Argosy University
COURSE SYLLABUS
B7660
The Evolution of Accounting Theory & Practice
Faculty Information
Faculty Name: Dr. Roberto Castaneda, CPA
Campus: Argosy Chicago
Contact Information: 312-498-2028
Office Hours: 8AM to 8PM Mon thru Sat
8AM to 1PM Sunday
Short Faculty Bio:
Roberto Castaneda, DBA, Argosy University (concentration in accounting), MM/MBA Northwestern University’s Kellogg Graduate School of Management (concentrating in finance and marketing) and BSC from DePaul University (concentrating in accounting and marketing). Dr. Castaneda is also a certified public accountant. Dr. Castaneda has over 28 years experience in finance and accounting with companies such as American Express, McDonald’s, PepsiCo, Arthur Andersen, Price Waterhouse and Trammell Crow Consulting. Dr. Castaneda currently consults with a number of Fortune 500 companies and non-profit organizations on organizational financial literacy issues. Some of his awards and honors include “2002 Illinois Literacy Foundation” for promoting literacy in Illinois, “American Express Chairman’s Award” For Quality, and the “PepsiCo International GAAP Award” on internal controls. He is also a member of the Illinois CPA Society, AICPA Society, and Financial Executives International. Dr. Castaneda also serves as a board of director for non-profit organizations including President of the Illinois Literacy Foundation, Center for Economic Progress, and Grants Panelist for the Chicago Cultural Center.
Course description:
This course chronicles the development of accounting theory as a response to changes in culture. The goal of this course is to analyze the relations of accounting and the social world, in a historical context, to better understand why accounting and auditing standards have achieved their present state of evolution.
Course Pre-requisites: None
Required Textbook:
Stickney, C., Brown, P. & Wahlen, J. (2007). Financial reporting, financial statement analysis and valuation: A strategic perspective ( 6th ed.). Thomson Southwestern. ISBN: 0324302959
Thibodeau, Jay & Freier, Deborah. (2008). Auditing after sarbanes-oxley: Illustrative cases (2nd ed.). McGraw-Hill Irwin.
ISBN: 0073379492
Course length: 7.5 Weeks
Contact Hours: 45 Hours
Credit Value: 3.0
Program Outcomes:
1. Research
1.1. Performing – Design, conduct, and justify applied research in a business context using appropriate methodology
1.2. Understanding – Evaluate and apply existing theory and research to current business practice
2. Communication
2.1. Oral – Present orally, complex business information that is concise, clear, organized, and well supported in a professional manner appropriate to the business context
2.2. Written – Present in writing, complex business information that is concise, clear, organized, and well supported in a professional manner appropriate to the business context using required format
3. Critical Thinking/Problem Solving
3.1. Critical thinking – Evaluate relevance of established theory to current business practice and identify gaps in current literature
3.2. Problem Solving/Decision Making – Given a business situation, diagnose the underlying causes of the situation, evaluate possible solutions, in relation to underlying business theory and determine and defend appropriate course of action
3.3. Information Literacy - Conduct an exhaustive literature search from a variety of sources, evaluate the credibility of the sources, and apply that information to create new knowledge
4. Team
4.1. Leadership - Conduct an exhaustive literature search from a variety of sources, evaluate the credibility of the sources, and apply that information to create new knowledge
4.2. Collaboration - Given a case study or business situation collect, assimilate, and disseminate the views of stakeholders
5. Ethics
5.1. Ethics - Given a case study or business situations, evaluate the ethical dimensions of decision situations and personal, social, and corporate responsibility not absolved by market forces
6. Diversity
6.1. Diversity - Given a case study or business situation evaluate the multicultural dimensions of decision situations and multicultural solutions to business situations
Accounting Concentration
7. Analysis
7.1. Financial Analysis - Evaluate results of accounting analyses including audit, financial, and risk analyses to determine appropriate business strategies
7.2. Systems - Evaluate effectiveness of comprehensive accounting systems in meeting the goals of an organization
Course Objectives:
1. Identify the changing roles of today’s accountant and the evolving role of accounting practices on the global financial market. (Program Outcomes: 1.1, 1.2, 3.1, 3.3, 5.1, 6.1)
2. Comprehend and apply current regulations that have been promulgated to ensure consistency and uniformity in application for financial reporting and auditing. (Program Outcomes: 1.2, 3.2, 3.3, 4.1, 4.2, 7.1)
3. Compare and Contrast the varying types of audits, reports and types of auditors. (Program Outcomes:1.1, 1.2, 3.1, 3.2, 3.3, 4.2, 7.2)
4. Examine and evaluate auditor and management responsibilities for detecting errors, fraud, illegal acts and assess the risks for material misstatements. (Program Outcomes: 1.1, 3.1, 3.2, 3.3, 4.2, 7.2)
5. Describe and apply decision-making processes using various accounting practices and standards. (Program Outcomes: 2.2, 3.2, 3.3, 4.1)
6. Apply current accounting theory and selected accounting concepts, principles and standards to evaluate business situations. (Program Outcomes: 1.1, 1.2, 2.1, 3.1, 4.1, 4.2)
7. Critically analyze and Identify internal control weaknesses and strengths through the use of operational audits. (Program Outcomes: 1.2, 2.2, 3.2, 4.2, 7.1, 7.2)
Assignment Table
Each assignment should be a minimum of three pages in APA style
1 / · Overview of Financial Reporting
· Evolution of GAAP
· Assessing the value of Financial Analysis
· Internal and External Users and Reliance for Accurate Data / Thibodeau, J. & Freier, D. (2007).
