Prof. Dr.

Matthias Kropp

Office hours: Wednesdays, 9:15-10:45 p.m. and

with prior appointment (W2.4.17)

E-mail: [email protected]

International Accounting (IFRS)

(ACC5011)

Syllabus

Winter Term 2016/2017

Time: Mondays, 3:30 p.m. – 5:00 p.m. and Tuesdays, 3:30 p.m. – 6:35 p.m.
Room: Mondays: W1.5.03 Tuesdays: W1.5.03
Starting: Tuesday, October 11, 2016
Written Exam: Tuesday, December 20, 2016
ECTS-Credits: 6
Language: English
Prerequisites: Sound knowledge of financial accounting in the student’s respective
national GAAPs, including bookkeeping

Accessibility: The course is offered to students of

• Master of Arts Controlling, Finance and Accounting: compulsory
• MBA International Management: elective
• International Master Exchange Program (IMEP)

Learning Objectives:
By the end of the course students
• have a general overview about IFRS (apart from Standards being concerned with
accounting for consolidated financial statements, joint ventures and at equity
accounting)
• have an understanding of the IASB’s due process for developing new standards
• have an in-depth understanding in applying and interpreting existing IFRS to real
world accounting problems
• do know how to assess and interpret future changes of Standards
• do know interrelations of IFRS to Finance and Investments
• expressed ideas, findings and conclusions clearly, logically, and persuasively in oral
and written communication, and demonstrated interpersonal skills in co-operation and
teamwork

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Course contributions to the Master of Arts Controlling, Finance and Acounting
program goals / learning outcomes

Program Goal/
Program Subgoal Course Contribution
Learning Outcome

I. Extending and consolidating knowledge with a view to theoretical concepts and practical
applications in controlling, finance and accounting.

Students will be familiar with

1. MACFA master’s graduates are familiar with models, concepts, concepts, standards and
standards and applications of controlling, finance and accounting application of IFRS-reporting
that go beyond previously acquired bachelor knowledge. beyond previously acquired
bachelor knowledge
2. They are able to identify appropriate approaches for theoretical or Application of investment
practical problems in controlling, finance and accounting, to assess techniques to selected areas in
them with regard to their relevance and examine them critically. IFRS
3. On this basis, they are able to define theoretical/practical
tasks/research questions in the areas referred to, clearly formulate
-
objectives to address these questions and structure the solution
process to achieve the objectives.

II. Systemic, analytical and instrumental/conceptual competences for solving theoretical

and/or practical problems in controlling, finance and accounting.

1. MACFA master’s graduates are able to understand the complexity

Students are trained especially in
of specific scientific and/or practical problems in controlling, finance
recognizing the ambiguities of
and accounting by applying appropriate models and concepts that
current IFRS standards.
are in compliance with predefined standards.
2. Graduates are able to analyse these using scientifically well- Students solve case studies in
founded methods. teams on applied issues of IFRS.
3. Using the results of the analysis, graduates are able to develop
independent, creative and reflected
recommendations/results/answers to specific research questions and -
complex practical problems that are well substantiated with empirical
and/or theoretical evidence.

III. Communicative and social skills to convince third parties of developed approaches.

1. MACFA master’s graduates are able to impart independently

Students solve case studies in
developed approaches to third parties in a distinct, concise and
teams on applied issues of IFRS.
stylistically appropriate manner.
2. In the course of this they take into account the appropriate formal
-
standards for scientific solution concepts.
3. Graduates debate in a convincing manner by presenting their
approaches in a way that is reasonable, differentiated and sufficiently -
documented.

Course contributions to the MBA program goals / learning outcomes

Goal Course Contributions to Goal Assessment

1 Responsible leadership in
organizational contexts Not applicable
2 Creative problem solving
skills in a complex business
environment
2.1 Ability to identify, differentiate
and classify problems Ability to identify, differentiate and classify Assignments &
2.2 Ability to analyze problems problems in IFRS Final exam
2.3 Ability to derive creative Ability to analyze problems of accounting
solutions Not applicable
2.4 Ability to present and explain
problems and solutions Ability to present and explain problems and
solutions under IFRS
3 Research Skills Not applicable
4 Management of Innovation Not applicable
5 Management of the Grasping the need for faithful reporting
challenges of global -
sustainability and awareness
for social and corporate
responsibilities

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Basic outline, organization and teaching philosophy:

The course provides a thorough introduction into the accounting under International Financial
Reporting Standards (IFRS), formerly known as International Accounting Standards (IAS).
Standards dealing with consolidation issues (IAS 27, 28, 31; IFRS 10, 11, 12) will not be
covered since for MACFA students these issues will be dealt with in a subsequent module.
Certain other standards will not be dealt with due to time constraints, e.g. IAS 20 Govern-
ment Grants, IAS 23 Related Party Disclosures, IAS 33 Earnings per Share.

In a primarily lecture-style approach, the most important IFRS-rules will be covered in depth
(i.e. including journal entries) to provide a thorough understanding of IFRS. The lectures are
based on Powerpoint presentations which are revised term by term to be up to date with the
ongoing changes of regulations and which will be available for download/print through the
University’s eLearning platform. In addition, practical examples are provided on blackboard.
Lectures will contribute approx. 4 contact hours to the workload.

The lectures are amended by project work on a set of case studies which will be assigned
to groups of 4-5 students, ensuring a continuous involvement of each participant into the
topics dealt with in the lecture. These assignments also relax the workload for the immediate
preparation of the final exam. The group assignments are to be handed in and will be
graded. The groups’ solutions will be informally presented by individual groups and dis-
cussed in separate sessions, adding approx. another contact hour to the course load.

