IBA - KARACHI ACCOUNTING FOR DECISION MAKING - COURSE OUTLINE MBA-I FALL SEMESTER-2010 Instructor: R.

Kavasji Session 1 Topic Introduction---Classroom attendance and disciplinary norms; Course Over-view; Corporate Objectives----Maximizing Value Creation for Shareholders. Responsibilities of CEOs and CFOs; Principal Managerial Activities underlying the Value Creation Process; developing a Conceptual Frame-work. Widening role of Accounting for Business Decision Making; Need for and importance of the Generally Accepted Accounting Principles (GAAP) and International Accounting Standards (IAS); brief introduction to International Accounting Standards Board (IASB), FASB & ICAP. Chap/Assign

3-4

Cost Behavior Developing deeper conceptual understanding of the terms Cost, Expense and Asset; nature and characteristics of Costs; their classification and behavior; Cost Drivers and Activity Pools. Financial Statements ----- In-depth Review with particular emphasis on: provisions contingent liabilities; extra-ordinary items; off-balance sheet financing; nature of different reserves; and cash flows.

A closer look at the nature of Revenue, its measurement and recognition criteria for various transactions as per guidelines laid down in IAS-18. Cost-Volume-Profit (CVP) Analysis: Contribution and safely margins; cost volume - profit analysis for evaluating the impact of changes in selling price, sales volume, sales mix (single and multiple products) and costs; operating leverage and its interpretation.

7-9

10-11

Tactical Decision Making; relevant and marginal costs and their application in accept or reject a special order; add or drop a product or service; out-sourcing of product and services; sell or process further decisions; product mix decision with constraint resources. Long-term Investment / Capital Budgeting Decisions: capital projects--importance and different evaluation methods; mutually exclusive projects with multiple roots; ranking of projects with different capital outlays and under capital rationing.

12-13

14

Scenario and sensitivity analysis; effects of inflation and capital budgeting; projected cash flow estimates; tax consideration. Transfer Pricing Decision The intra-company transfer pricing; different methods and practices for computing transfer price; dual transfer pricing; OECD guidelines for transfer pricing

15-16

IBA - KARACHI ACCOUNTING FOR DECISION MAKING - COURSE OUTLINE MBA-I FALL SEMESTER-2010 Instructor: R. Kavasji 17 Financial Control through Standard Costing Establishing standards for material, labor and manufacturing overhead costs; determining and analyzing the direct material and labor price, quantity / efficiency, mix and yield variances. Financial Control through Flexible Budgeting; determining and evaluating spending efficiency and idle capacity variances. Evaluating the Cash-generating- Ability and Financial Flexibility of a firm through interpretation of the Statement of Cash Flow (SCF); preparation of SCF and the requirements of IAS-7.

18

19-20

21

Internal Control and Internal Auditing - Importance of Internal Control in organizations. Control techniques and the role of the Internal Auditor Performance Evaluation-I- Financial Measure using Return on Investment (ROI); relationship of factors influencing ROI Illustrated; limitations of ROI. Performance Evaluation-II- Other Alternative Financial Performance Measures using Residual Income (RI) and Economic Value Added (EVA) approaches; historical perspective and associated problems. Measuring Total Business Unit Performance using the Balanced Score-card approach highlighting the performance of critical value creation activities performed by skilled and motivated employees.

22-23

24

25-26

27

Accounting for Foreign Operations. Accounting Decisions; Corporate Compliance and Ethics; key issues in corporate compliance. Transformation from GAAP to IAS and IFRS Course Review.

28

Reference Books: Managerial Accounting by Ronald W. Hilton - Sixth Edition Assigned Handouts / Class Presentations Recommended Books: Managerial Accounting Second Edition by John G. Helmkamp International Financial Reporting Standards (IFRSs) including International Accounting Standards (IASs) and Interpretations as at 31st March 2005. Advanced Managerial Accounting Third Edition by Robert S. Kaplan and Anthony A. Atkinson Grading Plan: Quizzes, Class Participation (inc Cases) & Assignments Mid Term Exam Final Exam Total Note: CP = Class Participation 30% 30% 40% 100%

