Managerial Accounting

General

• Paul Thielen
• Starts on time
• Ok to work ahead
• Easier to have right book 8e, problems different
• Use website
• Online answers to odd problems
• Work in teams
• TAs all current students
• Bethany does Elluminate sessions Thur 6 to 7
• Pick US company that has GAAP, GRI
• Presentation: All speak
• 1000 points total
• No late work
• Can say ‘pass’ when asked a question

Week 1, Class Notes

• Always start with income statement, otherwise balance sheet won’t balance
• Inventory valued at lower of cost or market
• Inventory markdown, reduce inv and increase COGS
• Profit and Loss (P&L) should be called ‘Income Statement’
• GAAP likes straight line depreciation
• Goodwill is ‘impaired’
• Audit opinions: un-qualified, qualified, adverse, disclaimer
• Debits increases assets and expenses

Week 2, Reading

Sustainable Development Reporting

• Helps companies understand the added value of sustainability reports
• Provides guidance on how to report
• Reporting web site showcases reporting practices
• Sustainability reports are complicated and there is no global standard
• Sustainable reporting may expose the company to criticism and lawsuits
• Reports are expensive to produce
• Creating report has value in itself by requiring the company to have a more systematic approach and becoming part of the learning process
• CSR and sustainability ratings are increasingly used for for investment and lending decisions
• Subjective weighting of issues to one another
• Only a small overlap in questions (15%) used by the 12 main rating agencies
• GRI covers more than 80% of issues in the various questionnaires
• GRI could increase consistency in various questionnaires
• Reporting should be an active dialog
• A framework should help harmonize reporting practices
• Reports should be readily understandable
• Trade-off between flexibility and comparability
• Guidelines, not standards are appropriate at this point
• 5 steps: Overall objectives, Planning, Activities, Follow Up and Appraisal, Review and Learning
• Contains information, suggestions and examples for creating sustainability reports
• CSR likely to be mandatory in the future
• CSRs likely to be harmonized, probably around GRI

Sustainability Reporting Guidelines

• Global Reporting Initiative (GRI)
• Sustainability reporting is the practice of measuring, disclosing, and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development.
• Grades A, B, C are just self-declared Application Levels - how much they covered of the GRI framework. A + is used if they utilized external assurance
• Each Principle includes: definition, explanation, tests
• Includes exactly what sections to include and how to number them
• Has IDs for each performance indicator
• Requires a number or percentage wherever possible

Short Term Performance

• Stock prices ultimately depend on a company's ability to generate cash flow.
• Keynes: "Markets can remain irrational longer than you can remain solvent."
• Discounted indexed-options plan with extended time horizons, and discounted equity-risk options (DEROs)
• There is no greater impediment to good corporate governance and long-term value creation than earnings obses-
  sion.
• There is no greater enemy of stock market allocative efficiency than earnings obsession.