Accounting for Decision Making For: IBA Academic Committee By: Rustom Kavasji Chairman, Accounting & Law, IBA, Karachi.

Accounting for Decision

Making

For: IBA Academic Committee

By: Rustom KavasjiChairman, Accounting & Law, IBA, Karachi

Course ObjectivesTo provide an senior executive perspective of advanced financial and management accounting

To learn techniques for analysis of financial information and improved decision making and value creation and measurement.

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Grading

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• Class Participation / Assignments (30%)– Qualitative– Interactive

• Two written Case Analysis / Reports (20%)

• Home Assignments (10%)

• Mid Term (20%)– Combination of case analysis and short questions

• Final Exam (20%)– Combination of case analysis and short questions– Comprehensive

Course Outline & Calendar

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Session Detail1 Introduction

2 Understanding Costs, Expenses, & Financial Management

3 Understanding Financial Statements and Role of Revenue

4 Cost - Volume - Profit Analysis

5 Tactical Decision Making & Relevant Costing

6 - 7 Capital Budgeting – I & II

8 Transfer Pricing & Responsibility Accounting

9 Fiscal Planning, Budgeting, Control & Variance Analysis

10 Internal Control & Internal Auditing

11 Performance Measures & The Balanced Scorecard

12 Accounting Conventions regarding IAS, IFRS, GAAP, and Compliance

13 Activity Based Costing

14 Service Department Cost Allocations

15 - 28 Cases

Ammar Textiles

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The Transfer Pricing Problem

Highlights transfer pricing as a key factor in competitiveness of textile exports and why calculation and determination of an accurate transfer price between the Pakistani manufacturing operation and Muscat is critical for Ammar’s successful entry into new markets

Zulsham Engineering

6

Cost Volume Profit Analysis

Shows the usefulness of CVP as a [planning and decision making tool for Zulsham and an illustration of the nature of costs in the real world. Highlights key issues in CVP’s link to product pricing.

Dell Computers

7

Working Capital Management

Shows the effectiveness of good working capital and cash management in organizational growth. The case highlights good operational WC management as key in Dell’s success while also indicating some pitfalls along the way.

The Dublin Shirt Company

8

Cost Allocations and Pricing

An excellent case study that illustrates the peril of poor management due to incorrect cost allocations and hidden costs, buried within lumped cost structures, in turn leading to poor product pricing and ineffective customer profitability analysis.

The IBETO Group

9

Accounting & ERP Systems

Illustrates the necessity for ERP and builds a case for an E-Enterprise. Shows the transformation of a conglomerate’s redundant information systems to the adoption of a state-of-the-art ERP system and the issues and challenges along the way in selection of a system.

The Chase Manhattan Bank

10

Accounting & Compliance

Illustrates the real world, real life challenges that face a team of banking executives as they are confronted between trade-offs and hard choices between sustaining profitability and remaining compliant with statutes and directives issued by the State Bank of Pakistan.

Kincaid Manufacturing

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Supply Chain Cost Management

Illustrates critical issues that inflate costs due to weakness and inefficiencies within the supply chain function of Kincaid and highlights the critical importance of the procurement function in good supply chain management.

Analysis of Financial

Statements

For: IBA Academic Committee

By: Rustom KavasjiChairman, Accounting & Law, IBA, Karachi

Course ObjectivesTo provide an overview of accounting and understanding of accounting flow for non accountants.

To enhance reading ability and understanding of financial information.

To learn techniques for analysis of financial statements for purposes of determining and selecting superior investment opportunities among large public sector corporations.

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Course Content

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Overview of Financial Statement Analysis  Review and understanding of Financial Statements  Objectives of Financial Statement Analysis

Sources of Financial Information  Sources of Financial Statements; Role of IFRS & GAAP  Detailed class practice of financial statement preparation  Challenges in Interpreting financial statements  Assessing quality of Financial Statements, Red Flags & Warnings

Annual Report Analysis  What are Annual Reports  Annual Report diagnosis; Regulatory framework; Chairman’s reviewAuditor Report, Director’s report, Measurement, Notes to Accounts

Income Statement Analysis  IS - Revenue recognition, income taxes, deferred taxes,   IS - Extraordinary items, effect of change in accounting principles

Course Content (Continued)

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Balance Sheet Analysis

  BS - Consolidated statements, Reserves, commitments

  BS - Contingencies, Changes in equity

Statement of Cash Flows

  SCF - Review of Cash Flows and importance of Cash Flows

  SCF - Detailed Analysis of Statement of Cash Flows

Analysis of Liquidity, Solvency, Profitability & Growth

  Liquidity, Profitability, Solvency & Growth

  Investor, Institutional Investors & Government

Presentations and Analysis of Financial Statements   Student presentations of financial statements of Pakistani Corporations

Grading

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• Class Participation / Assignments (30%)– Qualitative– Interactive

• Term Project (30%)– Class Presentation (15%)– Written Term Report (15%)

• Mid Term (15%)– Combination of case analysis and short questions

• Final Exam (25%)– Combination of case analysis and short questions– Comprehensive

Class Participation & Term Project

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The Presenter / Group Class

Investors

Or

Clients

Class Participation & Term Project

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1. Select Annual Report of any public (i.e. shares traded on KSE) company during FY’s 2010 – 2011

2. Prepare a detailed analysis of the company for presentation in class. You must pick a company that you would invest in and prepare an overall analysis of why you would invest in that corporation for a minimum of 3 – 5 years.

3. Multidimensional Analysis• Industry Analysis• Potential for future growth and success• Liquidity• Risk & Reward• Competitor Analysis

4. If possible interview top management or executives of that corporation (optional but likely to enhance your score)

5. Present & defend conclusions in class + written term report

CLASS

PARTICIPATION

Attack Them!

INVESTORS

Class Participation & Term Project

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All written submissions relating to term project must be printed not hand written