Instructor: Charles P. Baril
Semester: Fall 1996
Office: Showker Hall 345
Office Hours: Mondays 9:30 - 11:00 am; Tuesdays and Thursdays 2:00 - 3:30 pm
Other times by appointment (568-3092 - Office)
E-Mail: barilcp@jmu.edu
Course Objectives: The Accounting Education Change Commission in "Position Statement No.1: Objectives of Education for Accountants," included the following skills in its list of those necessary for success in the accounting profession.
Unstructured problems are those which lack certainties regarding such factors as the validity and completeness of the data at hand, range of solution options, and outcomes related to various options. One of the best ways to identify an unstructured problem is to ask if experts might disagree about the b4est solution; if so, the problem is probably unstructured.
One premise of this course is that students develop problem-solving skills most effectively by solving problems. Accordingly, the course assignments provide numerous opportunities to practice addressing various aspects of identifying, framing and resolving unstructured problems in the financial reporting and financial statement analysis arena.
Our course will examine the environment in which financial reporting occurs, including SEC regulation and the basis for management disclosure strategies.
The economic consequences of reporting financial information are diverse and affect various groups in diverse ways. There may be a lack of consensus among individuals on the value of any particular financial reporting system. Thus, choosing among financial reporting systems requires tradeoffs among the welfare or interests of the various constituencies.
Like financial reporting decisions, financial statement analysis is a classic unstructured problem with no one "right" solution. The effective analysis of a set financial statements requires an understanding of (1) the economic characteristics and current conditions of a firm's businesses; (2) the particular strategies the firm selects to compete in each of these businesses; and (3) the accounting principles and procedures underlying the firm's financial statements. To facilitate the development of your problem-solving skills you will perform the analysis on actual companies and present your best solution to the class with it's strengths and weaknesses.
Finally, to enhance our awareness of the financial reporting environment as well as our critical thinking skills, we will discuss the Monday WSJ editorial at the beginning of each session.
Grades and Testing: Much of the value of a graduate course is entailed in the exchange of ideas.
Hence, both preparation for and participation in class discussions is expected. Your grade will be determined by performance in these areas:
| Presentation | 30% |
| Papers | 15% |
| Mid-term Exam | 20% |
| Final Exam | 25% |
| Contribution to Discussions | 10% |
| 100% |
| Date 1996 | Assignment |
| Aug 27 | * Introduction - What is Financial Reporting? |
| * Unstructured Problem Solving - Demand and definition | |
| - Example - WSJ - Managers Journal 8/25/95 | |
| Sept 3 | * Stickney, Chapter 1; Financial Reporting and Financial Statement Analysis |
| * Stickney, Problems 1.1, 1.3 | |
| * FASB, Statement of Financial Accounting Concepts No. 1, Objectives of Financial Reporting of Business Enterprises | |
| * WSJ - Managers Journal 9/2 | |
| Sept 10 | * Afterman, Chapter 1 - 4; pp. 132-198 |
| * WSJ, Experts vs. Darts Series | |
| * Paper - Reynold's ROA analysis | |
| * WSJ Managers Journal 9/9 | |
| Sept 17 | * Stickney, Chapter 2 - Income Flows versus Cash Flows |
| * Stickney, Problems 2.1, 2.5 | |
| * Stickney, W.T. Grant Co. case | |
| * WSJ - Managers Journal 9/16 | |
| Sept 24 | * Stickney, Chapter 3 and appendix - Assessing Profitability and Risk |
| * Stickney, Problems 3.1, 3.4, 3.6 | |
| * Stickney - Specialty Retailing Industry Analysis: The GAP and the Limited case | |
| * Stickney, Chapter 8, pp. 452-469 | |
| * Stickney - Interpreting Industry - Level ROAs and ROCEs - case 8.1 | |
| * WSJ Managers Journal 9/23 | |
| Oct 1 | * Stickney, Chapter 4 - Data Issues in Analyzing Financial Statements |
| * Stickney, Problems 4.5 | |
| * Stickney - International Paper: A Recurring Dilemma - case 4.1 | |
| * WSJ Managers Journal 9/30 | |
| Oct 8 | * Mid - term Examination |
| Oct 15 | * Life Is Not Smooth paper |
| * Abelson, R, "Truth or Consequences? Hardly, "NY Times, June 23, 1996, pp. C 1-13. | |
| * Ayres, F., "Perception of Earnings Quality: "What Managers Need to Know," Management Accounting, March 1994, 27-29. | |
| * Afterman, Chapter 7, Discussion question 1. | |
| Oct 22 | * Stickney, Chapter 5 - GAAP: Income Recognition and Assets Valuation |
| * Stickney - Arizona Land Development Company case | |
| * WSJ Managers Journal 10/21 | |
| Oct 29 | * Stickney, Chapter 5; Problems 5.3, 5.4 |
| * Zuccca and Campbell, "A Closer Look at Discretionary Writedowns of Impaired Assets," Accounting Horizons, September 1992, 30-41. Grinaker, "Earnings Expectations and Discretionary Research and Development Spending," Accounting Horizons, December 1994, 43-51. | |
| * WSJ Managers Journal 10/28 | |
| Nov 5 | * Stickney, Chapter 6 - GAAP: Liability Recognition and Related Expenses |
| * Stickney Problem 6.2 | |
| * Stickney - American Airlines and United Airlines: A Pension for Debt case, a-e | |
| * WSJ Managers Journal 11/4 | |
| Nov 12 | * Stickney, Chapter 6 - American Airlines and United Airlines: A Pension for Debt case, f-k |
| * Stickney, Chapter 6 - Sun Microsystems: A Not Too Taxing Experience case | |
| * WSJ Managers Journal 11/11 | |
| Nov 19 | * GAAP Update Service, "A Summary and Analysis of the AICPA Special (Jenkins) Committee on Financial Reporting, "December 1994, pp 1-10. |
| * Seidler, L.J, "Review of Jenkins Report," Accounting Horizons, September 1995, pp 119-124. | |
| * Elliott, R. and P. Jacobson, "Costs and Benefits of Business Information Disclosure," Accounting Horizons, December 1994, pp 80-96. | |
| * Healy, P. and K. Palepa, "The Effect of Firms' Financial Disclosure Strategies on Stock Prices," Accounting Horizons, March 1993, pp 1-11. | |
| * Dieter, R. and K. Sandefur, "Spotlight On Management's Discussion and Analysis," Journal of Accountancy, December 1989, pp 64-70. | |
| * Hooks, K. and J. Moon, "A Classification Scheme to Examine Management Discussion and Analysis Compliance," Accounting Horizons, June 1993, pp 41-59 | |
| Nov 26 | * Thanksgiving (Wed. classes meet on Tuesday) |
| Dec 3 | * Final Exam - part I |
| Dec 10 | * Final Exam - part II |
Email: barilcp@jmu.edu
This page last updated April 21, 1997