LEVENTHAL SCHOOL OF ACCOUNTING

COURSE SYLLABUS

ACCOUNTING 470a Fall 2011ADVANCED EXTERNAL FINANCIAL Prof. Ken SimmondsREPORTING ISSUES OFFICE: ACC 209a

OFFICE HOURS: MW: 1:00AM – 2:50PM T: 1:00PM – 4:00PM OFFICE TELEPHONE: (213) 740-5014 E-MAIL: simmonds@marshall.usc.edu

USC DEP’T. OF PUBLIC SAFETY EMERGENCIES (213) 740-4321USC EMERGENCY INFORMATION (213) 740-9233 (24-HOUR VOICE MAIL)USC INFORMATION (213) 740-2311KUSC FM 91.5 FM

ACCT 470a continues the student’s exposure to key aspects of financial accounting theory and practice. It builds upon the foundation established in ACCT 370a and ACCT 370b.

COURSE DESCRIPTION:

Developing capabilities to identify and articulate current external financial reporting problems and issues, concentrating on operating, financing, and investing activities of business organizations.

COURSE PREREQUISITES:

For successful performance in ACCT 470a, completion of ACCT 370a and ACCT 370b is essential.

COURSE OBJECTIVES:

The primary objectives of ACCT 470a are as follows (this list is not necessarily all-inclusive):

Develop skills in reporting and analyzing accounting information

Develop an understanding of accounting information, including the rules used to prepare and report this information

Develop an appreciation of the usefulness and limitations of accounting information

Develop experience in analyzing accounting information from the perspective of its various users (e.g., equity investors, creditors, company management, auditors, etc.)

Peripheral objectives of ACCT 470a are to enhance the student's written and oral communication skills and to imbue the student with the meaning of professionalism and ethical conduct.

STATEMENT FOR STUDENTS WITH DISABILITIES:

Any student requesting academic accommodations based on a disability is required to register with Disability Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP. Please be sure the letter is delivered to Prof. Larsen as early in the semester as possible. DSP is located in STU 301 and is open 8:30a.m. – 5:00 p.m., Monday through Friday. The phone number for DSP is (213) 740-0776.

THE USC WRITING CENTER:

The USC Writing Center, located on the third floor of Taper Hall, is an excellent resource for students who want to improve their writing. Students can schedule 30-minute appointments with writing consultants who are trained to assist in planning, organizing, and revising writing assignments. Some of the consultants are graduate business students in Marshall School of Business. Other consultants have special skills in working with students for whom English is a second language and grammar issues. Students are required to visit The USC Writing Center and take advantage of these outstanding services for students, when requested by the instructor.

REQUIRED TEXTBOOKS (obtainable from USC Bookstore):

Kieso, Weygandt, Warfield, Intermediate Accounting, Thirteenth Edition, two volumes; (also used in 470b) (IA)Hoyle, Shafer & Doupnik, Advanced Accounting, Tenth Edition

RECOMMENDED OTHER COURSE MATERIALS: Dictionary

Original Pronouncements: Accounting Standards (2004/05 ed.) (APB, ARB, CON, FAS) (3 volumes)(also used in 470b)

FASB Codification

Supplemental material: Problem Solving Survival Guides volume 1 (Chs. 1-14) and volume 2 (Chs. 15-28). The survival guides contain additional problems you can do, and excellent descriptions of how to solve each problem. Although no formal assignments will be given from the guides, doing additional problems in the guides will help you better understand the course material.

STUDENT OBLIGATIONS:

1. Attend all classes on time. (See SCampus 2002-2003, p. 78, B2. ) (NO MAKE-UP EXAMINATIONS WILL BE GIVEN; UNEXCUSED ABSENCE FROM AN EXAMINATION RESULTS IN A GRADE OF “O” ON THE EXAM.)

2. Submit all written assignments, prepared on a word processor, on the date assigned and in good form. (See ES Rule 13). Written assignments submitted late will be graded 0, except for excused absences. Also see pages 5 and 6 hereof. Students who do not turn in a solution to a case study on which a mid-term or final examination question is based will receive no credit for an answer to the examination question.