IBA - KARACHI ACCOUNTING FOR DECISION MAKING - COURSE OUTLINE MBA Faculty Abdul Rahim Suriya FCA,FCMA uriya Session 1 Topic Introduction---Classroom attendance and disciplinary norms; Course Over-view; Corporate Objectives----Maximizing Value Creation for Shareholders. Responsibilities of CEOs and CFOs; Principal Managerial Activities underlying the Value Creation Process; developing a Conceptual Frame-work. Widening role of Accounting for Business Decision Making; Need for and importance of the Generally Accepted Accounting Principles (GAAP) and International Accounting Standards (IAS); brief introduction to International Accounting Standards Board (IASB), FASB & ICAP. Chap/Assign

handouts

3-4

Cost Behavior Developing deeper conceptual understanding of the terms Cost, Expense and Asset; nature and characteristics of Costs; their classification and behavior; Cost Drivers and Activity Pools. Financial Statements ----- In-depth Review with particular emphasis on: provisions contingent liabilities; extra-ordinary items; off-balance sheet financing; nature of different reserves; and cash flows.

Chapter 2, 5 & 7 - (Due on session 4 - Problems 2-37 & 243)

A closer look at the nature of Revenue, its measurement and recognition criteria for various transactions as per guidelines laid down in IAS-18. Cost-Volume-Profit (CVP) Analysis: Contribution and safely Chapter 8 & (Due on session 9 margins; cost volume - profit analysis for evaluating the impact of Problems 8-35 & 8-35 & Case: changes in selling price, sales volume, sales mix (single and multiple the Dublin Shirt Company products) and costs; operating leverage and its interpretation. CP1) Tactical Decision Making; relevant and marginal costs and their application in accept or reject a special order; add or drop a product or service; out-sourcing of product and services; sell or process further decisions; product mix decision with constraint resources.

7-9

10-13

Book on Business decision Making

14

Long-term Investment / Capital Budgeting Decisions: capital projects--importance and different evaluation methods; mutually exclusive Chapter 16, (Due on session 13 projects with multiple roots; ranking of projects with different capital Problems 16-40 & 16-44) outlays and under capital rationing.

15

Scenario and sensitivity analysis; effects of inflation and capital budgeting; projected cash flow estimates; tax consideration. Transfer Pricing Decision The intra-company transfer pricing; different methods and practices for computing transfer price; dual transfer pricing; OECD guidelines for transfer pricing Chapter 13 (Due on Session 16 Problem 13-46)

16

IBA - KARACHI ACCOUNTING FOR DECISION MAKING - COURSE OUTLINE MBA Faculty Abdul Rahim Suriya FCA,FCMA 17 uriya Financial Control through Standard Costing Establishing standards for material, labor and manufacturing overhead costs; determining and analyzing the direct material and labor price, quantity / efficiency, mix and yield variances. Financial Control through Flexible Budgeting; determining and evaluating spending efficiency and idle capacity variances.

Chapter 10, (Due on Session 18 Problems 10-43 & 10-44)

18

Chapter 11, (Due on Session 19 Problem 11-38)

19-20

Evaluating the Cash-generating- Ability and Financial Flexibility of a firm through interpretation of the Statement of Cash Flow (SCF); (Due on Session 20 - Exercise preparation of SCF and the requirements of IAS-7. I)

21

Internal Control and Internal Auditing - Importance of Internal Control in organizations. Control techniques and the role of the Internal Auditor Performance Evaluation-I- Financial Measure using Return on Investment (ROI); relationship of factors influencing ROI Illustrated; limitations of ROI.

CP2

22-23

(Due on Session 23 - Case: University Bottom Line, University of Cape Town - CP3)

24

Performance Evaluation-II- Other Alternative Financial Performance Measures using Residual Income (RI) and Economic Value Added (EVA) approaches; historical perspective and associated problems. Measuring Total Business Unit Performance using the Balanced Score-card approach highlighting the performance of critical value creation activities performed by skilled and motivated employees.

CP4

25-26

Chapter 10 & (Due on Session 26 - Case: The Balanced Scorecard at Cola - CP5)

27

Accounting for Foreign Operations. Accounting Decisions; Corporate Compliance and Ethics; key issues in corporate compliance. Transformation from GAAP to IAS and IFRS Course Review.

28

Reference Books: Managerial Accounting by Ronald W. Hilton - Sixth Edition Assigned Handouts / Class Presentations Recommended Books: Managerial Accounting Second Edition by John G. Helmkamp International Financial Reporting Standards (IFRSs) including International Accounting Standards (IASs) and Interpretations . Business Decision Making by Abdul Rahim Suriya Grading Plan: Quizzes, Class Participation , Case Studies & Assignments Mid Term Exam Final Exam Total 30% 30% 40% 100%