LEVENTHALSCHOOL OF ACCOUNTING

COURSE SYLLABUS

ACCOUNTING 470a Fall 2011
ADVANCED EXTERNAL FINANCIAL Prof. Ken Simmonds
REPORTING ISSUESOFFICE: ACC 209a

OFFICE HOURS:

MW: 1:00AM – 2:50PM

T: 1:00PM – 4:00PM

OFFICE TELEPHONE: (213) 740-5014

E-MAIL:

USC DEP’T. OF PUBLIC SAFETY

EMERGENCIES (213) 740-4321

USC EMERGENCY INFORMATION (213) 740-9233(24-HOUR VOICE MAIL)

USC INFORMATION (213) 740-2311

KUSC FM 91.5 FM

ACCT 470a continues the student’s exposure to key aspects of financial accounting theory and practice. It builds upon the foundation established in ACCT 370a and ACCT 370b.

COURSE DESCRIPTION:

Developing capabilities to identify and articulate current external financial reporting problems and issues, concentrating on operating, financing, and investing activities of business organizations.

COURSE PREREQUISITES:

For successful performance in ACCT 470a, completion of ACCT 370a and ACCT 370b is essential.

COURSE OBJECTIVES:

The primary objectives of ACCT 470a are as follows (this list is not necessarily all-inclusive):

  • Develop skills in reporting and analyzing accounting information
  • Develop an understanding of accounting information, including the rules used to prepare and report this information
  • Develop an appreciation of the usefulness and limitations of accounting information
  • Develop experience in analyzing accounting information from the perspective of its various users (e.g., equity investors, creditors, company management, auditors, etc.)

Peripheral objectives of ACCT 470a are to enhance the student's written and oral communication skills and to imbue the student with the meaning of professionalism and ethical conduct.

STATEMENT FOR STUDENTS WITH DISABILITIES:

Any student requesting academic accommodations based on a disability is required to register with Disability Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP. Please be sure the letter is delivered to Prof. Larsen as early in the semester as possible. DSP is located in STU 301 and is open 8:30a.m. – 5:00 p.m., Monday through Friday. The phone number for DSP is (213) 740-0776.

THE USCWRITINGCENTER:

The USCWritingCenter, located on the third floor of Taper Hall, is an excellent resource for students who want to improve their writing. Students can schedule 30-minute appointments with writing consultants who are trained to assist in planning, organizing, and revising writing assignments. Some of the consultants are graduate business students in Marshall School of Business. Other consultants have special skills in working with students for whom English is a second language and grammar issues. Students are required to visit The USC Writing Center and take advantage of these outstanding services for students, when requested by the instructor.

REQUIRED TEXTBOOKS (obtainable from USC Bookstore):

Kieso, Weygandt, Warfield, Intermediate Accounting,Thirteenth Edition, two volumes; (also used in 470b) (IA)

Hoyle, Shafer & Doupnik, Advanced Accounting, Tenth Edition

RECOMMENDED OTHER COURSE MATERIALS:

Dictionary

Original Pronouncements: Accounting Standards (2004/05 ed.) (APB, ARB, CON, FAS) (3 volumes)

(also used in 470b)

FASB Codification

Supplemental material: Problem Solving Survival Guides volume 1 (Chs. 1-14) and volume 2 (Chs. 15-28). The survival guides contain additional problems you can do, and excellent descriptions of how to solve each problem. Although no formal assignments will be given from the guides, doing additional problems in the guides will help you better understand the course material.

STUDENT OBLIGATIONS:

  1. Attend all classes on time. (See SCampus 2002-2003, p. 78, B2. )

(NO MAKE-UP EXAMINATIONS WILL BE GIVEN; UNEXCUSED ABSENCE FROM AN EXAMINATION RESULTS IN A GRADE OF “O” ON THE EXAM.)

2.Submit all written assignments, prepared on a word processor, on the date assigned and in good form. (See ES Rule 13). Written assignments submitted late will be graded 0, except for excused absences. Also see pages 5 and 6 hereof. Students who do not turn in a solution to a case study on which a mid-term or final examination question is based will receive no credit for an answer to the examination question.