3. Staple written assignment sheets. Students are responsible for complying with the English grammar, style, and usage rules in Chapters I and II of The Elements of Style and in the attached essay "Thoughts on Writing" in written assignments. Written assignments will be returned after being graded on a scale of 4 = Excellent, 3 = Good, 2 = Fair, 1 = Poor, 0 = No Credit; grades on case assignments are NOT NEGOTIABLE. (The 4, 3, 2¸ and 1 are not to be construed as A, B, C, and D.) Annotations of “ES” (The Elements of Style), “TW” (“Thoughts on Writing”), and “1 (a),” “3,” etc. (p.5 hereof) should be studied to help students improve their writing skills. Students may consult informally with each other, and they may do any desired research, in completing written assignments; however, written assignments must be the students’ own work, and any cited material must be properly footnoted. (Please see definition of plagiarism at Section 11.11.)

LEVENTHAL SCHOOL OF ACCOUNTING HONOR CODE:

Per Article II of the Student Honor Code, “All students enrolled in upper division and graduate courses required for a degree in Accounting and offered by the Leventhal School of Accounting…are subject to the Code…”

RETURNED GRADED WORK:

All graded written assignments and examinations will be returned promptly to students. Unclaimed items will be retained by the instructor until the last day of the following semester (excluding summer term), then discarded.

EXAMINATIONS:

The mid-term examination is 1hour and fifty minutes in length. The final examination is two hours in length. Examinations are not cumulative. The mid-term examination normally includes multiple choice questions, one essay question, and two problems. The final examination normally includes multiple choice questions, one essay question and three problems. Grades on examinations are NOT NEGOTIABLE . No “makeup” examinations will be given; an unexcused absence from an examination results in a grade of 0 on the examination.

COMPOSITION OF FINAL GRADE:

The average grade in this course will be in accordance with Leventhal School of Accounting Standards.

The following weights will be assigned for determination of final grades:

Written assignments……….................................................10%Mid-term examination.........................................................45%Final examination.........................................................…. . . 45% Total…………………………………….………………..100%

The +/- grading system will be used. (See attached "Leventhal School of Accounting Grading and Academic Standards.") Final grades are obtainable only through self-addressed postcard or envelope or through USC's formal grade report; they are not obtainable from the Leventhal School of Accounting Staff. Final grades are NOT NEGOTIABLE.

Classroom Rules of Conduct Cell phone use of any kind (e.g., voice, text messaging, calculator, photography) is strictly

banned during class. (During exams, any cell phone use will automatically constitute cheating and will be dealt with as such.)

Cell phones should be turned off. Use of computer, music player and other electronic devices is not permitted during class. Be courteous to your fellow students by not making distractions (e.g., come in class late,

eating, talking, paging through newspapers).

ATTENDANCE AND CLASS PARTICIPATION:Attendance is defined as appearing in the classroom no later than 5 minutes after the scheduled beginning time of the class. Participation is defined as (1) asking relevant questions of the instructor or fellow students; (2) answering questions posed by the instructor or fellow students; (3) volunteering to discuss issues raised in class. Sitting mutely in class is not considered participation.

COURSE AND EXAMINATION SCHEDULEDATE TOPIC TEXT READING WRITTEN

ASSIGNMENTS

M 8/22 Introduction W 8/24 SEC

Nonmonetary Exchanges, Segment Reporting, Interest Capitalization

APB 29, ¶s 18-28; FAS 131, ¶s 1-39; FAS 34, ¶s 1-21; IA Ch 10

IA Ex. 10-10

M 8/29 Leases: Lessee FAS 13FAS 13 ¶s 1-16; FAS 28 ¶s 1-21; FAS 98, ¶s 1-13; IA Ch 21

IA Ex. 21-2, 21-3, 21-5IA Case 21-2

W 8/31 Leases: Lessor FAS 13, ¶s 17-19, 41-47

IA Ex. 21-4, 21-6, 21-10

M 9/05 LABOR DAYUNIVERSITY HOLIDAY

W 9/07 Investments IA Ch 17; APB 18, ¶s 1-20; FAS 115, ¶s 1-20, dissent

None

M 9/12MID-TERM

(In-Class)

W 9/14 Business Combinations Hoyle Ch. 1 & 2; FAS 141, ¶s 1-58

Pr1-23, 1-24, 1-26, 1-27; FASB 94 Research Case pg. 34Pr. 2-19, 2-23, 2-27, 2-33, 2-35

M 9/19 Consolidations: Date of Combination

Hoyle Ch.3. Hoyle Ch.3.

