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Strategies for Teaching the Accounting Theory Course: Curriculum, Pedagogy and Resources Carla Carnaghan - University of Lethbridge James Dodd – Drake.

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Presentation on theme: "Strategies for Teaching the Accounting Theory Course: Curriculum, Pedagogy and Resources Carla Carnaghan - University of Lethbridge James Dodd – Drake."— Presentation transcript:

1 Strategies for Teaching the Accounting Theory Course: Curriculum, Pedagogy and Resources Carla Carnaghan - University of Lethbridge James Dodd – Drake University Irene Gordon - Simon Fraser University David Gilbertson - Western Washington University

2 Strategies for Teaching the Accounting Theory Course Topics to be discussed: What do we mean by an accounting theory course? Why we think a theory course is important Roles for the accounting theory course in the curriculum Considerations in designing the course content Pedagogical techniques and resources Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. August 4, 2010

3 What Do We Mean by An Accounting Theory Course? Not a lot of literature on such courses (James Martin, MAAW - AECM) Nature of the course is very diverse: CPA Exam Prep Current Topics Financial Economics Conceptual Framework Course Our Focus in Teaching Accounting Theory: To help students better understand why accounting looks like it does, and the challenges of creating accounting standards and information given diverse needs and stakeholders Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

4 Why is a Theory Course Important? Increasing complexity of business transactions More understanding of what accounting is trying to do is important Impossibility of prescriptive rules Trend toward principles-based accounting standards Provides students with a different vision of accounting – Social responsibility – What could be, rather than what is e.g. use of all fair values, replacement cost accounting, different approaches to accounting for intangibles Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

5 Roles for the Accounting Theory Course in the Curriculum: Skills and Knowledge Critical thinking and reasoning – Using evidence; challenging status quo Speaking and writing skills Conceptual knowledge (e.g. fair values, adverse selection) Research skills – Accounting standards – Financial reporting regulations – Practitioner articles and commission reports – Research studies Motivation for standards What to do when there is no clear guidance Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

6 Roles for the Accounting Theory Course: Complementing Other Parts of the Curriculum (1) Review/integrate topics from other accounting courses Conceptual Framework Examples using existing standards Implications of current accounting approaches (e.g. pensions) IFRS Forest rather than Trees (Why, not how) Discuss current business and accounting issues Derivatives and off balance sheet financing Accounting Scandals Management Compensation Fair Values Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

7 Roles for the Accounting Theory Course: Complementing Other Parts of the Curriculum (2) Relating accounting to other disciplines: – Economics (The dark side?) – Psychology – History – Ethics Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

8 Designing the Courses Content: What Do We Want Students to Learn? Critical Thinking Role of Assumptions in Developing Accounting Using Evidence to Develop/Support Positions Writing/Articulating a Coherent Position Learning to Learn Research skills No one right answer? Judgment skills (better answers) Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

9 Designing the Courses Content: What Do We Want Students to Learn? My emphasis is on the development of accounting standards using history as the starting point. The idea is to understand how we got to where we are before starting the trip. I emphasize likely future trends and how the students as professionals can find/support ways to account for economic transactions. The find/support leads to a research orientation to stay abreast of change. I want students to develop empathy for differing positions Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

10 Designing the Courses Content: Foundations Financial economics Critical theory Conceptual framework Psychology Valuation bases (HC vs FV vs RC etc) - R. Jensen, AECM A mix can be helpful to make students think about underlying assumptions History of development of accounting thought can be helpful in explaining particular developments Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

11 Designing the Courses Content: Concepts that Might be Covered EconomicsPsychologyCriticalConceptual Framework Efficient Markets Behavioral Finance EthicsRelevance Information Asymmetry Prospect Theory StakeholdersReliability Agency TheorySatisficing History of Accounting Valuation Bases Earnings Management Attribution Theory Stewardship Standards Setting Decision Usefulness Market Failures Valuation Bases Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

12 Designing the Courses Content: Controversies that Might be Covered TopicEconPsychCriticalFramewk Fair ValuesXXX Intangibles/ Contingencies** XXX Market efficiencyXXXX Management Comp.XXX Earnings Management**XXXX IFRS AdoptionXX Derivatives/ Shadow Economy** XXX Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

13 Pedagogical Techniques and Resources (1): Alternative Delivery Methods In a traditional classroom, a mixture of face-to-face and online – Drake University – University of Iceland Online delivery, 100% – Blackboard Discussion Boards (forums) – Blackboard Quizzes for content facts – VoiceThreads for community building Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

14 Pedagogical Techniques and Resources (2): Assignments and Projects Debates on Controversies (Team) Position Papers - Followup to Debates (Individual) Beginning and ending assignments Group Assignments (in and out of class) Microeconomic experiments (See Book by Bergstrom and Miller - McGraw Hill) Draft Standards projects - analysis (IFRS or FASB) Concept Maps - visual representations of concepts and the relationships among them. (See Simon, J. 2007. Concept Mapping in a Financial Accounting Theory Course. Accounting Education: an International Journal. September. v. 16(3). 273-308) Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

15 Pedagogical Techniques and Resources (3): Assignments and Projects A project comparing U.S. GAAP with IFRS and non- IFRS standards with the goal of developing a best standard by using components from around the world. It requires review of academic and industry literature, databases, and the political processes affecting standards setting. Research papers: Newspaper article about a business and use accounting research to explain the situation Requirement to organize and present seminars – examples from student groups seminars Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

