Unit information: Financial Accounting 2 in 2014/15

Unit name	Financial Accounting 2
Unit code	EFIM20001
Credit points	20
Level of study	I/5
Teaching block(s)	Teaching Block 4 (weeks 1-24)
Unit director	Mr. Ricky Tutin
Open unit status	Not open
Pre-requisites	Financial Accounting 1 (EFIM10002) and Managerial Finance (EFIM10004); or Introduction to Accounting (ACCG10052); or 70% in 25 Principles of Accounting (University of London External Diploma)
Co-requisites	None
School/department	School of Accounting and Finance - Business School
Faculty	Faculty of Social Sciences and Law

Description including Unit Aims

This unit aims to equip participants with a good understanding of the principles and techniques of Financial Reporting, Income Concepts (Valuation) and Auditing, providing a useful and interesting foundation from which you may further your education and develop your careers.

It's a technical unit which students tend to find difficult during term-time, but stick with it and do the work set and you'll find that you get rewarded.

Intended Learning Outcomes

Financial Reporting

Explain, apply and evaluate the requirements of International Financial Reporting Standards and proposals for change for the following areas of financial reporting:

1. Conceptual Framework
2. Leases
3. Provisions, Contingent Liabilities and Contingent Assets
4. Property, Plant and Equipment

(including the impact of government grants and borrowing costs)

1. Intangible assets
2. Impairment of assets

Group Accounts

Explain, apply and evaluate the requirements of International Financial Reporting Standards for the preparation of group financial statements:

1. Compare and contrast acquisition accounting and equity accounting
2. Explain the circumstances under which acquisition accounting should be used and the circumstances under which equity accounting should be used
3. Describe the circumstances which may give rise to one entity having control of another entity
4. Describe the circumstances which may give rise to one entity having significant influence over another entity
5. Describe the circumstances under which a parent need not present consolidated financial statements
6. Explain the principles underlying the preparation of consolidated accounts
7. Prepare consolidated financial statements
8. Explain, apply and evaluate the alternative methods allowed by IFRS 3 for calculating goodwill and non-controlling interests
9. Explain, apply and evaluate the requirements of IFRS 3 concerning the treatment of goodwill
10. Explain, apply and evaluate the requirements of IFRS 3 concerning the treatment of a gain from a bargain purchase

Income Concepts

1. Recall the central definition of income according to J R Hicks;
2. Derive and use appropriate formulae for the calculation of income as interest, income as capital maintenance, income as consumption maintenance and income as consumption maintenance in real terms;
3. Define, calculate and explain windfalls and holding gains and losses;
4. Explain and evaluate the proposals of the Joint International Group on Performance Reporting for presenting the performance of an entity;
5. Recall and explain alternative capital maintenance concepts;
6. Explain and apply the principles and techniques of exit and entry value accounting to the preparation of financial statements
7. Explain and apply the principles and techniques of current cost accounting in real terms to the preparation of financial statements
8. Explain and apply the principles and techniques of deprival and relief valuation to the preparation of financial statements
9. Explain and apply the principles and techniques of Current Purchasing Power accounting to the preparation of financial statements
10. Compare, contrast and evaluate alternative valuation bases

Auditing

1. Explain what an audit is
2. Explain why external audits are performed
3. Recall who is eligible to audit
4. Recall the rules on the appointment, removal and resignation of auditors
5. Explain the purpose and content of an auditor’s report
6. Select and explain appropriate audit opinions for given scenarios
7. Recall the formula for calculating audit risk and explain its components
8. Understand and explain the audit tests on control and substantive procedures, and the concepts relating to obtain and evaluate audit evidence, such as analytical review, sampling, etc

Teaching Information

Lectures plus small-group tutorials.

Assessment Information

Jan in-class test 10%; June exam 90%

Reading and References

Alexander, Britton and Jorissen International Financial Reporting and Analysis

Iain Gray and Stuart Manson The Audit Process