W 9/21 Consolidations: Date of Combination

Hoyle Ch. 4 Pr. 4-31, 4-37, 4-41

M 9/26 Consolidations: Subsequent to Combination

Hoyle Ch.5 Pr. 5-27, 5-28, 5-31

W 9/28 Consolidations: Intercompany Transactions

None None

M 10/03 International Financial Reporting Standards-IFRS

Handouts None

W 10/05 Open

W 10/12

FINAL EXAMINATION

IN CLASS

Using the American Accounting Association FASB Accounting Standards Codification – Professional View

Online Research Software

I. OverviewThe FASB Accounting Standards CodificationTM is now the single official source of authoritative, nongovernmental U.S. generally accepted accounting principles (GAAP).  Only one level of authoritative GAAP now exists, other than guidance issued by the Securities and Exchange Commission (SEC).   All other literature is now non-authoritative.

All existing standards that were used to create the Codification are superseded with the adoption of the Codification, which happened on July 1, 2009.  The FASB will no longer update and maintain the superseded standards.

Leventhal School of Accounting has purchased an annual license through the American Accounting Association(AAA) for accounting academic use of the FASB Codification Professional View online database. The Professional View provides search, advanced search, cross reference, glossary, join/combine sections as well as copy and print functions.

II. Student Access – two methodsA. Access to the AAA Professional View Codification material is available on-campus through the

Teaching Applications on the Leventhal Library and Crocker Library lab computers.Start > All Programs > Teaching Applications > FASB Accounting Standards Codification > FASB Codification > FASB Codification DatabaseThe software will then launch without further need of an ID or password.

B. Additionally, the database is available online from on-campus or any web-available location at http://aaahq.org/ascLogin.cfm

If you use the web link access, you should see the American Accounting Association aqua and gold Please Login screen.

Student User ID AAA51188Student Password susc588

You may find it useful to add the address to your Favorites or to put a shortcut on your desktop.

Note: If you lose or forget the ID and/or Password, please contact Dee Davidson dgd@marshall.usc.edu.

Important Note: If you see the FASB blue and red Welcome screen instead of the American Accounting Association aqua and gold “Please Login” screen, you have not reached a functional login screen. Please review the information below about the Blue and Red Log in screen.

Blue and Red Log in ScreenIf you are using the direct web access method to log in and you see only the blue and red FASB Welcome screen shown on the screen print above, you have not reached a functional login area. If that occurs, you may have a security conflict with your internet browser or with your firewall on your computer. You may be able to resolve the conflict by adding the web address to the list of trusted sites. If you are using Internet Explorer, you can add the site through Tools > Internet Options > Security > Sites. To add a trusted site to your firewall, you will need to contact your firewall administrator or consult the Help screens. If you are unable to fix the problem, you will need to use the software in the on-campus computer lab.

III. Features of the Professional ViewWhen you successfully complete the AAA login you will see this Home screen

Note: Please review the Terms and Conditions of use. In particular please note:1. Our license for this software is for academic use only.2. Updates will be made by FAF(Financial Accounting Foundation) when deemed necessary.3. Circumstances beyond the control of FAF may cause unexpected downtime.

The Codification is a compilation of Financial Accounting Standards by topics and subtopics. The topics are shown on the left and can be browsed through the subtopics using the red arrows. Links to Accounting Standards Updates, Exposure Drafts and the Pre-Codification Standards are included under Other Sources.The six information links in the center and the right will provide support for your use of the topics.  The Tutorials and Help will assist your use of the Join Sections and Cross Reference capabilities as well as creating productive searches of the Codification topics and subtopics. 

