The course Financial Accounting and Reporting (FAR) aims to contribute to the understanding of how financial reporting information should help to discipline managers to act in the interests of the capital providers and other stakeholders. From an agency perspective, the separation of ownership and control involves inherent conflicts of adverse selection and moral hazard problems. The information in corporate financial reports should help to reduce information asymmetry by providing information that is useful for investors and other stakeholder in making resource allocation decisions and/or assessing management stewardship. However, managers may behave opportunistically. They may distort the information disclosed the in financial reports in a way that is less useful for predicting future earnings and cash flows, or even stronger, manage the information to mislead capital providers and other stakeholders.

 

FAR provides students with theoretical foundations enabling them to critically assess how and to what extent financial statements may help to reduce adverse selection and moral hazard problems. In addition, students will develop a solid background knowledge for further professional application of accounting principles in various national and international contexts. For this reason, FAR provides an overview of accounting principles and accounting methods allowed under different global and local financial reporting standards. In addition, FAR provides insight into the impact that accounting choices might have on companies and investors' decision making and control. To train student's professional skills as preparers and informed users of financial reports, students have to practice questions, exercises and problems. A selection of these questions, exercises and problems, including the preparation of financial statements, will be discussed in the lectures.