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Strategies for Teaching the Accounting Theory Course:
Curriculum, Pedagogy and Resources
Carla Carnaghan - University of LethbridgeJames Dodd – Drake University
Irene Gordon - Simon Fraser UniversityDavid Gilbertson - Western Washington
University
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
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
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
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
Roles for the Accounting Theory Course: Complementing Other Parts of the
Curriculum (1)
• Review/integrate topics from other accounting coursesConceptual FrameworkExamples using existing standardsImplications 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 financingAccounting ScandalsManagement CompensationFair Values
Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010
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
Designing the Course’s 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
Designing the Course’s 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
Designing the Course’s 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
Designing the Course’s Content: Concepts that Might be Covered
Economics Psychology Critical Conceptual
Framework
Efficient Markets
Behavioral Finance
Ethics Relevance
Information Asymmetry
Prospect Theory
Stakeholders Reliability
Agency Theory
SatisficingHistory 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
Designing the Course’s Content: Controversies that Might be Covered
Topic Econ Psych
Critical
Framew’k
Fair Values X X X
Intangibles/Contingencies**
X X X
Market efficiency X X X X
Management Comp. X X X
Earnings Management** X X X X
IFRS Adoption X X
Derivatives/Shadow Economy**
X X X
Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010
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
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
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 group’s seminars
Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010
Pedagogical Technique Example: Sample Student Group
Presentation - Experiment
ManagerHonest (H) Distort (D)
InvestorBuy (B) 60, 40 20, 80
Refuse to Buy (R)
35, 20 35, 30
• Investor: to buy or not to buy• Manager: Honest or Distort
• Assumptions:• One-period game• Non-cooperative• Rational Individuals
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
Pedagogical Technique Example: Student Group Presentation Slide
Pedagogical Technique Example: Student Group Executive Compensation Activity
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.)
Pedagogical Technique Example : Student Group Activity
Explanation (2)• Two Rounds of Discussion
– 1st Round• Compensation Team A and CEO/Executives• Compensation Team B and Shareholders
– 2nd Round• Compensation Team A and Shareholders • Compensation Team B and CEO/Executives
Student Group Role Play: Scene One (1)
•Role play illustrating agency theory– Lilian as Manager– Lindy as Owner
Student Group: Scene One (2) – The PERFORMANCE REVIEW
Student Group Role Play Setting (3):
HUGE LOSS!
Student Group slide illustrating how AGENCY THEORY worked in the Role
Play Example (4)
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
Pedagogical Techniques and Resources (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? 1 2 3 4 5
2. Linking the seminar topics to current business developments? 1 2 3 4
5 3. Using visual aids and/or handouts to provide support and insight into today's topics? 1 2 3 4
5
Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010
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
Pedagogical Techniques and Resources (6): Selected
Textbooks
Author Country GAAP Focus
Schroeder, Clark, Cathey (Wiley) U.S.
U.S. /some IFRS
Framework
Wolk, Dodd, Rozycki (Sage)
U.S U.S. Framework
Scott (Prentice Hall) Canada IFRS/U.S. Economic
Deegan (McGraw-Hill)
Australia/ Europe
IFRS Mixed
Godfrey et al (Wiley) Australia IFRS/Aus Mixed
Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010
Pedagogical Techniques and Resources (7):
Selected Textbooks - Major Topics
Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010
Schroeder
Wolk Scott Deegan
Godfrey
Conceptual Framework X X X X
Uses of Accounting Info X X X
Income Concepts/Valuation Bases
X X X XX
F/S and A&L Topics XXX XXX X
Regulation of Financial Accounting
X X X
Economic Theories XXX X X
Social Responsibility X X
Behavioral Research X X
Critical Perspectives X
Int’l Accounting X X XX XX X
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
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• FASB’s Accounting Standards Codification• Larger CPA firms’ websites
Strategies for Teaching the Accounting Theory Course - AAA Annual Meeting. San Francisco. August 4, 2010
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