Tutorial and Help screens.The new Codification is an online software database. It is also a major change in the way accounting standards are organized.  While the FASB Codification is designed to make it much easier to research accounting issues, the transition to the use of the Codification may be facilitated by use of the online Tutorials and Help screens which are included in the material. The four brief tutorial modules include explanations on the use of browsing topics, join/combine sections, cross reference to the old FASB Standards, search and advanced search, and Master Glossary features, as well as use of copy and print functions. Please review each tutorial to become familiar and proficient with the Professional View of the Codification material.

IV. LogoutPlease use the logout link in the upper right when you have finished your work. This releases the database for others to use. When you logout, the blue and red Welcome screen appears with fields for login credentials. Please close that screen and do not use it for any purpose. It is not functional for our Professional View license.

If you need to log in again, please use the direct web address http://aaahq.org/ascLogin.cfm and the Username and Password given above. Note: If you lose or forget the ID and/or Password, please contact Dee Davidson dgd@marshall.usc.edu

Note: Pre-Codification standards – FASB Pronouncements and EITF – can also be viewed at www.fasb.org or http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1218220137031

Subscriptions to the FASB Codification material are available to non-Leventhal users at www.asc.fasb.org .

Please advise Dee Davidson at dgd@marshall.usc.edu if you encounter problems with the AAA Professional View online research software.

Why learn IFRS?International Financial Reporting Standards, commonly referred to as IFRS, are gaining

momentum as the global norm in financial reporting. Issued by the London-based International Accounting Standards Board (IASB), IFRS is currently accepted in approximately 100 countries, including the members of the European Union, Israel and Australia. Many other countries, such as Canada, Mexico, India and Japan have committed to adopt or converge with IFRS by dates ranging from 2009 to 2011.

For years, the Financial Accounting Standards Board (FASB) has been working with the IASB as part of a long term plan toward convergence of IFRS and U.S. Generally Accepted Principles (U.S. GAAP) with the 2007 decision of the U.S. Securities and Exchange Commission (SEC) to accept IFRS financial statements for foreign filers (without requiring reconciliation to U.S. GAAP), the timeline for U.S. adoption of IFRS is expected to accelerate at a rapid pace. In response to the SEC’s decision, accountants, managers and analysts began to question when the SEC would allow, or require, U.S. companies to use IFRS for their annual filings. While the answer to this question is still unknown, other ripple effects of the SEC’s decision can already be seen. In May 2008, the AICPA expressed its intent to incorporate IFRS into the CPA exam. In the same month, the AICP also amended Rules 202 and 203 of the Code of Professional Conduct to recognize the IASB as an international accounting standard, allowing accountants of private US companies to prepare financial statements in accordance with IFRS.

Introduction to IFRSHistorically, multinational and global companies were required to prepare separate financial

statements for each country in which they did business, in accordance with each country’s generally accepted accounting principles. In 1973, the International Accounting Standards Committee (IASC) was formed in response to the growing need to develop a set of common financial standards to address the global nature of corporate financing. In 2000, the IASC received support from the International Organization of Securities Commissioners (IOSCO), primary forum for international cooperation among securities regulator. The IOSCO recommended its members (currently 181 organizations including the U.S. Securities & Exchange Commission and the Committee of European Securities Regulators) permit multinational companies to use IASC standards along with a reconciliation to national GAAP. In 2001, the IASC reorganized as the International Accounting Standards Board to incorporate representatives from national standard-setting organizations.

The term IFRS has both a narrow and broad definition. Narrowly, It refers to the specific set of numbered publications issued by IASB. Broadly it refers to all publications approved by the IASB, including standards and interpretations issued by its predecessor, the IASC. Unlike U.S. GAAP, there is no hierarchy to IFRS guidance. All standards and interpretations have equal levels of authoritativeness. Status in the U.S.

