5008 - ACCOUNTING AND FINANCIAL STATEMENT ANALYSIS

The course profile was updated on 18/02/2005 as a result of a Course Instructor change.

The course is designed to provide an understanding of the primary financial statements and the influence of different accounting practices in the communication of financial information. Successful completion of this course should enable students to read and interpret meaningfully financial statements prepared by enterprises in different legal systems. This necessarily requires that the course devotes attention to the basic rules of the accounting language as well as the issues and institutions which influence those rules. Therefore, the most important aim of this course is to develop students' ability to read accounting literature, to understand financial statements and to analyze them in order to evaluate the performance and the soundness of business entities. In the European Union and its applicant member countries, listed companies from 1 January 2005 are required to adopt International Accounting Standards (IASs)/International Financial Reporting Standards (IFRSs). The pace of change is quickening and involves 7,000 companies in the European Union and many more globally as Australia, the Russian Federation, Japan and other countries are introducing IASs/IFRSs. Many countries around the world already require/encourage foreign listed companies to apply IASs/IFRSs with or without reconciliation to national accounting standards.
This course is designed to reflect this new situation and its implications. A basic understanding of the requirements of the IASs/IFRSs is now essential for anyone studying financial accounting and reporting.

The course addresses the following main topics:

• The framework of financial reporting: accounting standards and regulation.
• Nature and purpose of primary financial statements: balance sheet, income statement and cash flow statement.
• Valuation of the main balance sheet items according to IAS/IFRS.
• Accounting language and methodology: how to record business transactions.
• Group accounts.
• Analysis of cash flows.
• Ratio analysis.
• Current developments in corporate governance and corporate reporting.

• DAVID ALEXANDER AND CHRISTOPHER NOBES, Financial Accounting. An international introduction, Financial Times, Prentice Hall, 2nd edition, February 2004 (Nobes).
• Other required teaching material related to each class will be provided through the B-Learning Space or handed-out in class.

Two partial exams of one hour each or one written exam of two hours.
Students are also required to write an essay during the course.