Accounting and Accountability

Full course description

This course will provide an introduction to the field of accounting. Accounting is usually seen as the process of identifying, measuring and communicating (financial) information about a company to interested users, allowing them to make decisions based on this information. These users can be internal to a company (managers, employees) or external to the company (shareholders, banks, investors).

By providing financial information to external users, these users can make decisions regarding the firm. These decisions include whether or not to invest in the firm or lend money to it. This information also allows investors to predict the future of the company and to value it. In short, this information thus allows capital markets to function and provide a healthy economic environment for investment.

The communication of financial information to interested users is guided by accounting standards. These standards dictate how financial information should be recorded, and how it should be presented and communicated to interested parties. This course will follow the International Financial Reporting Standards as the framework for recording and communicating financial information. 

Even though these accounting standards exist, managers still have room to present information in a certain way as they have an information advantage compared to the external users. They might use this advantage to hide certain information or to paint a better financial picture of the firm. This will of course have a severe negative effect on the functioning of capital markets. In this course we, therefore, also discuss the fields of corporate governance and auditing. Corporate governance and auditing put regulations and systems in place, that aim to prevent the management from creating bias in the financial statements or try to detect (intentional or unintentional) misstatement.

Because of the importance of accounting in the functioning of economic markets, getting an introduction to this field carries importance for almost all students. Whether small or large, all businesses will have to communicate some information to interested external users. All businesses will also put systems in place to provide assurance that this information is correct. Therefore, whether you pursue a career within business or economics, or want to start a company for yourself, knowledge of the field of accounting will be useful in the future.