Module Code and Title:   ACT306 Corporate Reporting II

Programme:                          Bachelor of Commerce

Credit:                                    12

Module Tutor:                       Madhav Verma, Arindam Ghosh, Laxmikanth Dhakal,

                                               Dilli Ram Sharma, Ritu Barna Adhikari , Tshering Pemo, Nawang Yangden

Module Coordinator:            Arindam Ghosh

General objective: The module offers contemporary financial knowledge and skills in corporate reporting taught within the context of BAS/IFRS. Learners will be introduced to one of the complex standards on financial instruments and disclosure requirements of the corporate reporting. They will also be introduced to the group or consolidated reporting principles and gain competitive edge through developing the skills of preparing and analyzing the group financial statements. The learners acquire other capabilities such as communication, application of computers and decision making skills by participating in the learning activities and assessment components.

Learning outcomes – On completion of the module, students will be able to:

1. Discuss the concepts, recognition and measurement aspects of various transactions and events;
2. Account transactions in accordance with the applicable financial reporting standards
3. Identify and explain the disclosure requirements of financial reporting including earnings per share, related party transactions and segment reporting;
4. Draft a financial statements of a limited company in accordance with the financial reporting standards (students should be able to write an appropriate accounting policies).
5. Discuss consolidation principles and apply this in drafting a simple consolidated financial statements;
6. Use computer skills for financial data analysis and presentation of that information to the users;
7. Demonstrate team work and managerial skills; and

Teaching and Learning Approach:

Assessment Approach:

1. Written assignments: Portion of Final Marks: 15 %

Each student will complete 2 written assignments, each being worth 7.5%, on topics related with managerial decision making based on financial information. Students will prepare financial statements of a selected organization and make appropriate conclusions out of them, which are adequate enough to guide the decision making bodies of the organizations.

0.5%    Selection and identification of organization(s).

2%       Collection of financial information about the selected company

3%       Accurate preparation of the financial statements

2%       Using appropriate accounting tools and techniques and making reasonable conclusions.

1. Case Study & Presentation: Portion of Final Marks: 20%

Students will be assigned one topic in a group of 4. They will collect secondary data on the given topic and analyse, conclude and make their recommendation in a paper of 1000 words (10%). This will be followed by a presentation (10%) of 15 minutes, with 5 min Q&A.

2%       Group mark: coordination of presentation and distribution of work among the group members.

2%       Collection of relevant data

2%       Analysis and interpretation of data

2%       Conclusion and recommendation

1%       Logical presentation, writing style

1%       Bibliography and citation

4%       Presentation Group mark: coordination and distribution of work among the group member.

6%       Presentation Individual mark will be assessed on following criteria:

2%       Subject knowledge and ability to answer Q& A

2%       Smartness, body language, pronunciation, audibility

2%       Organization of presentation

1. Problem solving tests based on business situations and application: Portion of Final Mark: 15%

Students will be required to solve situation based business related problems in-class using accounting techniques and tools covered in class. There will be 3 problem solving tests each of 1 hour duration. Each problem solving test is worth 5% and will be assessed on the following criteria.

3%       identifying the appropriate accounting technique to solve the problem

2%       correct solution of the problem

1. Midterm Examination: Portion of Final Mark: 20%

Students will take a written exam of 2 hours duration covering topics up to the mid-point of the semester.

1. Semester-End Examination: Portion of Final Marks: 30%

The module will have a semester-end exam for 2 hours covering the entire syllabus. The question will be divided into two parts – Part A (carrying 40% of the exam weightage) will be mostly of short answer including objective questions. Part-B (carrying almost 60% of the exam weightage) will be mostly of essay type or an extended response to the given question. This part of the question requires students to apply, analyse, and evaluate or construct knowledge and skills. Cases will also be used to test the levels of knowledge.

Pre-requisites: ACT204 Corporate Reporting I

Subject matter:

1. Accounting for Borrowing costs and investment property

• Borrowing costs
  • Concept of borrowing cost and qualifying asset
  • Capitalization of borrowing costs –commencement, suspension and cessation of capitalization
  • Accounting and disclosure of borrowing costs
• Investment property
  • concept of investment property and fair value
  • investment property vs owner occupied property
  • recognition and measurement of investment property
  • accounting for investment property
  • disclosure requirements under BAS 40/IAS40

2. Accounting for financial instruments

• Definition of financial instruments in terms of financial assets and financial Liabilities
• Definition of factoring and account for the factoring of receivables
• Measurement of different categories of financial instruments and how any gains and losses from subsequent measurement should be treated using: (i) amortised cost ii) fair value through other comprehensive income (including where an irrevocable election has been made for equity instruments that are not held for trading)  iii) fair value through profit or loss
• Difference between debt and equity capital
• Account for the issue and finance costs of: (i) equity (ii) redeemable preference shares and debt instruments with no conversion rights (principle of amortised cost), and  (iii) convertible debt
• Presentation of equity and debt component of convertible debt in the financial statements

• Accounting for investments in associates and joint ventures
  • Investment in associates and accounting method
    • Types of investments
    • Equity method of accounting
    • Losses in associates
    • Carrying amount of investments in associates
  • Investment in Joint venture
    • Concept of joint venture
    • Types of joint venture investment-
      • Jointly controlled operations
      • Jointly controlled assets
      • Joint venture entities

3.2.3    Disclosure requirements under BAS 28/IAS28

• Accounting for foreign currency transactions
  • Meaning of foreign currency
  • Concept of functional and presentation currencies
  • Determining functional currency
  • Meaning of exchange, closing and spot rates
  • Meaning of monetary item and exchange difference
  • Initial and subsequent recognitions of foreign currency transactions
  • Foreign currency translation including foreign branch operation
  • Recognition of exchange differences in the profit and loss and other Comprehensive income

