3.1.4 Hypothesis of Positive Accounting Theory | |Journal Articles |
| |3.1.5 Conclusion on EC and PAT | | |
| |3.2 An Analysis of Conflict |2 hrs |SWR |
| |3.2.1 Game Theory | |Ch 9 & 10 |
| |3.2.2 Agency Theory | | |
| |3.2.2.1 Employment contract | |Journal Articles |
| |3.2.2.2 Lending contract | | |
| |3.3 Earnings Management (EM) and Creative Accounting |3 hrs |SWR |
| |3.3.1 Overview of EM and Creative Accounting | |Ch 11 |
| |3.3.2 Patterns of Earnings Management | | |
| |3.3.3 Evidence of Earning Management for Bonus Purposes | |SHD |
| |3.3.4 Other Motivations for Earnings Management | |Ch 14 |
| |3.3.4.1 To meet investors’ earnings expectations | | |
| |3.3.4.2 Debt Contract Motivations | |Journal Articles |
| |3.3.4.3 Initial Public Offerings (IPO) | | |
| |3.3.5 The Good Side of Earnings Management | | |
| |3.3.5 The Bad Side of Earnings Management | | |
| |3.3.5.1 Opportunistic Earning Management | | |
| |3.3.5.2 Do Managers Accept Securities Market Efficiency? | | |
|5.0 |COMPREHENSIVE CASES |6 hrs |Websites Articles & |
| |6.1 Earning management |Individual |Journal Articles |
|Week |6.2 Integrity and ethics in preparing and reporting financial information |Presentation | |
|10 – 11 |6.3 Other current related issues | |Case Study |
|6.0 |CURRENT FINANCIAL REPORTING ISSUES |6 hrs |GHHT |
| |5.1 Corporate social and environmental reporting | |Ch 19 |
|Week |5.2 On-line reporting and XBRL | | |
|12 – 13 |5.3 Performance Reporting | |SHD |
| |5.4 Management commentary | |Ch 15 |
| |5.5 Human resource and intellectual capital reporting | | |
| | | |DU |
| | | |Ch 9 |
| | | | |
| | | |Websites Articles & |
| | | |Journal Articles |
|7.0 | REVISION WEEK |
| | |
|Week | |
|14 | |
6.0 TEACHING METHODS
A combination of lecture and discussion, tutorial, case study methods will be employed. The main and fundamental ideas of each topic will be explained during lectures through discussions, students’ presentation and participation. Each topic will be discussed in further details during interaction and participation from students.
All students must work and prepare on topic assigned related to the course content to discuss and participate during the discussion in class. However, a selected group will present the topic before the discussion. Students are required to participate actively during the discussion of related topics. Communication skills are also expected from the students throughout the discussion and participation.
** Marks will be awarded to students who participate in the topical discussion accordingly.
7.2 Case Study
Students must work in a group (number of team members will be decided later) on a case study related to Topic 5.0 – Comprehensive Cases: the current related issues in practice depending on issues specifically highlighted locally or internationally that will be assigned in the second week of the semester. Team-working, critical discussion, written communication, presentation of report, and group interaction are expected in this case study.
** Group marks will be given for the full report of the case study.
7.3 Presentation of Case Study
Presentations of the case study related to Topic 5.0 – Comprehensive Cases are expected from each student (Group will decide the part to be presented by each team member). Each group will only be given about 20 minutes to present their case study and 10 minutes for Q&A. A certain confidence level is expected. Interaction and communication skills to deliver the content of the case study are certainly expected from the students throughout the presentation of the case study.
** Individual marks will be given to individual presentation of the case study according to the different part of the case presented.
7.4 Assignments 1 Group Assignment 1 Individual Assignment
Students may be required to: • summarize class discussion on selected topic, or • critically provide opinion on selected accounting-related issues, or • answer selected past-semester exam questions, or others
