Introduction

This interactive seminar will develop your understanding of the role played by financial reporting in communication between the enterprise and its stakeholders and its influence over managerial decisions. The seminar will consider the framework imposed by the accounting and financial standard setting process, the implications of recent scandals and the related developments in the USA and elsewhere that affect companies worldwide.

Seminar Objectives

By the end of this programme you will be able to:

• Identify the role of accounting standards in the communication of financial results
• Apply key accounting standards to their respective enterprises
• Appreciate the need for openness and clarity in financial reporting
• Understand and work with the role of audit

Who Should Attend?

• Professionals and CFOs responsible for financial reporting
• Accountants, project professionals, budget analysts, vice presidents of finance, controllers and treasurers
• Anyone with an interest in financial reporting

Organisational Impact

• More confidence in understanding financial position and performance
• Awareness of the causes of accounting scandals
• Understanding of the importance of corporate governance
• Apply analysis to increase growth and profits

Personal Impact

• Exchange of ideas and knowledge with other professionals
• Increased awareness of techniques in financial analysis and financial reporting
• Increased ability to identify problem areas
• Increased confidence to tackle new situation

Competencies Emphasized

This programme aims to enable participants to develop the following competencies:

• Increased knowledge of financial analysis
• Ability to interpret financial statements
• Increase technical ability in a variety of key areas

Training Methodology

The seminar will be conducted along workshop principles with formal lectures supplemented by case studies. Relevant case studies will be provided to illustrate the practical application of accounting issues discussed. Discussion in groups to promote exchange of concepts and ideas. Difficult technical accounting concepts are minimised wherever possible and handled in a visual way that is easy to understand with examples demonstrated.

Seminar Outline

DAY 1

Financial reporting and accounting and reporting standards

• The role of accounting in financial reporting
• Business objectives and shareholder wealth maximisation
• Users of financial information
• Accounting terminology
• The framework of accounting and financial reporting
• Accounting concepts
• Accounting standards (FRS, IAS, and IFRS)
• The nature and purpose of financial statements
• The key financial statements

International financial scandals and corporate governance

• Financial scandals and frauds (e.g. Barings Bank, Enron, WorldCom) and the implications for the reputation of financial reports
• The agency problem
• Corporate governance – the answer to the agency problem?
• The context of corporate governance (CG)
• CG in the UK – combined code of best practice
• CG in the USA – Sarbanes-Oxley Act
• CG in GCC countries
• Audit and the role of auditors

Company financial position reporting – the balance sheet

• The structure of the balance sheet
• Shareholders’ equity; liabilities; assets
• Current assets and fixed assets
• Current liabilities and non-current liabilities
• Working capital
• Balance sheet preparation
• What does the balance sheet tell us about the company?
• Limitations of the conventional balance sheet

DAY 2

Working capital analysis

• Working capital and working capital requirement
• Inventory
• Accounts receivable
• Accounts payable
• Cash

Company financial performance reporting – the income statement

• What is profit?
• The structure of the income statement (profit and loss account)
• The categories of income and expenditure in the income statement
• Income statement preparation
• Valuation of assets impact on the income statement and balance sheet
• The links between the income statement, balance sheet and cash flow

Break-even analysis

• Cost/volume/profit (CVP) relationships
• Break-even analysis
• The impact of cost structure, volume and sales changes
• Limitations of CVP analysis

DAY 3

Company financial reporting – the cash flow statement

• What is included in the cash flow statement?
• Why is cash flow so important?
• The structure of the cash flow statement
• Sources of cash
• Uses of cash
• Cash flow statement preparation
• The links between the cash flow statement, profit and loss account and balance sheet

The real value of cash flow

• Interest rates
• Future values and present values
• Time value of money
• Discounted cash flow (DCF)
• Annuities and perpetuities

Capital Investment

• What is an investment?
• Appraisal of investments
• Net present value (NPV) v internal rate of return (IRR)
• Other factors affecting investment
• Free cash flow
• Capital rationing
• Risk and uncertainty and investment
• Capital investment project management
• Equivalent annual cost (EAC) method
• Capital rationing

DAY 4

Company financing

• Sources of finance
• Gearing
• Weighted average cost of capital (WACC)
• Cost of debt and equity capital
• Cost of equity and risk, CAPM and the factor

Company valuation

• The reasons for company valuation
• Types of valuation methods
• Stock market valuation
• Net assets valuation
• Capitalised earnings valuation
• P/E ratio valuation
• Gordon growth model valuation
• DCF valuation

Analysis of growth – financial modelling

• Analysis of company growth
• Excel financial growth modelling

DAY 5

Analysis of financial reporting

• Publication of financial statements
• The annual report and accounts
• Tools and techniques of financial reporting: ratios; trends; common size analysis
• The use of financial ratios
• The Dupont system
• The best performance measure – cash or profit?
• Common size (or horizontal) trend analysis of financial statements
• Vertical trend analysis of financial statements
• Segmental analysis of financial statements
• Value added analysis of financial statements
• Financial distress
• Altman's Z-score analysis and it's uses

Integrated financial accounting case studies

• Preparation of a set of financial statements
• Analysis of the position of shareholders, auditors, and directors