The continuing globalization of business means many U.S. companies (operating or obtaining capital in foreign countries), including 40% of Global Fortune 500, are already affected by IFRS. In response to this trend, efforts have been under way to coverage IFRS and U.S. GAAP since 2002. The IASB and FASB have worked together closely and developed a plan for convergence of the two sets of standards. Main areas of differences with U.S. GAAP are summarized below:

Areas where IFRS and U.S. GAAP are not converged:Consolidation policy, impairment, liabilities, intangibles

Areas where there are differences in the “details”:Revenues, income taxes, leases, pensions, business combinations, share-based payments

Despite the progress toward convergence, the financial information reported by a company may differ significantly under the two sets of standards. Historically, the SEC has allowed foreign companies trading stock on U.S. exchanges to prepare Form 20-F, their annual financial statements, in accordance with a foreign GAAP as long as reconciliation to U.S. GAAP was included. A review of 2006 reconciliations determined that approximately 2/3 of companies have higher income under IFRS, with a median increase of 12.9%. For the 1/3 of firms with lower income under IFRS, the median difference was 9.1%.

As previously mentioned, the SEC eliminated the reconciliation requirement for foreign private issuers using IFRS in November 2007. The SEC is currently considering allowing U.S. companies the option of using IFRS in the near future.

Pros and ConsWhile many now believe the adoption of IFRS in the U.S. is inevitable, including

AICPA President Barry Melancon, SEC chairman Christopher Cox, and the Big Four accounting firms, not everyone agrees this is in the best interest of the American public. Advocates for the U.S. adoption of IFRS believe one global set of standards will streamline costs for U.S. companies operating globally and increase comparability of financial statements between companies, resulting in lower costs of capital.

On the other hand, many people are concerned that IFRS is not as robust as U.S. GAAP, that the cost of transition will be high, and that the U.S. market is not prepared for the transition. Based on the similar transition in Europe, experts estimate the implementation of IFRS will take companies two to three years. This includes time to gather the necessary information, modify accounting and control systems, and possibly renegotiate debt and other agreements linked to financial performance. An additional concern is the lack of accounting professionals familiar with IFRS. Knowledge of IFRS will be a valuable asset as you enter the workplace during this time of dynamic change in the accounting environment.

LEVENTHAL SCHOOL OF ACCOUNTINGGRADING AND ACADEMIC STANDARDS

ACCT 370ab, 371ab, 372, 373, 374, 462, 463, 470ab, 472, 473, 474 476, 478, 479

The Leventhal School of Accounting adheres strictly to the grading standards of the University and the School of Business Administration. Additionally, the Leventhal School of Accounting has supplemented those standards with certain others. For students' convenience, and to prevent misunderstanding, these additional standards are summarized below.

GRADING STANDARDS

The following grades are used: A - excellent; B - good; C - fair; D - minimum passing; F - failure. The grade of F is awarded for failing work at the end of the semester. The assignment of minuses and pluses when earned is required.

The grade of W (Withdraw) is assigned if the student officially withdraws after the third week but before the end of the twelfth week of the semester. No withdrawals will be permitted after the end of the twelfth week except by student petition to the University's Committee on Academic Policies and Procedures.

Students may elect to audit courses during the first three weeks of the semester. A course taken for audit (V) will be assessed at the current tuition rate. A course taken for audit (V) will not receive credit and will not appear on the USC transcript or grade report. Under no circumstances will the University allow a change in the registration status of a course from letter grade or credit to audit (V) or vice versa after the third week of a given semester.

The grade of IN (Incomplete, i.e., work not completed because of documented illness or some other emergency occurring after the twelfth week of the semester) is reserved for those highly unusual cases where, due to circumstances judged fit by the Dean of the Leventhal School of Accounting, the student is unable to complete a specified single item of the course requirements by the time final grades are submitted.

IN grades can be removed only by the student completing the missing requirements of the course to the satisfaction of the instructor.

Marks of IN in courses numbered below 500 must be removed by the end of the semester following the one in which the mark of IN was assigned. If not removed within the specified time limit, marks of IN automatically become marks of IX (expired incomplete), with the exception of thesis and dissertation, and compute in the GPA as an F. A student may remove the IN only by completing the work not finished as a result of illness or emergency. It is not possible to remove an incomplete by re-registering for the course. Previously graded work may not be repeated for credit.

