Management Accounting and Analysis D, 15 Credits

Contents

This course provides an advanced overview of different issues related to management accounting and managerial control systems as well as financial accounting.

Module 1. Advanced financial statement analysis and valuation, 7,5 ECTS
Module 2. Advanced management accounting, 7,5 ECTS

Module 1.   Advanced financial statement analysis and valuation, 7.5 ECTS
This module is relevant for students who are contemplating careers in accounting, auditing, corporate finance, investment banking, security analysis, equity research, and financial consulting. It should also be of great interest and benefit to anyone considering the purchase or sale of a business. It deals with the analysis of financial statement information and the use of this information for business strategy analysis, performance evaluations and investment decisions. The module integrates accounting, finance, economic theory, and empirical research into a financial statement analysis and valuation framework. The primary purpose in presenting the module is to provide students with relevant theories, methods, and models for valuing companies and their securities, primarily equity (common stock). A spreadsheet program is used throughout the module as a practical tool for conducting financial statement analysis and valuation, including the creation of forecasted income statements and balance sheets (pro-formas). A brief summary of topics includes: models of shareholder value and a comparison of accounting and discounted cash flow approaches to valuation; analysis of the firm’s profitability, growth, and value generation; forecasting of earnings and cash flows and pro forma analyses; and analysis of price-earnings and price-to-book ratios.

In addition, students are introduced to what good scientific practice means, how students and instructors can create and maintain a constructive learning environment while preventing misconduct and fraudulent behavior such as plagiarism. Students are, therefore, required to carefully study the guide of ethical and professional behavior, which is aligned with the rules and regulations of Umeå University. Since knowledge of these rules and regulations are fundamental for coming courses and thesis writing this module includes a web-based test to ensure that students understand how to follow these guidelines in practice.

Expected learning outcomes (ELO)
After completing this module, the student should be able to:

• value the equity, operations and debt of companies using different valuation approaches/models and financial statement information
• analyze and reformulate financial statements to uncover a firm´s business strategy and value drivers so as to facilitate analysis, forecasting and valuation
• analyze value drivers and financial measures, e.g., profitability, growth, P/B and P/E ratios, and their relations to value
• forecast relevant value drivers and other quantities needed for valuation including the development of pro-forma financial statements
• explain the relations between accounting standards, e.g. IFRS and US GAAP, accounting methods, accounting quality and value
• describe and apply ethical/professional learning and research conduct

Generic ELO:

• work efficiently in teams in which the members may differ as regards field of specialization, gender, nationality and cultural background
• conduct, write, present and critically review an equity research project
• use a spreadsheet program as a tool in financial statement analysis and valuation
• take responsibility for own work in a professional and ethical way

Focus of instruction
The core topics of this module are covered by lectures, seminars, research articles (max 40 pages), cases, projects and computer exercises utilizing a spreadsheet program. Students are expected to take an active part in every aspect of the module.

Examination modes
Examination is based upon a written comprehensive individual exam and on successful completion of a project. Furthermore, each and every student has to pass the web-based test on ethical behavior and professional conduct. A passing grade is required for each part of the module.

Module 2.   Advanced management accounting, 7.5 ECTS
According to the Institute of Management Accountants, management accounting is the internal business-building role of accounting and finance professionals, who design, implement, manage, and report on internal accounting systems that support effective decision support, planning, and control over the organization’s value-creating operations. Management accounting and finance professionals directly support an organization’s strategic goals. Management accounting is about creating value, not just measuring it.

Management accountants are strategic financial management professionals who integrate accounting expertise with advanced management skills to drive business performance inside organizations. They serve as trusted partners to executives in all areas of an organization, offering the expertise and analysis necessary for sound business decisions, planning, and support. Management accountants monitor, interpret, and communicate operating results, evaluate performance, control operations, and make decisions about the strategic direction of the organization. They understand the business formula for delivering value to the customer, arriving at strategies for identifying, developing, marketing, and evaluating a product or service throughout its entire life cycle.

This advanced management accounting course module builds on previous training in accounting from a value-based management perspective. The focus of contemporary management accounting is on the enhancement of shareholder value through customer-driven value creation.

Students’ knowledge, insights, and analytical skills related to the way corporate managers design, and utilize planning and management control systems to implement strategies will be enhanced in this module. Techniques of the management control processes are studied and behavioral considerations involved in the use of these techniques are discussed. The student should also become aware of the varied and changing roles of the controller function and the management accountant.

