GROUP FINANCIAL STATEMENTS
Code : CA02-A7 - 30 h/5 ECTS
Terms 1, 2 &
Summer Term
Paris, London
Madrid Campus
@p Professor: Pascale DELVAILLE, delvaille@escpeurope.eu -

Prerequisite:

This advanced financial accounting course, follows-on from the "Financial Accounting-Basic Principles" course given in the first semester. As for the Basic Principles course, this course is open to students who wish to study the subject in the English language. It is a compulsory elective of the major “Financial Reporting and Audit”. It is useful for those who wish to prepare for the CFA exams, especially the “Financial Statement Analysis” area.


LEARNING OBJECTIVES

The course is designed primarily to expand on the subjects studied in the Basic Principles course, in particular:

- The concepts of group accounts and the techniques of consolidations.

- The analysis of financial statements and the concepts of cash-flows.

- The interpretation of financial information published by groups (accounting policies, notes to the financial statements, disclosures, etc.).

- Corporate Governance Issues.


LEARNING OUTCOMES

1. An Introduction to Group Accounting: Principles and Concepts

- Definitions of a "Group"

- Notions of "Control" and "Financial Interest"

- Valuation rules and methods

2. Consolidated Accounting: Applications and Techniques

- Accounting for Acquisitions

- Different "ownership" and "control" factors

- Intra-group transactions

3. Preparation of Consolidated Financial Statements

- Working Paper Techniques

- Adjustments and eliminations of intra-group transactions

- Transition from Legal Entities' Accounts to combined, consolidated accounts

4. The Acquisition of a Subsidiary: notion of cost of investment, "fair value" and purchase price

- Goodwill

- Treatment of goodwill in the accounts

- Comparison of different methods

5. Accounting for the Income Tax of a Corporation

- Profits determined on basis of accounting rules

- Profits determined on basis of tax rules

- Reconciling the differences by Deferred Taxation Techniques

6. Financial Information published by Groups

- Quality of earnings - analysing a Corporate Income Statement

- Analysing Stockholders' Equity

- Interpreting the notes to the Financial Statements and Accounting Policies applied

7. Preparing and Using the Statement of Cash-Flows

- Basic Concepts - Contents and Format

- Preparing the Statements using the "Direct" and "Indirect" Methods

8. Financial Statements Analysis for Decision Making

- Using Ratios to make business decisions

- Different Methods of Analysis

9. Reporting a Group's Financial Position: Additional Issues

- Accounting Policies

- Segments of Business analysis

- Management's responsibility for the Financial Statements

- Corporate Governance Issues

10. Conclusions and Summary - Final exam

- Questions and discussion on topics covered

- Exam 1 h 30