Case 1.1: Enron: A Focus on Independence and Ethics (p.3)
Case 1.4: WorldCom: A Focus on Professional Responsibility (p. 15)
Case 1.6: The Fund of Funds: A Focus on Independence (p. 23)
Stickney, C., Brown, P. & Wahlen, J. (2007).
Chapter 1: Overview of Financial Reporting, Financial Statement Analysis and Valuation. / 1. Visit the FASB's home page on the World Wide Web (http://www.rutgers.edu/Accounting/raw/fasb/welcome.htm).
Required:
a. Review recently posted FASB Documents and Information to determine if any important new initiatives are being considered by the FASB.
b. What exposure drafts are currently outstanding?
c. What issues are being considered by the Emerging Issues Task Force?
Visit the FASB's home page on the World Wide Web (http://www.rutgers.edu/Accounting/raw/fasb/welcome.htm).
2. Review the “FASB Facts” section of its website. In particular, read through the sections “Facts about FASB—Mission & Structure of the Board” and “FASAC—Financial Accounting Standards Advisory Council.”
Required:
a. Summarize the mission of the FASB in one or two paragraphs. What do you think about the FASB’s mission? Is it too broad; is it too vague, do you think the mission is achievable?
b. How effective do you think the FASB’s processes are? Do you think they will focus on the right issues on a timely basis? Do you think that all relevant parties will be heard in their process?
2 / · Evolution the Accounting Practices
· Asset and Liability Valuation and Balance Sheet Presentation
· Income Measurements
· Ethical Standards. / Thibodeau, J. & Freier, D. (2007).
Case 2.3: WorldCom: A Focus on Fraud and Inherent Risk Assessment (p. 39)
Case 2.7: The Fund of Funds: A Focus on Fraud and Inherent Risk (p. 51)
Stickney, C., Brown, P. & Wahlen, J. (2007).
Chapter 2: Asset and Liability Valuation and Income Measurement. / 1. Choose your company, log onto the SEC Edgar Form Pick website (http://www.sec.gov/edaux/formlynx.htm) (try and select a public company that you are familiar with). Companies disclose the impact of new accounting pronouncements in the footnotes to their financial statements (Usually in the Summary of Significant Accounting Policies).
Required:
Search your company’s financial statements to determine the new accounting standards that affected their operations during the past year and summarize their effects.
2. Research and identify the hierarchy of accounting standards. http://www.cpadvantage.com/articles/gaaphierarchy.aspx?LNC=_4_1 Select two different levels and provides examples of a company where these were implemented.
3. Select one of the two articles below and summarize the following article.
Dyckman, Thomas. 1989. Practice to Research--'What Have You Done for Me Lately?' Accounting Horizons, Mar89, Vol. 3 Issue 1, p111-118.
http://www.nysscpa.org/cpajournal/old/13808657.htm
3 / · Financial Statement Analysis
· Market Implications of Financial Analysis
· Income and Cashflow Understanding the Differences. / Thibodeau, J. & Freier, D. (2007).
Case 3.1: Enron: A Focus on Company Level Controls (p. 63)
Case 3.6: WorldCom: A Focus on Internal Controls (p. 91)
Stickney, C., Brown, P. & Wahlen, J. (2007).
Chapter 3: Income Flows versus Cash Flows: Key Relationships in the Dynamics of a Business. / 1) Through your reading of the following link and further research, identify what are the differences between accounting concepts, postulates, principles and standards? Which have more practicality in business today and which are general guidelines to follow and why?
http://sunzi1.lib.hku.hk/hkjo/view/12/1200037.pdf
2) Research and identify some of the concerns with the passage of the stock options (SFAS 123) prior to passage. What were some of the environmental issues and argements with this proposed FASB? Who were the proponents for and against its passage? Why was this such a heated debate prior to passage?
http://www.cato.org/research/articles/reynolds-040417.html
http://www.xent.com/FoRK-archive/july99/0650.html
3) What were the major issues with the predecessor accounting rule making body of FASB (i.e. ARB, APB)? Did accounting change with the times or did the times change with accounting?
http://query.nytimes.com/gst/fullpage.html?res=9506E1D81438F93BA35757C0A9629C8B63
4 / · Audit Opinions
· Profitability Analysis / Thibodeau, J. & Freier, D. (2007).
