Dr J Horton, E307, Dr P Frantz, E310, and others.

This course is intended for students on MSc Accounting and Finance, MSc Law and Accounting and MSc Management and Regulation of Risk. Other students may be admitted if they have a substantial knowledge of financial accounting acquired at undergraduate level, and only with the agreement, in writing, of the MSc (Accounting) Course Tutor.

The course examines the current approach to corporate financial reporting to investors and other groups in countries with active capital markets (such as the UK and USA).

The course studies various rationales for corporate financial reporting, with particular consideration being given to the nature of conventional (historical cost) accounting and the prevailing regulatory structures applying to financial reporting.  Standard setting issues with respect to conceptual frameworks are discussed, especially the implications for different accounting jurisdictions.  Rather than emphasize the technicalities of preparing financial statements, efforts are made to link practical issues such as the introduction of new standards to underlying theories. Knowledge of basic accounting is assumed.  Some technical accounting issues will be examined in detail and specific topics may include accounting treatments across jurisdictions.  Students will be encouraged to relate economic events to financial statements and the regulatory environment, and to think critically of ongoing controversies and debates.

The main theoretical perspectives examined are: deductive approaches, based on the notion of financial accounting as the measurement of economic income and value (including applications to current accounting controversies); economic approaches, regarding corporate financial reporting as an information system, including signalling and disclosure, and studying the demand for and supply of accounting information in a market setting and its stock market impact; and regulatory approaches, examining the nature of and case for and against the regulation of corporate financial reporting. Illustrations are provided on how these theories are used in standard setting and in valuation.

Detailed choice of subjects will be determined by those lecturing on the course and many vary to some extent from year to year.

20 lectures of two hours each, sessional (AC420), and 20 classes (AC420.A) of one hour.

The lecturers set exercises, essays or case studies for class discussion each week. Many of these involve reading key papers and other writings in the financial accounting literature and illustrating their effects numerically. Four pieces of work, based on these assignments, are collected for formative assessment.

Detailed reading lists are handed out at the start of the course, and will be largely based on papers in academic journals. Relevant books covering specific parts of the course are: W H Beaver, Financial Reporting: An Accounting Revolution (3rd edn, Prentice-Hall, 1998); M Bromwich, Financial Reporting, Information and Capital Markets (Pitman, 1992); R Macve, A Conceptual Framework for Financial Accounting and Reporting (Garland, 1997); W Scott, Financial Accounting Theory, (Prentice Hall, 1997); R L Watts & J L Zimmerman, Positive Accounting Theory (Prentice-Hall, 1986).

A three-hour plus 15 minutes reading time written examination in the ST.