UNIVERSITI UTARA MALAYSIA

COLLEGE OF BUSINESS
SESSION A161
______________________________________________________________________________
COURSE CODE
:
BKAF3083
COURSE
:
ACCOUNTING THEORY AND PRACTICE
PRE-REQUISITE
:
BKAF3073 FINANCIAL ACCOUNTING AND
REPORTING IV

1.0

SYNOPSIS
This course is an advanced level course focusing on financial accounting theory; and as
such, it differs from other accounting courses learnt previously. It is designed to further
enhance students understanding of the concepts and issues in accounting theory and
practices. This course involves the study of the practical and theoretical issues involved
in the development, implementation and changes in accounting theories and regulatory
framework. As this course will be seminal-like, this course will provide students with
some generic skills required in the accounting profession such as team working,
interaction, leadership, follower-ship, critical and creative thinking skills, decision
making skills, analytical skills, communication skills as well as professional demeanor.

2.0

OBJECTIVES
Upon completion of this course, students are expected to:
2.1. analytically understand the formulation, construction and verification of accounting
theory, which includes the concepts and issues in this arena;
2.2. critically evaluate the development of conceptual framework project and accounting
standard setting;
2.3. methodically comprehend the essential of research in addressing the issues between
accounting theory and practices in the real world; and
2.4. systematically analyse current issues in financial accounting and reporting practices
through case study-based learning.

3.0

LEARNING OUTCOMES
Upon completion of this course, students should be able to:
3.1. scrutinise the development of accounting theory. (C4,P2,A3)
3.2. distinguish the various accounting theory construction approaches and accounting
theory verification. (C4,P2,A3)
3.3. elaborate conceptual framework and accounting standard setting process from
Conventional and Islamic accounting perspectives. (C4,P3,A4)
3.4. analyse earnings management activities, economic consequences of accounting
standards, and importance of ethics in financial reporting process. (C4,P3,A4)
3.5. evaluate the current financial reporting issues and identify the missing link to
accounting theory. (C4,P3,A4)

4.0

REFERENCES
The importance of regular and extensive reading is very much emphasized in this course.
There are four (4) main references that have been chosen as the text for this course.
Students are also expected and encouraged to read widely from other additional
recommended books, articles from accounting journals, business bulletin and
pronouncements by the Malaysian Accounting Standard Board (MASB), the Malaysian
Institute of Accountants (MIA) and the Malaysian Institute of Certified Public
Accountants (MICPA).
Main References:
Godfrey, J., Hodgson, A., Holme, S., & Tarca, A., (2010). Accounting Theory, 6th ed.,
John Wiley & Sons, Australia (GHHT)
Scott, W.R., (2009). Financial Accounting Theory, 5th ed., Pearson Prentice Hall
International Inc., Toronto (SWR)
Belkaoui A.R., (2009). Accounting Theory, 6th ed., Business Press, U.K. (ARB)
Deegan, C. & Unerman, J., (2007). Financial Accounting Theory, 2nd ed., McGraw
Hill, Australia
Other References:
Hendriksen, Eldon,S. (1990). Accounting Theory, 4th ed., Richard D. Irwin Inc.,
Illinois
Littleton, A.C., (1985). Structure of Accounting Theory, American Accounting
Association, Monograph No. 5
Schroeder, R.G., Clark, M.W., & Cathy, J.M., (2001). Financial Accounting Theory
and Analysis: Text Readings and Cases, 7thEd., John Wiley & Sons, Inc .
Statement on Accounting Theory and Theory Acceptance, AAA
Susela, S.D., Hooper, K., Davey, H., (2006). Accounting Theory and Practice: A
Malaysia Perspective, Pearson Prentice Hall Kuala Lumpur, Malaysia (SHD)

5.0
NO. /
WEEK
1.0
Week
14

COURSE CONTENT
CONTAC
T HOURS

TOPICS
INTRODUCTION
1.1 Historical development of accounting
1.1.1 The Importance of Accounting History
1.1.2 Early Development of Double Entry
Bookkeeping: Bookkeeping vs.
Accounting
1.1.3 Accounting History and Ideology
1.1.4 Institutional Development of Accounting
Practices
1.1.5 Early Accounting in Muslim Civilization
1.2 Introduction to Accounting Theory
1.2.1 Overview of Accounting Theory
1.2.2 Nature and Purpose of Theory
1.2.3 Theory and Method
1.2.4 Accounting Theory Construction and
Formulation
Approaches to the Development of
Accounting Theory: Paradigms in
Accounting Research
1.2.4.1 Pragmatic theories
1.2.4.2 Syntactic & semantic theories
1.2.4.3 Normative theories
1.2.4.5 Positive theories
1.2.5 Accounting Theory Approaches
1.2.5.1 Traditional Approach
1.2.5.2 Regulatory Approach
1.2.5.3 Positive Approach
1.2.5.4 Behavioral Approach
1.2.5.5 Accounting Paradigms
1.2.6 Need and Importance of Accounting
Theory
1.2.7 Accounting Theory and Policy Making
1.2.8 The Structure of Accounting Theory