16 Pedagogical Technique Example: Sample Student Group Presentation - Experiment Manager Honest (H)Distort (D) Investor Buy (B)60, 4020, 80 Refuse to Buy (R) 35, 2035, 30 Investor: to buy or not to buy Manager: Honest or Distort Assumptions: One-period game Non-cooperative Rational Individuals

17 Pedagogical Technique Example: Sample Student Group Presentation - Debrief of the Experiment Nash Equilibrium: – Rational investors would not invest – Rational managers would distort information – Suboptimal points for both parties Solutions: Cooperative agreement (auditor) Enron: Unethical managers and auditors – Short-run profit> long-run costs Regulations: Government, courts, standard setters

18 Pedagogical Technique Example: Student Group Presentation Slide

19 Pedagogical Technique Example: Student Group Executive Compensation Activity

20 Pedagogical Technique Example: Student Group Activity Explanation (1) Your group represents one of four groups: 1.CEO/Executive Team 2.Shareholders 3.Compensation Committee A 4.Compensation Committee B For the CEO/Executive and Shareholder Teams, your goal is to persuade the compensation committee to choose a compensation package that is most beneficial to you. For the compensation committees, your goal is to understand the arguments from the two sides and decide a reasonable compensation package. (It does not have to be right in the middle.)

21 Pedagogical Technique Example : Student Group Activity Explanation (2) Two Rounds of Discussion – 1 st Round Compensation Team A and CEO/Executives Compensation Team B and Shareholders – 2 nd Round Compensation Team A and Shareholders Compensation Team B and CEO/Executives

22 Student Group Role Play: Scene One (1) Role play illustrating agency theory – Lilian as Manager – Lindy as Owner

23 Student Group: Scene One (2) – The PERFORMANCE REVIEW

24 Student Group Role Play Setting (3): HUGE LOSS!

25 Student Group slide illustrating how AGENCY THEORY worked in the Role Play Example (4)

26 Pedagogical Techniques and Resources (3): Ways of Increasing Student Motivation/Enrollment Students participate in performance evaluations. Students take turns leading the discussion Students have to write journals on each reading Discuss current issues in relation to course - big picture Link to career functions and cases (Z. Swanson- AECM) The course is a graduate-level course in our Master of Accounting (MAcc) program. I changed the title from Accounting Theory to Emerging Accounting Issues without changing content or structure and enrollments increased. I find that introducing current articles into the discussions tends to make the idea of accounting theory more meaningful. Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

27 Pedagogical Techniques and Res ources (4) Performance Evaluation - Excerpt Group Members: Seminar Number: Last four digits of your student number: Irene Circle only one number HOW EFFECTIVE WAS THE GROUP IN: for each comment. Poor Excellent |_____________________________________| CONTENT OF SEMINAR: 1.Highlighting the main points of the readings through seminar discussion, brief overview or summary?1234 5 2. Linking the seminar topics to current business developments? 1234 5 3.Using visual aids and/or handouts to provide support and insight into today's topics? 1234 5 Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

28 Pedagogical Techniques and Resources (5): Other Techniques Means for tracking participation Get Out of Jail Free Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

29 Pedagogical Techniques and Resources (6): Selected Textbooks AuthorCountryGAAPFocus Schroeder, Clark, Cathey (Wiley) U.S. U.S. /some IFRS Framework Wolk, Dodd, Rozycki (Sage) U.SU.S.Framework Scott (Prentice Hall)CanadaIFRS/U.S.Economic Deegan (McGraw-Hill) Australia/ Europe IFRSMixed Godfrey et al (Wiley) AustraliaIFRS/AusMixed Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

30 Pedagogical Techniques and Resources (7): Selected Textbooks - Major Topics Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010 SchroederWolkScottDeeganGodfrey Conceptual FrameworkXXXX Uses of Accounting InfoXXX Income Concepts/ Valuation Bases XXXXX F/S and A&L TopicsXXX X Regulation of Financial Accounting XXX Economic TheoriesXXXXX Social ResponsibilityXX Behavioral ResearchXX Critical PerspectivesX Intl AccountingXXXX X

31 Pedagogical Techniques and Resources (8): Other Resources Wall Street Journal - instructor mailing list – http://ProfessorJournal.com AECM mailing list and archives (http://www.aecm.org) MAAW http://www.maaw.info/ Smartest Guys in the Room video Accounting Horizons/Accounting Perspectives Senate Hearings IASB/FASB - discussion papers and roundtables Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

32 Pedagogical Techniques and Resources ( 9): Other Resources Annual testimony by Chairman of SEC, PCAOB, and FASB to U.S. House of Representatives. The Wall Street Journal Financial Times Lexis-Nexus Google Scholar FASBs Accounting Standards Codification Larger CPA firms websites Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010

33 Strategies for Teaching the Accounting Theory Course: Summary Points Very helpful as a complement to the rest of the curriculum – Cover why and judgment questions – Big Picture – Critical Thinking Content – Lots of choice: conceptual framework, valuation bases, controversies, current research; all of the above Assessment – Can encompass presentations, debates, papers, research, journals, experiments Range of resources available


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