3.Staple written assignment sheets. Students are responsible for complying with the English grammar, style, and usage rules in Chapters I and II of The Elements of Style and in the attached essay "Thoughts on Writing" in written assignments. Written assignments will be returned after being graded on a scale of 4 = Excellent, 3 = Good, 2 = Fair, 1 = Poor, 0 = No Credit; grades on case assignments are NOT NEGOTIABLE. (The 4, 3, 2¸ and 1 are not to be construed as A, B, C, and D.) Annotations of “ES” (The Elements of Style), “TW” (“Thoughts on Writing”), and “1 (a),” “3,” etc. (p.5 hereof) should be studied to help students improve their writing skills. Students may consult informally with each other, and they may do any desired research, in completing written assignments; however, written assignments must be the students’ own work, and any cited material must be properly footnoted. (Please see definition of plagiarism at Section 11.11.)

LEVENTHALSCHOOL OF ACCOUNTING HONOR CODE:

Per Article II of the Student Honor Code, “All students enrolled in upper division and graduate courses required for a degree in Accounting and offered by the Leventhal School of Accounting…are subject to the Code…”

RETURNED GRADED WORK:

All graded written assignments and examinations will be returned promptly to students. Unclaimed items will be retained by the instructor until the last day of the following semester (excluding summer term), then discarded.

EXAMINATIONS:

The mid-term examination is 1hour and fifty minutes in length. The final examination is two hours in length. Examinations are not cumulative. The mid-term examination normally includes multiple choice questions, one essay question, and two problems. The final examination normally includes multiple choice questions, one essay question and three problems. Grades on examinations are NOT NEGOTIABLE. No “makeup” examinations will be given; an unexcused absence from an examination results in a grade of 0 on the examination.

COMPOSITION OF FINAL GRADE:

The average grade in this course will be in accordance with Leventhal School of Accounting Standards.

The following weights will be assigned for determination of final grades:

Written assignments………...... 10%

Mid-term examination...... 45%

Final examination...... …...45%

Total…………………………………….……………….100%

The +/- grading system will be used. (See attached "Leventhal School of Accounting Grading and Academic Standards.") Final grades are obtainable only through self-addressed postcard or envelope or through USC's formal grade report; they are not obtainable from the Leventhal School of Accounting Staff. Final grades are NOT NEGOTIABLE.

Classroom Rules of Conduct

  • Cell phone use of any kind (e.g., voice, text messaging, calculator, photography) is strictly banned during class. (During exams, any cell phone use will automatically constitute cheating and will be dealt with as such.)
  • Cell phones should be turned off.
  • Use of computer, music player and other electronic devices is not permitted during class.
  • Be courteous to your fellow students by not making distractions (e.g., come in class late, eating, talking, paging through newspapers).

ATTENDANCE AND CLASS PARTICIPATION:

Attendance is defined as appearing in the classroom no later than 5 minutes after the scheduled beginning time of the class. Participation is defined as (1) asking relevant questions of the instructor or fellow students; (2) answering questions posed by the instructor or fellow students; (3) volunteering to discuss issues raised in class. Sitting mutely in class is not considered participation.

COURSE AND EXAMINATION SCHEDULE

DATE / TOPIC / TEXT READING / WRITTEN ASSIGNMENTS
M 8/22 / Introduction
W 8/24 / SEC
Nonmonetary Exchanges, Segment Reporting, Interest Capitalization / APB 29, ¶s 18-28; FAS 131, ¶s 1-39; FAS 34, ¶s 1-21; IA Ch 10 / IA Ex. 10-10
M 8/29 / Leases: Lessee / FAS 13
FAS 13 ¶s 1-16; FAS 28 ¶s 1-21; FAS 98, ¶s 1-13; IA Ch 21 / IA Ex. 21-2, 21-3, 21-5
IA Case 21-2
W8/31 / Leases: Lessor / FAS 13, ¶s 17-19,
41-47 / IA Ex. 21-4, 21-6, 21-10
M 9/05 / LABOR DAY
UNIVERSITY HOLIDAY
W9/07 / Investments / IA Ch 17;
APB 18, ¶s 1-20; FAS 115, ¶s 1-20, dissent / None
M 9/12 / MID-TERM

(In-Class)

W 9/14 / Business Combinations / Hoyle Ch. 1 & 2; FAS 141, ¶s 1-58 / Pr1-23, 1-24, 1-26, 1-27; FASB 94 Research Case pg. 34
Pr. 2-19, 2-23, 2-27, 2-33,
2-35
M 9/19 / Consolidations: Date of Combination / Hoyle Ch.3. / Hoyle Ch.3.
W 9/21 / Consolidations: Date of Combination / Hoyle Ch. 4 / Pr. 4-31, 4-37, 4-41
M 9/26 / Consolidations: Subsequent to Combination / Hoyle Ch.5 / Pr. 5-27, 5-28, 5-31
W 9/28 / Consolidations: Intercompany Transactions / None / None
M 10/03 / International Financial Reporting Standards-IFRS / Handouts / None
W 10/05 / Open
W 10/12 / FINAL EXAMINATION