• Disclosure and other financial reporting requirements
  • Meaning and purpose of disclosures
  • Disclosure requirements under specific accounting standards
  • Accounting policies and changes in accounting estimates and errors
  • Other disclosure and presentation requirements:
    • EPS
    • Related party transactions
    • Financial reporting by segments- Operating segments
    • Non-current assets held for sale and discontinued operations
  • Interim financial reporting

• Accounting for employee benefits
  • Concept and nature of employee benefits
  • Categories of employee benefits: (i) short term benefits (ii) post-employment benefits (iii) Other long term benefits and (iv) termination benefits
  • Recognition and measurement of short term benefits

Post-employment benefits: (i) defined contribution plans (ii) Defined benefit plans and (iii) Multi-employer plans

• Recognition and measurement of defined benefit plans
• Actuarial assumptions and valuations
• Concepts of plan assets, asset ceiling, service costs, actuarial gains and losses, return on plan assets
• Accounting for defined benefit plans – four step method for recognizing and measuring the expenses and liability of a defined benefit plan
• Reporting employee benefits expenses and liability in the statement of financial position and the statement of profit or loss and other comprehensive income

• Preparation of corporate financial statements
  • Statements of financial position
    • Accounting equation, accounting treatments of various transactions and business entity convention underlying the statement of financial position
    • Nature of reserves
    • Identify and report reserves in a company statement of financial position
    • Preparation of a statement of financial position or extracts as applicable from given information
    • Definition of retained earnings and why it appears in a company statement of financial position
  • Statements of profit or loss and other comprehensive income
    • Preparation of a statement of profit or loss and other comprehensive income or extracts as applicable from given information
    • Concepts and application of revenue and expenses
    • Calculation of revenue, cost of sales, gross profit, profit for the year, and total comprehensive income from given information
    • Disclosure items of income and expenditure in the statement of profit or loss
    • Recording income tax in the statement of profit or loss and other comprehensive income of a company
    • The interrelationship between the statement of financial position and the statement of comprehensive income
    • Items requiring separate disclosure on the face of the statement of profit or loss and other comprehensive income
  • Statement of cash flows
    • Difference between profit and cash flow
    • The need for management to control cash flow
    • The benefits and drawbacks to users of a statement of cash flows
    • Classification of effects of transactions on cash flow
    • Calculation of cash flows from:
      • Operating activities
      • Investing activities
      • Financing activities
    • Calculation of cash flow from operating activities using the indirect and

direct method

• Introduction to group accounting
  • Concept of a group as a single economic unit
  • Definitions: Control, subsidiary, parent, group, acquire, acquirer, business combination, contingent consideration, fair value, equity interest, non-controlling interest.
  • Circumstances in which a group is required to prepare consolidated financial statements
  • Objective of consolidated financial statements
  • Identifying business combination
  • The acquisition method and acquisition related costs
  • Goodwill calculation and recognition
  • Valuing non-controlling interest at acquisition
  • Preparation of basic group financial statements (with two subsidiaries)-
    • Consolidated statement of financial position
    • Consolidated statement of profit or loss and other comprehensive income
    • Consolidated statement of cash flows
    • Consolidated statement of changes in equity

Reading List:

1. Essential Reading
   • PKF International Ltd (2017). Wiley IFRS 2017: Interpretation and Application of IFRS Standards. India, Wiley.
   • Cassy, B., Theodore, C. & David, C. (2016). Advanced Financial Accounting, McGraw-Hill
   • David, Y. & Jacob, C. (2016). Corporate Financial Reporting and Analysis-A Global Perspective, Wiley
   • Derry, C. (2016). Advanced Financial Reporting: A Complete Guide to IFRS, Pearson Education

2. Additional readings:
   • Barry, E., Jamie, E. (2016). Financial Accounting and Reporting, Pearson Education, (17th Ed).
   • Clare, R., Pauline, W., & Paul, G. (2012). International Corporate Reporting: a comparative approach, Pearson
   • Dane, M. C. (2016). Corporate Accountability Reporting and High-Profile Misconduct, The Accounting Review, Vol. 91, (2), pp. 377-399
   • Humphrey, C., O’dwyer, B &Jeffrey, U. (2016). Re-theorizing the configuration of organizational fields: the IIRC and the pursuit of ‘Enlightened’ corporate reporting, Accounting and Business Research
   • Kaminski, R. (2016). European Union Regulations of As a Response to the Evolution of Business Activity Conditions, Applied Finance and Accounting, Vol. 2(1)
   • Peter M. K., Brynn W. M., Steve M., Tom M., & Ruckelshause, M. (2015). Improving global environmental management with standard corporate reporting, PNAS, Vol. 112 (24), P. 7375-7385
   • Robert, G. & George, S. (2014). Crporate and Integrated Reporting: A Functional Perspective, Harvard Business Publishing
   • The KPMG International Financial Reporting Group (2015). Insights into IFRS: KPMG's Practical Guide to International Financial Reporting Standards, KPMG International Group
   • Thomas, L., James, P. N.&Clare, W. (2015). Signaling through corporate accountability reporting, Journal of Accounting and Economics, 60 (1), Pp. 56–72
   • Tull, J.M.; John, R. Robinson & Kathleen P. (2016). How do CEO incentives affect corporate tax planning and financial reporting of income taxes?, Review of Accounting Studies, Vol. 21(20. Pp.672-710
   • Warwick, S., Dowler, T. (2015). Early assessments of the gap between integrated reporting and current corporate reporting, Meditari Accountancy Research, Vol. 23 Iss: 1, pp.92 – 117
   • William, H. Beaver (1998). Financial Reporting: An Accounting Revolution, Pearson

Date: May, 20