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G.P.A. PREREQUISITES FOR UNDERGRADUATE ACCOUNTING COURSES

The grade point average prerequisites for any undergraduate student enrolled in any accounting course is a minimum 2.5 gpa for all completed accounting courses. In computing grade point average prerequisites, BUAD 250ab, 305 and 302T are considered accounting courses.

Grades in accounting courses taken at other institutions will not be included in the computation of the cumulative accounting grade point average.

When a student's cumulative accounting grade point average falls below 2.5, the student is placed on probation. If a student on probation does not regain a minimum accounting cumulative GPA of 2.5 after completing the next 12 semester hours in all courses (including accounting courses) attempted within the University, that student will not be permitted to continue as an accounting major in the Leventhal School of Accounting. Exceptions to this policy may be granted only in unusual circumstances by the Academic Standards Committee of the Leventhal School of Accounting. Decisions of the Academic Standards Committee are final.

To be removed from probationary status, a student may elect either to take another accounting course or courses for which prerequisites are met or to repeat an accounting course or courses in an attempt to earn a higher grade. Regardless of the course of action taken, all courses completed will be counted in computing the cumulative accounting grade point average.

The grade of "W" in an accounting course taken while a student is on probation will not extend probation. The probation period ends at the end of that semester during which the student completes a cumulative total of 12 semester hours of courses in any subject(s) at the university. Under no conditions will the student be permitted more than two successive semesters, including the summer semester, to complete the 12 semester hours of courses.

Students must attain a minimum 2.5 cumulative accounting grade point average to graduate with a Bachelor of Science in Accounting degree.

See the USC Catalogue for further restrictions on including grades in repeated classes in the overall grade point average computation.

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ACCT 470aINSTRUCTIONS FOR SOLUTIONS TO CASES

1. In preparation for case solutions, study Chapters II and III, pp. 15-38, of The Elements of Style (ES). Note especially the need for the following:

(a) Heading (or title) - ES p. 34(b) Paragraph construction - ES Rule 13, pp. 15-17(c) Active voice - ES Rule 14, pp. 18-19(d) Hyphenation - ES pp. 34-35(e) Quotations - ES pp. 36-37(f) References - ES p. 37(g) Titles - ES p. 38

2. Do not write a “zero draft” only! See ES no. 5, p. 72, re revising and rewriting.

3. When an accounting pronouncement, etc., is first cited, spell it out in full and then place a suitable acronym in parenthesis to be used thereafter. For example:

Generally accepted accounting principles (GAAP)Securities and Exchange Commission (SEC)Statement of Financial Accounting Concepts No. 1, “Objectives of Financial Reporting by Business Enterprises” (CON1)Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies” (FAS 5)Statement of Financial Accounting Standards No. 141, “Business Combinations” (FAS 141)

4. Remember that ’s is singular possessive; s’ is plural possessive.

5. Examples of footnotes:

First Citation: 1E. John Larsen, Modern AdvancedAccounting (New York: McGraw-HillCompanies, Inc. 2003), p. 105.

Second Citation, same work, some page 2Ibid.

Third Citation, same work, different page(s) 3 Ibid., pp. 109-110.

Third Citation, different work: 4Statement of Financial AccountingConcepts No. 6, “Elements of Financial

Statements,” par. 78.

Fifth Citation, previous work: 5Larsen, p. 114.

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ACCT. 470aProper Format for Journal Entries

1. The basic format is as follows:Troy CompanyJournal Entries

Date Account Titles and Explanations Debit Credit2003

Aug. 28

30

CashAccounts Receivable

To record collection of an account receivable.

Accounts Payable CashTo record payment of an account payable.