IN CLASS

Using the American Accounting Association

FASB Accounting Standards Codification – Professional View

Online Research Software

  1. Overview

TheFASB Accounting Standards CodificationTMis now the single official source of authoritative, nongovernmental U.S. generally accepted accounting principles (GAAP). Only one level of authoritative GAAP now exists, other than guidance issued by the Securities and Exchange Commission (SEC). All other literature is now non-authoritative.

All existing standards that were used to create the Codification are superseded with the adoption of the Codification, which happened on July 1, 2009. The FASB will no longer update and maintain the superseded standards.

Leventhal School of Accounting has purchased an annual license through the American Accounting Association(AAA) for accounting academic use of the FASB Codification Professional View online database. The Professional View provides search, advanced search, cross reference, glossary, join/combine sections as well as copy and print functions.

  1. Student Access – two methods
  1. Access to the AAA Professional View Codification material is available on-campus through the Teaching Applications on the Leventhal Library and Crocker Library lab computers.

Start > All Programs > Teaching Applications > FASB Accounting Standards Codification > FASB Codification > FASB Codification Database

The software will then launch without further need of an ID or password.

  1. Additionally, the database is available online from on-campus or any web-available location at

If you use the web link access, you should see the American Accounting Association aqua and gold Please Login screen.

Student User ID AAA51188

Student Password susc588

You may find it useful to add the address to your Favorites or to put a shortcut on your desktop.

Note: If you lose or forget the ID and/or Password, please contact Dee Davidson .

Important Note: If you see the FASB blue and red Welcome screen instead of the American Accounting Association aqua and gold “Please Login” screen, you have not reached a functional login screen. Please review the information below about the Blue and Red Log in screen.

Blue and Red Log in Screen

If you are using the direct web access method to log in and you see only the blue and red FASB Welcome screen shown on the screen print above, you have not reached a functional login area. If that occurs, you may have a security conflict with your internet browser or with your firewall on your computer. You may be able to resolve the conflict by adding the web address to the list of trusted sites. If you are using Internet Explorer, you can add the site through Tools > Internet Options > Security > Sites. To add a trusted site to your firewall, you will need to contact your firewall administrator or consult the Help screens. If you are unable to fix the problem, you will need to use the software in the on-campus computer lab.

  1. Features of the Professional View

When you successfully complete the AAA login you will see this Home screen

Note: Please review the Terms and Conditions of use. In particular please note:

  1. Our license for this software is for academic use only.
  2. Updates will be made by FAF(Financial Accounting Foundation) when deemed necessary.
  3. Circumstances beyond the control of FAF may cause unexpected downtime.

The Codification is a compilation of Financial Accounting Standards by topics and subtopics. The topics are shown on the left and can be browsed through the subtopics using the red arrows. Links to Accounting Standards Updates, Exposure Drafts and the Pre-Codification Standards are included under Other Sources.

The six information links in the center and the right will provide support for your use of the topics. The Tutorials and Help will assist your use of the Join Sections and Cross Reference capabilities as well as creating productive searches of the Codification topics and subtopics.

Tutorial and Help screens.

The new Codification is an online software database. It is also a major change in the way accounting standards are organized. While the FASB Codification is designed to make it much easier to research accounting issues, the transition to the use of the Codification may be facilitated by use of the online Tutorials and Help screens which are included in the material.

The four brief tutorial modules include explanations on the use of browsing topics, join/combine sections, cross reference to the old FASB Standards, search and advanced search, and Master Glossary features, as well as use of copy and print functions. Please review each tutorial to become familiar and proficient with the Professional View of the Codification material.

  1. Logout

Please use the logout link in the upper right when you have finished your work. This releases the database for others to use. When you logout, the blue and red Welcome screen appears with fields for login credentials. Please close that screen and do not use it for any purpose. It is not functional for our Professional View license.

If you need to log in again, please use the direct web address and the Username and Password given above.

