© 2000 John Petroff
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© 2000 John Petroff |
Assignments, Cases & Exercises
Research assignments:
R-6.1 Research the movement toward harmonization of accounting. Look into UN, OECD and EC pronouncements. Study the charter of IASC. Trace the work of IASC since its formation.
R-6.2 Determine the purpose, organization
and activity of the Security and Exchange Commission of the United
States. Read articles that discuss its role and contribution to
improvements in capital markets from its corporate information
disclosure requirements.
Summarize your findings
R-6.3 Research and report on how the nature and thrust of SEC corporate information disclosure requirements differ from those of accounting standards pronouncements of FASB or AICPA. Give examples.
R-6.4 Identify the purpose, tools and manner of evolution of management accounting, and contrast these with financial accounting. Do the same for tax accounting.
R-6.5 Find articles that discuss how accounting objectives, conventions and principles should be formulated. Specifically, determine why the responsibility for this process has changed hands over the years, ending currently with the FASB in the United States.
R-6.6 If a research library is accessible to you, obtain the annual reports of a corporation for the past fifty years. Study very carefully the content of the annual reports every tenth year, in terms of type of statements, number of years presented, extent of notes and additional written material. Observe the balance between promotional writing and financial information. Report on your findings and comment whether the evolution of annual report presentation is useful to investors and other users.
R-6.7 Compare the Statement of Cash Flows as it is prepared today with the Sources and Uses of Funds Statement appearing in annual reports in the past. Find the motivation for the change in articles and pronouncements. Report on the merits of the change and comment on the process of financial reporting change.
R-6.8 Choose randomly 100 annual reports in your library (or on the web), and read the auditors' opinions they contain. Compile a list of what the opinions contain in terms of 1) scope of work, 2) wording of opinion, 3) qualification (if any), and 4) other statements (if any). Report your findings and elaborate on all qualifications and other statements.
R-6.9 Locate a few rate annual reports that contain pro forma statements for the coming year (such as those of large conglomerates). Report on how the data is presented and what explanations accompany it. Evaluate the import of the data by checking if the numbers are not simple linear extrapolations of prior year statistics.
R-6.10 Read the Private Securities Litigation Reform Act of 1995. Discuss what inspired it. Give examples of how it impacts the writings present in annual reports. Comment on whether casual observation of statements made by management suggest the Act opened the door to more self serving positioning rather than truly useful financial projections.
R-6.12 Choose 60 annual reports randomly in a research library or on the web. Tabulate the number of annual reports which give sufficiently detailed financial statements, those that present excessive details that appear confusing, and those whose numbers are so few that it is not possible to know what took place. Report the results and cite extreme examples.
R-6.13 Choose 60 annual reports randomly in a research library or on the web. Tabulate how many annual reports give details about product line and location of operations and those that don't.
R-6.14 Choose 60 annual reports randomly in a research library or on the web. Tabulate how many companies are likely to have major undertakings (e.g. advertising campaign, construction of plant or major research effort) that overlap accounting periods, and those that do not.
R-6.15 Choose 60 annual reports
randomly in a research library or on the web. Tabulate
how many have useful information about seasonality of revenues
or expenses, those that indicate that their revenues and expenses
are not affected by seasonal factors, and those that do not offer
any such information.
R-6.16 Choose 60 annual reports randomly in a research library or on the web. Tabulate how many have long lived assets that have such long lives that the historical cost reported on the balance sheet is likely to be grossly understate in comparison to replacement cost, and those that do not.
R-6.17 Choose 60 annual reports randomly in a research library or on the web. Tabulate how many discuss the value of the internally generate goodwill and inventions, as well as the adequacy of their insurance coverage, and those that do not.
R-6.18 Choose 60 annual reports randomly in a research library or on the web. Tabulate how many give the number of employees they have and discuss employee welfare, benefits and motivation, and those that do not.
R-6.19 Read a few (e.g. four) accounting principles issued by IASC and compare equivalent pronouncement of FASB. Discuss the apparent commonality or divergence of views and suggest how difficult it will be to reconcile the view points.
R-6.20 Research in articles and textbooks what are the major discrepancies between GAAP and International accounting. Report on the efforts undertaken to eliminate the discrepancies.
Cases:
Study the financial statements of Bell Canada Enterprises in 1997 and 1998 accompanying Case - BCE. Observe and comment on the difficulty of making a comparison of performance in the two years. Obtain additional data from the notes to the financial statements available in SEC form 10-K filings. Reconstruct financial statements that are comparable in a spreadsheet showing the original numbers, the adjustments and the final figures.
Obtain Bell Canada Enterprises annual report with the notes to financial statements at its web site listed in Case - BCE. Study the presentation of the income statement prepared under US GAAP, as opposed to the income statement given in the financial statements prepared under Canadian General Accounting rules. Identify some of the apparent differences between US and Canadian accounting. Assess whether the differences are substantial.
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