Introductory description

Understanding and using financial reporting information for economic decision-making requires knowledge of the context of that information. How do changing technical principles, and accounting research and theory, help tackle the challenges facing global financial reporting today?

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

The module will include some or all of the following topics:

• Why regulate accounting? Why standardise financial reporting?
• IFRS and the role of a conceptual framework.
• Objectives, qualitative characteristics and elements of financial reporting.
• Understanding objectivity and financial reporting quality.
• Measurement and Fair Value accounting, alternative reporting models: stakeholder vs shareholder views of accounting; the demand for value-added statements; CSR reporting.
• Professional Service Firms and Commercial Pressures.
• Does IFRS improve financial reporting quality? A look at some evidence.
• What determines accounting choices? Positive accounting theory; economic consequences of accounting choices; the Efficient Market Hypothesis and accounting.

Learning outcomes

By the end of the module, students should be able to:

• Demonstrate an advanced and critical understanding of the rationale behind the current system of regulation, standardisation and external auditing of financial reporting, including professional ethics.
• Demonstrate an understanding of the role of normative, positive and critical research within the evolving system of regulation.
• Demonstrate a detailed technical and conceptual understanding of the issues relating to measurement in the current system.
• Explain the conceptual issues underpinning the technical regulations relating to measurement and the IASB conceptual framework (including a critical understanding of the scope of financial reporting and issues of relevance and faithful representation).
• Evaluate the different contributions that normative, positive and critical accounting make to understanding and improving the current system of financial reporting regulation.
• Critically reflect upon personal assumptions about authority and accountability (in relation to technical rules and disclosure) in financial reporting.
• Demonstrate, and evaluate the different technical approaches to measurement in financial reporting.

Indicative reading list

Barth, M., Landsman, W., and M. Lang (2008). International Accounting Standards and Accounting Quality. Journal of Accounting Research 46:467-498.
Deegan, C & Unerman, J. (2009) Financial Accounting Theory, McGraw-Hill.
Hines, R.D (1988) “Financial Accounting: In Communicating Reality, We Construct Reality” Accounting, Organizations and Society, 13 (3) pp.251-261 (Classic piece).
Hopper, T., Lassoud, P. & Soobaroyene, T. (2017) Globalisation, accounting and developing countries” Critical Perspectives on Accounting 43 pp. 125–148.
ICAEW (2006) “Measurement in Financial Reporting” ICAEW London.
IFRS Foundation/IASB publications such as (2015) Working In the Public Interest; (2015) Conceptual Framework (Exposure Draft).
Laux, C., and C. Leuz (2009). The crisis of fair-value accounting: Making sense of the recent debate. Accounting, Organizations and Society 34:826-834.
Milne, M. (2002). Positive accounting theory, political costs and social disclosure analyses: A critical look. Critical Perspectives on Accounting 13:369-395.
Wagner, J.W. (1965) “Defining Objectivity in Accounting” The Accounting Review July p. 599-605 (Historical Relevance).
Watts, R., and J. Zimmerman, (1990). Positive accounting theory: a ten year perspective. The Accounting Review 65:131-156.
Wyatt, A. R. (2004) “Accounting Professionalism: They Just Don’t Get It!” Accounting Horizons 18 (1) pp. 45-53 (Enron and Andersen).

Subject specific skills

• Explain the contingency of current technical regulations based on an understanding of the evolving and reactive regulatory system of international financial reporting (e.g. due process, politics, history of financial reporting concepts).
• Explain the professional factors that impact on the technical and ethical practice of financial reporting (e.g. professional ethics, national differences).
• Explain and evaluate different approaches to measurement in financial reporting.
• Explain some of the ways in which financial reporting information is actually used by organisations and financial markets (through an engagement with research into this).

Transferable skills

Summarising research articles and professional briefings.
Explanation of the rationale for the current approach to regulating disclosures
(beyond the hows to the whys).
Critical evaluation of current regulatory content.
Identification of ethical issues relating to the practicing of financial reporting disclosure.
Performing technical calculations using alternative systems of measurement.