Note: If you lose or forget the ID and/or Password, please contact Dee Davidson

Note: Pre-Codification standards – FASB Pronouncements and EITF – can also be viewed at or

Subscriptions to the FASB Codification material are available to non-Leventhal users at .

Please advise Dee Davidson at if you encounter problems with the AAA Professional View online research software.

Why learn IFRS?

International Financial Reporting Standards, commonly referred to as IFRS, are gaining momentum as the global norm in financial reporting. Issued by the London-based International Accounting Standards Board (IASB), IFRS is currently accepted in approximately 100 countries, including the members of the European Union, Israel and Australia. Many other countries, such as Canada, Mexico, India and Japan have committed to adopt or converge with IFRS by dates ranging from 2009 to 2011.

For years, the Financial Accounting Standards Board (FASB) has been working with the IASB as part of a long term plan toward convergence of IFRS and U.S. Generally Accepted Principles (U.S. GAAP) with the 2007 decision of the U.S. Securities and Exchange Commission (SEC) to accept IFRS financial statements for foreign filers (without requiring reconciliation to U.S. GAAP), the timeline for U.S. adoption of IFRS is expected to accelerate at a rapid pace. In response to the SEC’s decision, accountants, managers and analysts began to question when the SEC would allow, or require, U.S. companies to use IFRS for their annual filings. While the answer to this question is still unknown, other ripple effects of the SEC’s decision can already be seen. In May 2008, the AICPA expressed its intent to incorporate IFRS into the CPA exam. In the same month, the AICP also amended Rules 202 and 203 of the Code of Professional Conduct to recognize the IASB as an international accounting standard, allowing accountants of private US companies to prepare financial statements in accordance with IFRS.

Introduction to IFRS

Historically, multinational and global companies were required to prepare separate financial statements for each country in which they did business, in accordance with each country’s generally accepted accounting principles. In 1973, the International Accounting Standards Committee (IASC) was formed in response to the growing need to develop a set of common financial standards to address the global nature of corporate financing. In 2000, the IASC received support from the International Organization of Securities Commissioners (IOSCO), primary forum for international cooperation among securities regulator. The IOSCO recommended its members (currently 181 organizations including the U.S. Securities & Exchange Commission and the Committee of European Securities Regulators) permit multinational companies to use IASC standards along with a reconciliation to national GAAP. In 2001, the IASC reorganized as the International Accounting Standards Board to incorporate representatives from national standard-setting organizations.

The term IFRS has both a narrow and broad definition. Narrowly, It refers to the specific set of numbered publications issued by IASB. Broadly it refers to all publications approved by the IASB, including standards and interpretations issued by its predecessor, the IASC. Unlike U.S. GAAP, there is no hierarchy to IFRS guidance. All standards and interpretations have equal levels of authoritativeness.

Status in the U.S.

The continuing globalization of business means many U.S. companies (operating or obtaining capital in foreign countries), including 40% of Global Fortune 500, are already affected by IFRS. In response to this trend, efforts have been under way to coverage IFRS and U.S. GAAP since 2002. The IASB and FASB have worked together closely and developed a plan for convergence of the two sets of standards. Main areas of differences with U.S. GAAP are summarized below:

  • Areas where IFRS and U.S. GAAP are not converged:

Consolidation policy, impairment, liabilities, intangibles

  • Areas where there are differences in the “details”:

Revenues, income taxes, leases, pensions, business combinations, share-based payments

Despite the progress toward convergence, the financial information reported by a company may differ significantly under the two sets of standards. Historically, the SEC has allowed foreign companies trading stock on U.S. exchanges to prepare Form 20-F, their annual financial statements, in accordance with a foreign GAAP as long as reconciliation to U.S. GAAP was included. A review of 2006 reconciliations determined that approximately 2/3 of companies have higher income under IFRS, with a median increase of 12.9%. For the 1/3 of firms with lower income under IFRS, the median difference was 9.1%.

As previously mentioned, the SEC eliminated the reconciliation requirement for foreign private issuers using IFRS in November 2007. The SEC is currently considering allowing U.S. companies the option of using IFRS in the near future.

Pros and Cons

While many now believe the adoption of IFRS in the U.S. is inevitable, including AICPA President Barry Melancon, SEC chairman Christopher Cox, and the Big Four accounting firms, not everyone agrees this is in the best interest of the American public. Advocates for the U.S. adoption of IFRS believe one global set of standards will streamline costs for U.S. companies operating globally and increase comparability of financial statements between companies, resulting in lower costs of capital.