Expected learning outcomes:
After completing this module, the student should have:
Knowledge and understanding to

• describe the roles management accounting systems have in organizations;
• assess the consequences of management accounting system changes;
• have an ability to work with the theoretical and research based knowledge in the area of management accounting;
• make the best use of their knowledge of primary contemporary management accounting techniques
• be well prepared for the varied and changing roles of the controller function.

Professional Skills to

• assess the role of information relating to the controller function in an organisation;
• communicate, negotiate and report financial and non-financial information within a management team;
• be able to act as a catalyst, facilitator and management accounting change agent in organisations.
• produce detailed and coherent reports (both written and spoken) in matters related to management accounting

Focus of instruction
The developments of the management accounting subject, techniques and concepts are presented during lectures. Students will become familiar with quantitative issues through numerical examples, exercises and cases. They are expected to take an active part in discussions on the development of the field, literature and article seminars and reporting about case studies. They will be given a number of assignments, leading to continuous assessment. Course work will be done individually and in small groups. Course work must reach an advanced level of knowledge and understanding of the subject.

Readings
Requiring reading for the module includes cases, chapters, and articles contained in the assigned textbooks and supplementary materials. The lectures in the course module will be used to cover both conceptual and computational aspects of management accounting measurement topics. Class sessions will be organized around cases and team activities–debates and panel discussions. Written work will take the form of homework assignments and written case analyses.

Class participation
This class depends on a student’s own participation. At this point of the Master’s curriculum, a substantial part of learning comes from other students. It is important and essential for this course module that each student brings in their own experience and expertise. In addition to attending class (which is required), students should be prepared to comment on assigned cases or articles and to discuss the analysis presented in class. Part of the excitement and the benefit derived from this module is due to the diversity of experience of the participants of this class.

Examination modes
Examination is based upon a written comprehensive individual exam and group assignments. A passing grade is required for each part of the module.

Expected learning outcomes

See respective module.

Required Knowledge

University: Courses in Business Administration (75 ECTS) At Basic level (A-level) and Intermediate level (B-level) a minimum of 60 ECTS in Management, Marketing, Accounting and Finance courses. At least 15 ECTS Accounting (financial accounting, financial statement analysis or management accounting) as well as 7.5 ECTS in Finance. At the C-level (Bachelor), a minimum 15 ECTS. Language: Proficiency in English equivalent to Swedish upper secondary course English B (IELTS (Academic) with a minimum overall score of 6.5 and no individual score below 5.5. TOEFL PBT (Paper-based Test) with a minimum score of 575 and a minimum TWE score of 4.5). TOEFL iBT (Internet-based Test) with a minimum score of 90 and a minimum score of 20 on the Writing Section).

Form of instruction

See respective module.

Examination modes

Examination will be based upon the student’s active participation in seminars, a written comprehensive examination (tentamen), and successful completion of group or individual coursework as assigned.

The following grading system will be used:
Pass with distinction (Väl godkänd, Vg, 75% or more),
Pass (Godkänd, G, 50% or more)
Fail (Underkänd, U, less than 50%).

To receive the grade Pass with distinction in the course, the student must have achieved at least 75% of the total of points in the separate modules or the equivalent

Students who fail to present a photo ID at the occasion of a written examination cannot have their results registered.

In case of failure on seminar participation or individual and group assignments, compensating assignments must be completed in accordance with instructions given, no later than two weeks after the completion of the module.

Students who do not pass at the time of the normal written examination will be offered an opportunity to sit a further examination within a month. Beyond that, additional examination opportunities normally arise every academic year, one week prior to the start of the autumn term.

When a student has failed an examination on two occasions, he or she has a right to have another grading teacher. A written request for an alternative examiner should be handed to the director of studies no later than two weeks before the next examination opportunity.

Rules and regulations concerning the production of academic texts and correct referencing will be applicable to all written assignments. (see instructions in the Thesis manual. Thesis writing in Business Administration.)

Lectures are normally not obligatory. However attendance is expected because the lectures are designed to facilitate students towards achieving course specific learning objectives. In addition lectures often provide insightful explanations of, and can supplement and provide contrast to, the course litterateur and other relevant course materials.

Student who has passed an examination can not redo the examination to get a higher grading.

Grades on the course are awarded when students have passed all examinations and compulsory course elements.

Academic credit transfer
Academic credit transfers are according to the University credit transfer regulations.

Other regulations

This is a course at the D-level in an MSc-degree at Umeå University. The course can also be included in study programs in Business Administration and Economics at Umeå School of Business and Economics.