Masters of Business Administration Program

COURSE: ACC 591 Advanced Financial Reporting

Term: Trimester 3 2012

Professor: Phil Drake | Office: BA 297h | Cell Phone: (480) 363-5221 Office Hours: by appointment E-mail: phil.drake@asu.edu
Course Goal and Teaching Philosophy
The course focuses on developing a deeper understanding of financial reporting and the related footnotes than presented in the financial accounting course. The course emphasis is on the role of financial reporting plays in the capital markets in allocating resources. The course is designed to provide: i. the skills to read and understand the economics with financial statements, ii. exposure to public sources of financial information used in the capital markets, iii. an appreciation for the inherent conflicts of interests between firms and investors.

With these objectives, we investigate the following topics: i. the role of financial reporting plays in resource allocation markets ii. knowledge of complex accounting rules (e.g., securitizations, derivatives, income taxes) iii. the incentives of management for accounting policy choices, judgments & estimations.

This course assumes that a fundamental understanding of the principles and rules of U.S. financial accounting reporting. Additionally, an understanding of the capital markets is an essential perquisite in relating how the financial reporting process is used in practice. This course does not attempt to address the issues of financial statement analysis from an equity perspective. For that, please refer to the Financial Statement Analysis course.

The course will be taught using lectures, case discussions, problem assignments and a group project. Each student is expected to come to class prepared and to fully participate in class discussions.

Required Textbook

Textbook: Financial Reporting and Analysis 5th Edition by Revsine, Collins, Johnson & Mittelstaedt, 2012, Irwin McGraw Hill.

Course Expectations Class Conduct:

Academic Honesty: Ethical behavior is a cornerstone for any successful career. Applicable policies foe the University, the School of Business, and the MBA program are in force. The ASU Student Academic Integrity Policy is online at Http://www.asu.edu/studentlife/judical/integrity.html. Also, the W.P Carey MBS Student Honor is code is at http://wpcarey.asu.edu/mba/student-services/upload/Honor- Code.pdf. Note that it is your responsibility to report instances of violations of which you are aware.

Computers in Class: Given my experiences with the misuse of computers in the classroom, I am hesitant to allow them in the classroom. Research clearly demonstrates that multitasking or simply browsing the Internet results in a reduced ability to master the material presented. You may use computers, but please maintain a professional demeanor in class. Also, I provide ample breaks from class to allow you the opportunity to use your computer for personal usage.

Attendance: Participation, quizzes and the final exam require your attendance. Please contact me as early as possible if you expect to miss the final exam.

Seating: Please select a seat for yourself based on your team membership that you will determine during the first class or shortly thereafter. Sit beside your study-buddy (typically a teammate) to discuss more complex tasks done in class.

Grading and Course Requirements

(Subject to change) Grading:

Participation Quizzes Final Exam Issues Spotting Project

10% 15% 40% 35% 100%

Total points available

Quizzes: At the beginning of each class (excluding the first and last), there is a short quiz that covers the prior class material. Due to the limited number of quizzes there are only three, all quizzes will be counted toward your final grade.

Participation: In order to perform well, to obtain the full benefits of the course, and to help your colleagues benefit from your ideas and experience, you will need to attend class regularly. For those with perfect attendance, your participation base score will be set at a grade neutral mark then adjusted upwardly for the quality of your participation during the course. If you miss a class, your base participation is set below a grade neutral mark (10 percent reduction) then adjusted accordingly.

Project: The course project may be done individually or in groups up to three people. Students develop the project as they proceed through the course. For a selected publicly traded company, identify the incentives for management to manipulate the financial reports along with an analysis of accounting policy choices and accounts most likely impacted. The submission will be graded on its creativity, demonstration of depth of knowledge, rigor and clarity of communication.
Advanced Financial Reporting Prof. Drake Page 2

Course Schedule
Textbook (Revsine) & Reading Assignments on Blackboard

Topic

In-Class Cases & Problems

Saturday, March 3, 2012

Introduction The Role of Financial Reporting Revenue Recognition Ch. 1, 6 & 7 Ch. 2 & 3 (skim 132 145, read rest) Assessing Accounting Risk (BB) P3-11, P3-12, C3-3 & C3-4

Saturday, March 10, 2012

Securitizations Derivatives Leases Fair Value Ch. 8 (skim 425 440 & 451 459, read 441 -451) Ch. 11 (skim 611 637, read 637 665) Ch. 12 (skim 693- 722, read 722 729) Accounting for Interest Rate Derivatives (BB) Lehman Brothers (BB) C8-2 Citigroup Lehman Brothers (BB) Wal-Marts Use of Interest Rate Swaps (BB)

Saturday, March 17, 2012

Impairments Income Taxes Pensions Ch. 10 (read 567 572) Ch. 13 Ch. 14 Retiree Pension and Health Benefits (BB) P10-11 C13-3, C13-5 & C13-6 C14-2 & C14-3

Saturday, March 31, 2012

Equity Compensation, EPS Equity Method / Consolidations Ch. 15 Ch. 16 C15-1, C15-2 & C15-3 C16-1, C16-3 & C16-4

Saturday, April 14, 2012

Final Exam Accounting Tips & Tricks

Advanced Financial Reporting

Prof. Drake

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