Course Name (short): Acctg Theory & Contemp Issues
School: Business
Program(s): Bach Bus Admin Market Manage, Bach Business Admin Accounting, Bach Business Admin Finance, Bach Human Resources, BachBus Admin Spply Chain Mgmt
Program Coordinator(s): Tba
Course Leader or Contact: Francis Fasanu
Originator: Lynn Easson-Irvine
Designate: Jessica MacDougall
Version: 1.01
Status: Approved (APPR)

Calendar Description
Students examine a variety of contemporary issues in the field of financial accounting. By researching academic and professional accounting literature, students develop their professional judgment as it relates to emerging issues. Students explore the contributions of finance and economics to accounting theory.

Typical Instructional Format

Courses may be offered in other formats.

Section I Notes: This course will be delivered in hybrid format.

Detailed Description
Students examine a variety of contemporary issues in the field of financial accounting. By researching academic and professional accounting literature, students develop their professional judgement as it relates to emerging issues. Students explore the contributions of finance and economics to accounting theory. Using a seminar based approach, students lead research based discussions and debate contemporary issues related to the accounting profession.

Program Context

 Critical Performance
By the end of this course, students will have demonstrated the ability
to apply professional judgment, supported by research, in addressing
issues in the field of financial accounting.

Learning Outcomes
To achieve the critical performance, students will have demonstrated
the ability to:
1. Analyze contemporary issues in academic and professional accounting
   literature.
2. Apply the decision usefulness approach to financial reporting.
3. Assess the implication of efficient securities markets on financial
   reporting.
4. Compare the information approach and the measurement approach to
   decision usefulness.
5. Evaluate accounting policy choices using the Positive Accounting
   Theory.
6. Recognize the influence of Agency Theory and Game Theory on
   accounting policy choices. 
7. Determine the relationship between the discretionary and
   non-discretionary components of executive compensation and earnings
   management behaviour.
8. Evaluate the economic and political issues influencing standard 
   setting in the accounting profession.
9. Demonstrate professional behaviours including:
   a. work effectively in a team environment
   b. meet due dates
   c. produce professional quality assignments
   d. use reference materials responsibly

Group Presentation             5%
Quizzes (10 x 1.5%)           15%
Mid-term Exam (Module 1-6)    25%
Group Research Project        20%
Final Exam (Cumulative)       35%    
Total                        100%

In addition to achieving a minimum 50% overall grade, a student must
have a combined average of at least 50% on the non-group components of
the evaluation plan in order to receive credit for this course.

Textbook(s):  Scott, W.R. (2015). Financial Accounting Theory, 7th
Edition. Prentice-Hall.

Recommended Reading:
Reference Sources:
Skinner, R. M, & Milburn, J. A. (2001). Accounting Standards in
Evolution, 2nd Edition. Prentice Hall.

Module 1:  The role of accounting research
1. Review historical perspective and recent developments in financial
   reporting
2. Identify the fundamental problem of financial accounting theory 
3. Evaluate the relevance of financial accounting theory to accounting
   practice
4. Appreciate the concept of ideal conditions
5. Use the present value model under ideal conditions to prepare an
   articulated set of financial statements for a simple firm
6. Evaluate reserve recognition accounting (RRA) as an application of
   the present value model
7. Assess historical cost accounting in the mixed measurement model
8. Question the existence of net income as a well-defined economic
   construct
Learning Outline: 1
Quiz - 1.5%

Module 2:  The decision usefulness approach to financial reporting
1. Compare rules-based & principles-based accounting standards 
2. Assess ways to increase the usefulness of financial reporting 
3. Apply the decision theory to a single person
4. Identify issues in applying the decision theory model
5. Describe the rational, risk-averse investor 
6. Utilize optimal individual investment decision and the principle of
   portfolio diversification 
7. Assess the reaction of professional accounting bodies to the
   decision usefulness approach
Learning Outcome: 2
Quiz - 1.5%

Module 3: Implication of efficient securities markets on financial
reporting
1. Explain the Efficient Market Hypothesis.
2. Discuss how market prices fully reflect all available information 
3. Identify the implications of efficient securities markets for
   financial reporting 
4. Discuss the informativeness of price 
5. Apply a model of cost of capital such as the capital asset pricing
   model (CAPM)
6. Critique the capital asset pricing model 
7. Discuss information asymmetry and the fundamental value 
8. Identify the social significance of securities markets that work   
   well
Learning Outcome:  3
Quiz - 1.5%