Grading:

The grading is based upon the quality of the written examination (2/3), the quality of the
solutions of the assignments (1/3). Inactivity in class may lead to a downgrade in your final
overall grading. Please note: A grade of 5,0 in the written examination cannot be offset by
the assignment and leads to an overall grade of 5,0.

Course Materials:
a) Current Text
IFRS 2016, English – German (Standards in the versions approved by the European Union),
Wiley Text; or, alternatively, 2015
For Information regarding current developments see http://www.iasb.org/ , for further
literature see the IASB resources page.
b) Textbook
While there is no prime textbook, students are encouraged to use:
Mirza, Abbas Ali: Understanding IFRS Fundamentals: International Financial Reporting
Standards, New York (Wiley), newest edition

Availability of the lecturer:

Office hours: Wednesdays, 9:15-10:45 p.m. and with prior appointment (W2.4.17)

Email: [email protected]

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I do care about your learning. Therefore, do not hesitate to contact me if you have any
questions/problems with your learning or with the course. The longer you wait the fewer
options I will have to help you.

Motivation for Studying IFRS and Background

Differing national traditions and experiences led to the development of alternative financial
reporting models (e.g., the anglo-saxon, especially US-GAAP, tradition vs. the European-
continental tradition). The growing importance of multinational companies and the integration
of capital markets resulted in increasing demands for the international harmonization of
accounting practices. Divergences in accounting treatments across countries, and therefore
a lack of comparability of financial statements, have been identified as major impediments
and sources of comparative disadvantage especially for listed companies.

Already starting in 1973, representatives of professional accounting bodies founded the Inter-
national Accounting Standards Committee (IASC) which engaged in a standard-setting
program to provide internationally accepted accounting standards. By advocating decision-
usefulness for investors and promoting comparability, this set of standards, the International
Accounting Standards (IAS), gained increased worldwide recognition. To further promote the
development of International Accounting Standards, the organizational structure of the IASC
was changed in 2000. The standard-setting now principally rests with the International
Accounting Standards Board (IASB). New standards endorsed by the Board are issued as
International Financial Reporting Standards (IFRS) while existing IAS will stay in place until
eventually replaced or revised.

The growing importance of IFRS is documented especially by

- the IFRS functioning as “blueprints” for national accounting setters, and
- the acceptance of IFRS as national accounting standards in several countries world-
wide (e.g. in several states of the former Soviet Union and former Yugoslavia).

The major breakthrough for IFRS has been achieved by the European Union’s acceptance of
IFRS, thereby abandoning the EU’s long-standing goal of developing unique European
accounting standards. This new policy was first formulated by the European Commission in a
policy document entitled “EU Financial Reporting Strategy: The Way forward” in June 2000.
With minor changes the policy was finally enacted by the Council and European Parliament
in autumn 2002. It resulted in an obligation for companies which have listed securities
outstanding to issue consolidated financial statements under IFRS only, beginning with the
financial years starting at or after January 1, 2005. Furthermore, national governments may
require IFRS for consolidated financial statements in general and even entity accounts. Other
countries outside the EU followed this path (e.g. Australia, New Zealand). In addition, the
U.S. FASB and the IASB are working on converging these two sets of accounting standards
(Norwalk-Agreement). Currently, more than 100 countries worldwide do employ IFRS.

As a result of the aforementioned developments a thorough understanding of IFRS is re-

quired. With national GAAPs already obsolete at least for consolidated financial statements
of listed companies, accountants and financial analysts with a firm background in IFRS will
certainly be in high demand in the years to come.

However, students should be given a warning: IFRS are more rapidly changing then even
German tax law! Therefore, students of IFRS should not just “know” the Standards, they
must get a feeling of how the Standards are working and how the Standard Setter is looking
to its Standards. Thus, nobody should stubbornly get acquainted just with “the rules”, keep
up your mind to get a deeper understanding. That is what this course is looking for.

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Main Course Topics and Indicative Schedule for ACC5011

# Lecture Date Class Topic

1+2 Tue, Oct. 11 Preliminaries/Organization/General Course Information
I. Introduction
II. Financial Statements and Notes and Interim Reporting
3 Mon, Oct. 17 II. Financial Statements and Notes and Interim Reporting (ctd.)
4+5 Tue, Oct. 18 II. Financial Statements and Notes and Interim Reporting (ctd.)
III. Operating Segments
IV. Events after the Balance Sheet Date
6 Mon, Oct. 24 V. Changes in Accounting Policies, Estimates and Errors
7+8 Tue, Oct. 25 VI. Revenue Recognition
9 Mon, Oct. 31 VI. Revenue Recognition (ctd.)
Tue, Nov. 1 No lecture
10 Mon, Nov. 7 VII. Measurement Concepts – An Overview
11+12 Tue, Nov. 8 VII. Measurement Concepts – An Overview
VIII. Property, Plant Equipment
13 Mon, Nov. 14 VIII. Property, Plant Equipment (ctd.)
14+15 Tue, Nov. 15 VIII. Property, Plant Equipment (ctd.)
IX. Investment Property
16 Mon, Nov. 21 X. Intangible Assets
17+18 Tue, Nov. 22 XI. Impairment of Assets
Mon, Nov. 28 No lecture
19 Tue, Nov. 29 XII. Non-current Assets held for Sale and Discontinuing Operations
XIII. Inventories
20 Mon, Dec. 5 XIV. Provisions, Contingent Liabilities and Contingent Assets
21+22 Tue, Dec. 6 XV. Effects of Foreign Exchange Rates
XVI. Income Taxes
23 Mon, Dec. 12 XVII. Equity Instruments
24+25 Tue, Dec. 13 XVII. Financial Instruments Accounting I – Fundamentals
26 Mon, Dec. 19 XVII. Financial Instruments Accounting I – Fundamentals (ctd)
Tue, Dec. 20 Final Exam