10,000

4,000

10,000

4,000

2. Per the above illustration:

(a.) The month and year are not repeated as long as they remain the same.(b.) The accounts debited are listed first, flush against the date column.(c.) The accounts credited are listed next, indented.(d.) The total of the debits of a journal entry must equal the total of the credits.(e.) No words are written in the Debit or Credit columns.(f.) An explanation, typically in infinitive form, is required for all journal entries, unless waived. It may or

may not be indented.(g.) A line or space is skipped between journal entries.(h.) Dollar signs are not required for amounts in journal entries.

Proper Format for Accounting Working Papers

1. The basic format is as follows:

Troy CompanyComputation of Net Accounts Receivable

Aug. 31, 2002

Description AmountAlpha Company $180,000Bravo Company 68,000Charlie Company 275,000 Gross accounts receivable $523,000Less: Allowance for doubtful accounts (28,000) Net accounts receivable $495,000

2. Per the above illustration(a) A three-line heading (name of company, description of working paper, date or period covered) is provided.(b) All dollar amounts in the working paper are clearly labeled.(c) Arithmetic signs (+,-) are not used. Amounts to be subtracted are enclosed in parentheses.(d) Single underline show computations, double underlines show completion.

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THOUGHTS ON WRITING

(Adapted from my article that appeared in Journal of Accountancy, September, 1973)

In Horizons for a Profession: The Common Body of Knowledge for Certified Public Accountants (AICPA, 1967), Roy and MacNeill wrote:

“To the CPA the ability to express himself well is more than the hallmark of an educated man, it is a professional necessity... We feel justified , therefore,...in being unequivocal about this requirement of thecommon body of knowledge for beginning CPAs:candidates who cannot write the English language at least as well as a minimum-threshold should be denied admission to the profession, if need be on this account alone.”

Similarly, the American Accounting Association’s A Guide to Accounting Instruction: Concepts & Practices (South-Western Publishing Co., 1968) contains the following passage:

“Probably no other personal quality is more importantthan having the ability to communicate well---both in writing and orally....Although accounting instructors are not supposed to be English teachers per se, it would be shirking a responsibility to the student if an extra effort was not made in this area.”

I am guided by the above statements in my approach to the teaching of accounting. Accordingly, I am providing some thoughts on writing to guide my students in this critical area of their performance.

1. In all written communication, remember Socrates’ query to Phaedrus:

“At any rate, you will allow that every discourse ought to be a living creature, having a body of its own and headand feet; there should be a middle, beginning, and end, adapted to one another and to the whole?”

In applying this to expository writing, make certain your exposition flows smoothly from beginning to end. The easiest way to achieve this goal is to write much as you would speak, except, of course, for slang, excessive idioms, and the like.

2. Write principally in the third person. There is no need for using first or second person in most expository writing. For example, “We should avoid situations that will threaten our independence” is less desirable than “CPAs should avoid situations that will threaten their independence”; and “You confirm receivables by direct written communication with the debtors” is inferior to “The CPA confirms receivables by direct written communication with the debtors.”

3. Write principally in the active voice. Passive voice passages are tedious to read and often result in “dangling-modifiers.” For example, “Most CPAs believe” is much smoother than “It is believed by most CPAs.”

4. Avoid irrelevancies. Write only what is required, and no more. Irrelevant “regurgitation” appended to an examination answer often is inaccurate or contradicts the main response.

5. Avoid such grammatical shortcomings as incorrect number, changes in tense, dangling modifiers, fragmentary sentences, and long, awkward sentence structure. With respect to the latter, it is advisable to write like a Hemingway rather than a Henry James. In Hemingway’s famous short story “The Killers,” for example, the first three sentences-

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twenty-three words in the aggregate - providing setting, three of the principal characters, and the beginning of the plot. In contrast, after three sentences (173 words) at the beginning of Henry James’s equally famous nouvelle, “The Beast in the Jungle,” the reader has yet to know the identity of the principal characters other than their sex and knows little of the setting or plot.