Module 4: The Information approach to decision usefulness
1. Understand the value relevance of accounting information
2. Discuss empirical securities markets-based accounting research
3. Outlining the research problem, methodology and findings 
4. Review the Ball & Brown study
5. Evaluate the earnings response coefficient
6. Discuss the value relevance of other financial statement  
   information 
7. Appreciate the limitations of empirical securities markets research
   for accounting policy recommendations
Learning Outcome: 4
Quiz - 1.5%

Module 5:  Measurement approach to decision usefulness
1. Understand the measurement approach to financial reporting
2. Discuss reasons why financial reporting is moving in a measurement
   direction
3. Review theory and evidence that securities markets may not be fully
   efficient.
4. Discuss market efficiency versus behavioural finance
5. Defend market efficiency theory and average investor rationality
6. Discuss Ohlson's clean surplus theory
7. Discuss how auditor legal liability leads to conservative    
   accounting
Learning Outcome: 4
Quiz - 1.5%

Module 6: Measurement applications
1. Identify the major financial instrument accounting standards
2. Differentiate between fair value and value-in-use
3. Review long-standing examples of current cost accounting
4. Evaluate accounting for financial assets and liabilities
5. Explain accounting for derivative financial instruments
6. Evaluate a measurement perspective on intangibles
7. Report on risk
Learning Outcome: 4

Mid-Term Examination 25%

Module 7:  Positive Accounting Theory
1. Discuss the hypotheses of positive accounting theory 
2. Discuss accounting policies for efficient contracting 
3. Illustrate economic consequences 
4. Evaluate contract rigidity and employee stock options 
5. Research manager opportunism versus efficient contracting
6. Identify sources of efficient contracting demand for financial
   accounting information
Learning Outcome: 5
Quiz - 1.5%

Module 8: Game Theory & Agency Theory
1. Discuss the fundamental concept of game theory 
2. Illustrate a single-period non-cooperative game 
3. Illustrate a trust-based non-cooperative game
4. Examine models of cooperative game theory
5. Discuss the fundamental concept of agency theory 
6. Examine manager's information advantage 
7. Identify the implications of agency theory for accounting 
8. Reconcile efficient securities market theory with economic   
   consequences
Learning Outcome: 6
Quiz - 1.5%

Group Research Projects Topics Selection

Module 9:  Executive Compensation
1. Examine the desirability of incentive contracts
2. Discuss the theory of executive compensation
3. Discuss the implications of agency theory for executive  
   compensation
4. Identify the qualities needed by a good performance measure
5. Evaluate the role of net income in compensation plans in relation
   to stock-based performance measures
6. Review empirical evidence on the role of net income in compensation
   plans
7. Evaluate political aspects of executive compensation
8. Understand the power theory of executive compensation
Learning Outcome: 7
Quiz - 1.5%

Module 10:  Earnings management
1. Identify patterns of earnings management 
2. Discuss evidence of earnings management for bonus purposes 
3. Examine other possible motivations for earnings management 
4. Provide arguments in favour of earnings management 
5. Provide arguments opposing earnings management 
6. Discuss earnings management and market efficiency
7. Discuss the concept of strategic accounting policy choices
Learning Outcome:  7
Quiz - 1.5%

Module 11:  The economic issues related to standard setting
1. Discuss the need for the regulation of economic activity
2. Conceptualize ways in which firms can produce information
3. Review incentives for firms to produce information
4. Discuss market failure in information production
5. Discuss the extent to which private market forces limit market 
   failure
6. Evaluate costs/benefits  of regulation
Learning Outcome: 8
Quiz - 1.5%

Module 12: The political issues related to standard setting
1. Discuss public interest theory of regulation as it applies to
   standard setting
2. Discuss interest group theory of regulation as it applies to
   standard setting
3. Examine the existence of conflict and compromise in standard    
   setting 
4. Identify the criteria for a successful standard
5. Discuss information asymmetry between firm manager and regulator
6. Discuss benefits and challenges of international convergence of
   accounting standards
Learning Outcome: 8

Group Research Project Reports (20%) and Presentations (5%)

Final Examination (Cumulative) 30%