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Accounting & Finance Courses- Spring 2015

ACCT-431: Managerial Accounting

Dear Kellogg MBA Students:

I’m writing to provide information about a course which is of high value for students interested in consulting, general management or marketing careers.  The course is ACCT 431, Management Accounting.

Many students mistakenly believe that this course follows from ACCT 430, the core financial accounting class. This is not the case. Rather, this course shifts the focus from the firm’s financial statements to the firm’s internal accounting and information systems. The objective of this course is to give you the knowledge and skills necessary to design internal systems and analyze strategic information effectively. Graduates in consulting, general management and marketing positions frequently say that management accounting is the most important class they took because it trained them how to make smart operating decisions.

My teaching focuses on two broad areas. First, I outline the principles of effective internal accounting systems so that you can understand how they improve managerial decision making. Second, I outline the principles of effective control systems, which ensure that managers and personnel within an organization pursue the same goal and take operational actions that are consistent with the overall strategy of the organization. This portion of the course is often considered particularly interesting because it deals with economic incentives and the design of effective compensation programs.  

My goal for the course is to expose students to the above concepts and a set of problem solving skills that can be applied to a broad range of problems that will be frequently encountered in the workplace.

Attached is the syllabus for ACCT 431.  I encourage you to contact me with any questions: m-lyle@kellogg.northwestern.edu.

ACCT 451, Financial Reporting and Analysis, and FINC 463, Securities Analysis.

Dear Kellogg MBA Students:

With Spring Quarter course registration approaching, we would like to highlight two courses that are being offered in both the part time and full time programs.  The courses are ACCT 451, Financial Reporting and Analysis, and FINC 463, Securities Analysis.

The course titles are not completely descriptive and students sometimes find it difficult to distinguish these courses.  One of our goals is to differentiate the two courses in this email.  Perhaps more importantly we want to make sure you are aware of these courses because recruiters often comment on Kellogg students’ insufficient training and background in accounting and financial statement analysis.  And Kellogg alumni often comment that they wish they had taken more accounting while at Kellogg.  While few Kellogg students aspire to be accountants per se, accounting truly is the language of business and facility with the language will be beneficial in almost any career path you choose.  For those of you contemplating careers in finance or consulting, expertise in analyzing financial statements is critical to ‘hitting the ground running.’

ACCT 451, Financial Reporting and Analysis, covers core intermediate financial accounting topics in asset measurement and income determination.  However, the course is NOT a traditional intermediate accounting course and does not focus on learning the myriad of intricate accounting rules.  Instead, for each topic, we describe the underlying business transaction, the GAAP guidelines that apply, how the guidelines are implemented in practice, and how the financial statements are affected.  We then go a step further and ask: What do the reported numbers mean?  Does the accounting process yield numbers that faithfully present the underlying economic situation of a company?  And, if not, what can financial statement users do to overcome this limitation in order to make more informed decisions?  In short, Financial Reporting and Analysis focuses on helping you become informed consumers of financial statement information.

FINC 463, Securities Analysis, focuses on analysis of financial statements with the goal of valuing the company.  Students learn to forecast the future performance of the firm using “pro forma” (projected) financial statements in excel spreadsheet format.  The resulting financial model of the firm is then used as input to a valuation analysis.  The process of preparing the pro forma financial statements results in understanding both the drivers of firm value and the key elements of the business operations.  Because the fundamental, although not sole, source of valuation information is the firm’s set of financial statements, accounting knowledge is critical to the process.  In short, Securities Analysis uses what you learn in both ACCT 430 and ACCT 451 to project the firm’s future performance and then prepare a valuation analysis.  For those of you who have either done, or plan to do, “Training the Street,” Securities Analysis provides the background for the decisions necessary to construct a financial model of the firm.  The quality of the assumptions underlying the model determines its success.

ACCT 451 vs. FINC 463:  ACCT 451 complements FINC 463 and can be taken prior to or concurrently with Securities Analysis

FINC 463 vs. FINC 442: Students who take both suggest that FINC 463 be taken prior to or concurrently with FINC 442, Financial Decisions.  FINC 442 applies what we learn in FINC 463 to various finance situations through case studies that supply the financial data.  FINC 463 provides the background for understanding these data.

ACCT 451 vs. ACCT 452:  ACCT 452, Financial Reporting and Analysis II, is the sequel to ACCT 451 and covers advanced topics such as consolidation, joint venture accounting, foreign currency translation, and pension accounting.   

Attached are the syllabi for the two courses, ACCT 451 and FINC 463.  We encourage you to contact us with any questions: l-vincent@kellogg.northwestern.edu and clare-wang@kellogg.northwestern.edu.