Ethical Obligations of USC Students of AccountingBy Dr. E. John Larson

(Recommended by Prof. Ken Simmonds)

Ethical conduct in the accounting profession has been a significant concern of the Leventhal School of Accounting since its establishment in 1979. At first, this concern was evidenced by creation of the course “Ethical and Social Responsibilities of Accountants,” which was a required course in the Master of Accounting Program from 1984 through the summer of 1994. Later, a project was undertaken to incorporate ethical issues in all courses in the Leventhal School of Accounting curriculum. The first topic in Acct 450a, “External Financial Reporting Issues,” is “Ethical Issues in Advanced Accounting.”

I was recently requested to express my views on ethical issues for students of Accounting as students, separate from ethical issues in their accounting careers. The views expressed herein are my own, and not those of the Dean or the other faculty members of the Leventhal School of Accounting.

Before discussing my philosophical views on students’ ethical obligations, I recognize the existence of the Student Honor Code, which has been well publicized and, in my view, generally well administered by the Student Honor Council. I encourage all students to read and consider the booklet Student Honor Code in establishing personal standards for their compliance with the Honor Code. However, I also urge students to familiarize themselves with the following perhaps lesser-known provisions of the Statement of Student Rights and Responsibilities section of 2002-2003 Scampus:

1. Freedom of Expression As students are free to take reasoned exception to the data or views offered in any course of study, so students are expected to respect the intellectual views of faculty and the reasoned process of academic debate.

2. The Importance of Teaching As faculty are required to meet with their classes, students are expected to attend classes and observe courtesy toward their instructors and their fellow students.

3. Standard of Performance Students share responsibility for maintaining standards of academic performance and classroom conduct conducive to the learning process. It is the responsibility of the student to uphold the academic integrity of the university. Cheating on examinations, plagiarism, improper acknowledgment of sources in essays, and the use of a single essay in more than one course are considered very serious offenses and shall be grounds for disciplinary action. (See Faculty Handbook and the Students Conduct Code, listed on page 76 of this guidebook.) (Emphasis added.)

4. Student Participation in Faculty Evaluation In faculty evaluation, students have the responsibility to perform such evaluation according to academic criteria and not on the basis of opinions or conduct in matters unrelated to academic performance. (Emphasis added.)

In my opinion, violations of the foregoing, based on my more than 40 years on the USC faculty, include the following conduct by students (numbered as in the foregoing):

1. Disputing or otherwise challenging the performance standards-including basis for assigning final grades-established by faculty in course syllabi

2. Excessive unexcused absences from class meetings; talking to classmates when the instructor or a fellow student has the floor; straggling into the classroom long after the beginning of class meetings

3. Failure to submit assigned cases, papers, etc., as required by the course syllabus

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4. “Getting even” with instructors for imagined grievances by assigning unwarranted low ratings or writing unjustified open-ended comments on the end-of-semester General Teaching Evaluation Form

I believe students should keep in mind their obligations as discussed above, and,especially, accept responsibility for their failures as well as their successes. Formany students, this is a difficult task, for it involves a personal philosophy of“The buck stops here” (President Harry S. Truman) or “It happened on my watch (and therefore I am responsible)” (President George H.W. Bush).

Finally, students might consider adopting, as their ethical foundations, philosophical positions such as the following:

A man then must stand erect, not kept erect by others... Be thou erect or be made erect. (Marcus Aurelius Antoninus, Meditations, Books III and VII)

lago. Good name in man and woman, dear my lord, Is the immediate jewel of their souls,Who steals my purse steals trash; ‘tis something, nothing;‘Twas mine, ‘tis his, and has been slave to thousands;But he that filches from me my good nameRobs me of that which not enriches himAnd make me poor indeed. (William Shakespeare, Othello, Act III, Scene III)

Mowbray, The purest treasure mortal times affordIs spotless reputation:...Mine honour is my life; both grow in one;Take honour from me, and my life is done.…(Shakespeare, The Tragedy of King Richard II, Act I, Scene I)

Students also might benefit from reading William J. Bennett’s The Book of Virtues (New York: Simon & Schuster, 1993). As Bennett points out in his introduction (page 14):

This book reminds the reader of a time-not so long ago-when the verities were the moral verities. It is thus a kind of antidote to some of the distortions of the age in which we now live.

Best wishes for achieving high ethical standards!

E. John Larsen

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