Case 3.7: WorldCom: A Focus on Internal Audit (p. 95)
Stickney, C., Brown, P. & Wahlen, J. (2007).
Chapter 4: Profitability Analysis. / 1. What are some of the major concern in the the current accounting literature in revenue recognition today? Why has the SEC expressed a desire to have the accounting rules revisited? What has FASB done about the current movement to address the issue with revenue recognition today?
http://www.nysscpa.org/cpajournal/2001/0300/dept/d035001.htm
http://resources.bnet.com/topic/operational+accounting+and+revenue+recognition+and+sec.html
2. Identify the many difference facets of economic consequences in financial reporting and provide examples of each? What are the benefits to financial reporting and challenges that can occur both internally and externally to the organization?
3. Log onto the World Wide Web and search for the annual reports of three domestic Fortune 1000 companies and three international companies.
Required:
a. Review the income statements for the three domestic companies and answer the following questions for the last reporting year:
i. What income statement format does each company use?
ii. What are the basic and diluted earnings per share for each company?
iii. Have any of the companies disclosed accounting changes?
iv. Have the companies reported any discontinued operations for the last year?
b. Review the income statements for the three domestic companies and answer the following questions for the last reporting year:
i. Do the companies present the income statement in the format suggested in Presentation of Financial Statements?
ii. What are the basic and diluted earnings per share for each company?
iii. Have any of the companies disclosed accounting changes?
iv. Have the companies reported any discontinued operations for the last year?
5 / · Internal Controls
· Financial Statement Presentation and Accuracy from Transactions to User Data / Thibodeau, J. & Freier, D. (2007).
Case 4.3: Enron: A Focus on Revenue Recognition (p. 121)
Case 4.4: Waste Management: A Focus on Capitalization of Expenses (p. 125)
Case 4.6: WorldCom: A Focus on Line Cost Accruals (p. 133)
Stickney, C., Brown, P. & Wahlen, J. (2007).
Chapter 6: Quality of Accounting Information and Adjustments to Reported Financial Statement Data. / 1. A company is required to report a liability in its balance sheet when it expects to lose a law suit and the amount of the expected loss can be reasonably estimated. Conversely, a company is prohibited from reporting a receivable in its balance sheet when it expects to win a lawsuit even though it is probably and the amount of the expected gain can be reasonably estimated.
Required:
a. Does the expected loss meet the definition of a liability found in the conceptual framework? Explain.
b. Does the expected gain meet the definition of an asset found in the conceptual framework? Explain.
c. Why do you think accountants treat these seemingly similar situations differently? Explain.
2. Log on to the World Wide Web and search for the annual reports of three domestic "Fortune 1000" companies and three international companies (Consult the Preface for web sites of companies or search for different companies)
Required:
a. Review the balance sheets and statements of cash flows for the three domestic companies and answer the following questions for the last reporting year:
i. What are some of the measurement bases used by the companies to report their assets?
ii. Did the companies pay dividends for the last reporting year?
iii. What method of reporting cash flows from operating activities did each of the companies use?
iv. What were the company's cash flow from operations? Did this differ substantially from the net income reported on the income statement? Why?
v. What were the company's major cash flows from investing and financing activities?
b. Review the balance sheets and statements of cash flows for the three international companies and answer the following questions for the last reporting year:
i. What are some of the measurement bases used by the companies to report their assets?
ii. Did the companies pay dividends for the last reporting year?
iii. Are the companies disclosing the information concerning their financial assets that is required under the provisions of IAS No. 32?
iv. What method of reporting cash flows from operating activities did each of the companies use?
v. What were the company's cash flow from operations? Did this differ substantially from the net income reported on the income statement? Why?
vi. What were the company's major cash flows from investing and financing activities?
Do the companies follow U.S. GAAP or international standards in reporting cash flows from investing activities?
6 / · Disclosure
· Related Party Transactions
· Income Recognition. / Thibodeau, J. & Freier, D. (2007).
Case 4.11: Qwest: A Focus on Presentation and Disclosure (p. 153)
Case 4.12: The Fund of Funds: A Focus on Evidence – Asset Valuation (p. 157)
Stickney, C., Brown, P. & Wahlen, J. (2007).
Chapter 7: Revenue Recognition and Related Expenses. / 1. 1. Log onto the World Wide Web and search for the annual reports of three domestic Fortune 1000 companies and three international companies. (Consult the Preface for websites of companies or search for different companies.)