Accounting and Accountability

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Accounting is usually studied from a financial point of view. This conventional view sees accounting as identifying, measuring and communicating financial information to enable informed judgments and decisions by the users of information. From this financial perspective, accounting is mainly split into two complementary fields: financial accounting and management accounting. In financial accounting the external use of accounting information is discussed. The most important outcome of the financial reporting process is the annual report, containing the firm’s financial statements. During the course students will learn essential bookkeeping techniques, that is, how to make the necessary journal entries and prepare basic financial statements. Furthermore, the underlying principles of financial accounting rules will be studied. In discussing the subject of management accounting, which has an internal focus (aimed at managers), the course will concentrate on the value of management accounting information for the internal decision-making process. In general, the purpose of management accounting is to facilitate (e.g., cost calculations) and influence decision-making (e.g., performance evaluation). This course is however not bound by this (narrow) financial framework. It acknowledges that accounting is gradually evolving from an entirely financially oriented discipline to one that also studies non-financial information, including contemporary concepts such as corporate governance and corporate social responsibility. As such, it discusses accounting within a broader framework, extending the notion of accounting to a societal phenomenon. In this respect we will also discuss the role accounting has possibly played in the recent financial crisis. A topic of special importance in accounting and accountability nowadays is corporate governance. In essence, corporate governance deals with the relationships between a company’s management, its board of directors, shareholders and other stakeholders. Specifically, the course will discuss some major important accounting scandals (Enron, WorldCom) and the role corporate governance played in these scandals.