Stakeholder Theory and Language Learning Concepts

Accounting Course Information

• Bachelor in Management & Data Science
• TUM Campus Heilbronn
• Winter semester 2024/25
• Professorship of Accounting, TUM School of Management, Technical University of Munich

Unit 01 - Language of Business

• Course: "Accounting"
• Key topics:
  • Introduction
  • Corporate data
  • Recording business transactions
  • Cost accounting
  • Financial reporting
  • Sustainability reporting
  • Accounting policies and incentives
• Units have unique numbers for easier discussion
• Focus: company perspective and key business questions (what is a company, business model, performance, value?)

Unit 04 - Shareholders, Stakeholders, and the Company

• Aspects in this unit:
  • Understanding a company
  • Boundaries of a company
  • Corporations vs. partnerships
  • Shareholder vs. stakeholder approach
• Baseline understanding of a company's economic activities (input, process, output)
• Overview of economic units (private persons, public budgets, enterprises, public authorities, companies)
• Definition of "company" (from a scientific/technical perspective): Oxford dictionary, functional, institutional
• Boundaries of a company ("group perspective")
• Netting of transactions
• Incorporation of transactions along the value creation chain (upstream, within, downstream impact)
• Fundamental distinction between partnerships and corporations. Examples of legal forms (sole proprietor, partnership, corporation)
• General distinction between shareholder value approach, shareholder value maximization, and pluralistic/stakeholder value approach
• The key role of valuation for any company
• Decision-useful information and resource allocation with shareholders and stakeholders.
• Theoretical fundament of the shareholder value concept
• Drivers of shareholder value

Unit 06 - Company Value and Valuation

• What is the value of the chicken?: Question for conceptualizing the valuation perspective for a company
• Company values and valuations are subjective and depend on (valuation perspective, purpose of the valuation, conceptual valuation assumptions).
• Basic drivers of (economic) values: (timeline of benefit, type of transaction, measurement concept)
• Values are always relative, consistent comparisons of comparable companies
• Importance of systematic comparisons for company valuation exercises
• Fundamental definition of present value (with examples)
• Understanding discounting (with examples)
• Remarks on the sunk cost fallacy (explaining why retrospective costs are often irrelevant for future decision making.)
• Why discounting future cashflows?
• Understanding discounting (examples in the short and long term)
• Different discount rates (examples and discussion)
• Time horizons in company valuation

Unit 11 - Accounting Fraud

• Howeycoins, a fake investment opportunity, is presented. Study the website and white paper to better understand the opportunity.
• Howeycoins fake case study for accounting fraud understanding risk
• Distinction between accounting error and accounting fraud (misstatement, unintentional, intentional).
• Particularly destructive forces of accumulated misstatements: True profitability, manipulated profitability, accumulated overstated profitability, problematic overstatement, etc
• Asymmetric evaluation of manipulations (how "errors" or "frauds" are analyzed differently depending on whether they are deliberate or not)
• Examples of well-known accounting scandals.
• The importance of management awareness in the organization and governance for avoiding fraud.
• A "little bit of cheating” can be a part of the game, but a focus on "truly innocent" companies is narrow.
• Assessment of accounting misstatements and manipulations:
• Assessment perspective related to countries with different cultures. Ethical satisfaction is not the same as economic necessity.
• A fish always rots from the head down (The Wirecard case example)

Unit 13 - Internal and External Corporate Data

• Major data-driven technological changes that affect business environments.
• Dealing with data from various sources as a key part of accountants' daily work, illustrating difference between 1980 and 2030.
• Unobservable reality, description through data, and interpretation of the data (e.g., characteristics of a product, company, or economy described through data
• Intentionally and unintentionally generated data (different types and their relationships)
• Distinctive characteristics of data for managerial purposes and external reporting.
• Legitimate and questionable data collection aspects, and privacy questions.
• Trend of establishing platform-based solutions for accounting and management purposes, and the use of technologies to accomplish such goal
• Only a marginally small portion of all generated corporate data really used (with statistics to show the proportion)
• Public and private data with examples of different types data
• Why doesn't all private information become public or accessible? (cost-benefit considerations)
• Increasing data generating, storage, and usage fit ethical principles and sustainability
• Energy demand for data-driven AI products and controversies around such topic
• GDPR 2016 and its restrictions for natural person data (seven overarching principles).
• Importance of a "personal touch" in corporate information and the implications of data standardization
• Web-based official information channels with examples from EU countries and a summary of their data sources for accounting/economic use.
• Official SEC channels.
• Ad hoc requirements (example of EU's Market Abuse Regulation).
• Standardize corporate communication and how they're used or presented (examples of annual, quarterly, semi-annual reporting, corporate websites)

Unit 15 - Position and Performance Data

• Structuring of business transactions to insightfully inform corporate interactions.
• Time horizons (past, present, future) in terms of company valuation and business transaction structuring.
• Concept of a position statement
• Concept of a performance statement
• Comparative overview financial position and performance statements (with examples)
• Overall organization of the statement of financial position in line with IFRS
• Relationship between the three key financial statements (with an example)
• Equivalent styles of financial position statements (with examples)
• Example of BMW (2023) - Group financial statements, statement of cash flows, with examples, and details
• Extensive disclosures about compensation of board members, and why it is important
• Examples of BMW (2023) - Annual performance measures

Unit 16 - Business Transaction Data

• Examples for different business challenges that require differently defined transaction data.
• Definitions of basic flow variables
• Distinction between cash outflows and expenditures.
• Distinction between cash inflows and receipts
• Distinction between receipts and income.
• Illustrative examples of business transactions with different types of companies (e.g., purchasing cycle).
• Distinction between income and activity, expenses and costs.

Unit 18 - Sales

• Major aspects addressed in this unit (basic understanding of sales, contract components, payment, reporting period, intra-group sales, etc.)
• Attention: This unit primarily contains regulations in accordance with IFRS.
• Basic understanding of sales: components of sales
• How to define and consider sales?
• Regulations of IFRS 15 - Scope, timing, and measurement of sales (examples)
• Regulations of IFRS 15 - Key terms
• Regulations of IFRS 15 - Five steps approach
• Regulations of IFRS 15 - Example of total sales measurement (with example)
• Regulations of IFRS 15 - Example of the components approach
• Regulations of IFRS 15 - Payment before, concurrently, and after realization (examples)
• Regulations of IFRS 15 - Multi-period construction contract (examples)
• Intra-group sales-What are transfer prices?
• Intra-group sales - Survey evidence on the most important tax issues for tax directors (EY 2007 data examples.)
• Intra-group sales - Transfer prices and profit when tax rates are identical (examples)
• Intra-group sales - Transfer prices and profit when tax rates differ (examples)
• Intra-group sales - Tax aggressiveness and transfer pricing (example of international companies such as Amazon, Apple, Google)
• Standard approaches to determine transfer prices (negotiation, combinations, corporate policies)

Unit 20 - Material Costs

• Important types of materials in the production process: raw materials, auxiliary materials, operating materials.
• Method for recording and valuing material consumption (e.g., consumption method, inventory method, etc.).
• Characteristics of material prices (constant price, changing price)
• Financial reporting requirements for inventories (IAS 2).
• Valuation methods for interchangeable materials (e.g., first-in, first-out (FIFO), last-in, first-out (LIFO), weighted average).