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2016-17
TERM: VI
TITLE OF THE COURSE: CREATIVE ACCOUNTING PRACTICES
CREDITS: 2
Instructor:
Prof. Mehul Raithatha
Tel. No.
588
No. of Sections: 2
Faculty Block and Room No.
A-112
COURSE DESCRIPTION
Financial statements are widely used to evaluate a firms past performance and
future prospects. The accuracy and reliability of the financial statements are crucial
for the stakeholders of the firms in order to make financial decisions.
The course aims at analysing the off balance sheet transactions used by the firm in
real world scenario. Several firms are found to have used manipulative accounting
practices by using creative ways to report the financial numbers. The course also
analyses such real life cases along with the accounting frauds like Enron, Satyam etc.
COURSE OBJECTIVES
To focus on off balance sheet financing transactions and its impact on financial
statements
To discuss real life cases of Creative Accounting behavior of the firms
resulting into manipulative accounting
To analyze cases of accounting frauds resulting from fraudulent and
manipulative financial statements and its after effects
PEDAGOGY/TEACHING METHOD:
Case study, class discussion
EVALUATION
Assignment
Class Participation
End Term Exam
Total
WEIGHTAGE
40%
10%
50%
100%
SCHEDULE OF SESSIONS
MODULE I
INTRODUCTION TO CREATIVE ACCOUNTING
Module Objective: The modules aims at discussing instances of creative accounting. It
gives insights about how several firm uses accounting policies to their advantage and
how does it affect the reporting quality.
Sessions and Objective
Session 1: Creative accounting An Introduction
Objective: This session introduces to the concepts and simple instances of creative
accounting techniques.
Reading: Bertini and Tavassoli (2015) Can One Business Unit Have Two Revenue
Models? (Harvard Business Review, March 2015)
Class discussion: David Hawkins (2012). Assessing Accounting Risk, HBS No. 9 -105-054.
Harvard Business School Publishing
Session 2: Accounting policy choice: A strategic opportunity?
Objective: In this session, there will be discussion on several accounting policies and
principles. How do firm resort to window dressing is the key area of focus.
Reading: Bruns (1993) Diversity in Accounting Principles: A Problem, a strategic
imperative or a strategic opportunity?, 9-193-045. Harvard Business School Publishing
Cases:
1.
Srinivasan and Cornell (2013) First Solar: CFRA's Accounting Quality Concerns,
HBS 9-113-044. Harvard Business School Publishing
2.
Srinivasan Padmini (2010) Now You See It, Now You Do Not: The Case Of Jet
Airways And Its Accounting Policies (IMB 331) , Indian Institute of ManagementBangalore
Session 3: Creative income statements and revenue recognition
Objective: This session aims at discussing income statement based manipulation and
creativity.
Readings:
1.
Winkler Rolfe (2015) Star of Startup.com Charged With Accounting Fraud,
Wall Street Journal
2.
Hagopian Kip (2006) Point of View: EXPENSING EMPLOYEE STOCK OPTIONS IS
IMPROPER ACCOUNTING, California Management Review, 48(4).
Case: Tayan and McNicholas (2007). Haliburton Company: Accounting for Cost
Overruns and Recoveries, Stanford Case A 187.