TEXT
REFERENCE
S
ARB
Ch 1

2 hrs

SHD
Ch 1,2 & 3
Journal Articles

GHHT
Ch 1 & 2
4 hrs

DU
Ch 1, 2 & 3
GHHT
Ch 3

ARB
Ch 3,4,9 &10
3 hrs

DU
Ch 11
ARB
Ch 6

NO. /
WEEK

CONTAC
T HOURS

TOPICS

2.0

THE CONCEPTUAL FRAMEWORK AND

STANDARD SETTING PROCESS:
Week
CONVENTIONAL VERSUS ISLAMIC
57
2.1 What is Conceptual Framework?
2.2 Why Conceptual Framework is needed?
2.3 Components of Conceptual Framework
2.4 Objectives of Conceptual Framework
2.5 Alternative Views of Conceptual Framework
2.5.1 Conventional versus Islamic views
2.5.2 Islamic Accounting
2.5.2.1 Philosophy of Islamic Accounting
2.5.2.2 Global Islamic Resurgence
2.5.2.3 Need for Islamic Accounting
2.5.2.4 Current initiatives on Islamic
Accounting
2.6 Accounting Standards and the Needs for Accounting
Standards
2.7 Standard Setting Process
2.8 Standard Setting:
2.8.1 Economic Issues
2.8.2 Political Issues
2.8.3 Global CF
2.9 Due Process of Standard Setting in Malaysia
2.10 FRS and the Adoption of FRS in Malaysia
3.0
Week
8

RECOGNITION AND MEASUREMENT ISSUES

3.1 Introduction to Measurement Theory
3.1.1 What is measurement?
3.1.2 Types of measurement
3.1.3 What do we measure?
3.1.4 Reliability and accuracy
3.1.5 Measurement in accounting
3.1.5.1 Measurement concepts: from standard
setters
3.1.5.2 Recognition and measurement
standard setters current activities
3.2 Relevance and Reliability Issues
3.2.1 Adopting an Accounting Perspective
3.2.2 Historical Cost vs Fair Value Accounting
3.2.3 Current Cost Accounting
3.2.4 Exit Price Accounting
3.2.5 Reliability versus relevance

TEXT
REFERENCE
S
GHHT
Ch13
SHD
Ch 8,9 & 11

4 hrs

DU
Ch 6
ARB
Ch 5
Websites &
Journal
Articles
SHD
Ch 7 & 12

4 hrs

SWR
Ch 12 & 13
Websites
Articles &
Journal
Articles

2 hrs

SHD
Ch 10

GHHT
Ch 6,7,8,14 &
15
2 hrs

ARB
Ch 12 & 13
DU
Ch 5

NO. /
WEEK
4.0
Week
9 10

5.0
Week
10 11
6.0
Week
12 13

CONTAC
T HOURS

TOPICS
SPECIFIC ISSUES
4.1 Economic Consequences and Positive Accounting
Theory
4.1.1 The Rise of Economic Consequences
4.1.2 Relationship Between Efficient Market
Theory and Economic Consequences
4.1.3 Economic Consequences of Accounting
Standards
4.1.4 Hypothesis of Positive Accounting Theory
4.1.5 Conclusion on EC and PAT
4.2 An Analysis of Conflict
4.2.1 Game Theory
4.2.2 Agency Theory
4.2.2.1 Employment contract
4.2.2.2 Lending contract
4.3 Earnings Management (EM) and Creative
Accounting
4.3.1 Overview of EM and Creative Accounting
4.3.2 Patterns of Earnings Management
4.3.3 Evidence of Earning Management for Bonus
Purposes
4.3.4 Other Motivations for Earnings Management
4.3.4.1 To meet investors earnings
expectations
4.3.4.2 Debt Contract Motivations
4.3.4.3 Initial Public Offerings (IPO)
4.3.5 The Good Side of Earnings Management
4.3.5 The Bad Side of Earnings Management
4.3.5.1 Opportunistic Earning Management
4.3.5.2 Do Managers Accept Securities Market
Efficiency?
COMPREHENSIVE CASES
5.1 Earning management
5.2 Integrity and ethics in preparing and reporting
financial information
5.3 Other current related issues

TEXT
REFERENCE
S
SWR
Ch 8

3 hrs

DU
Ch 7
Journal
Articles
SWR
Ch 9 & 10

2 hrs
Journal
Articles

SWR
Ch 11
3 hrs

SHD
Ch 14
Journal
Articles

6 hrs
Individual
Presentatio
n

Websites
Articles &
Journal
Articles
Case Study
GHHT
Ch 19

CURRENT FINANCIAL REPORTING ISSUES

6.1 Corporate social and environmental reporting
6.2 On-line reporting and XBRL
6.3 Performance Reporting
6.4 Management commentary
6.5 Human resource and intellectual capital reporting

SHD
Ch 15
6 hrs

DU
Ch 9
Websites
Articles &
Journal
Articles

7.0
REVISION WEEK

Week
14

6.0

TEACHING METHODS
A combination of lecture and discussion, tutorial, case study methods will be employed.
The main and fundamental ideas of each topic will be explained during lectures through
discussions, students presentation and participation. Each topic will be discussed in
further details during interaction and participation from students.
7.0 ASSESSMENTS
Coursework**
Topical Assignments/Quizzes
Group Project: Case Study
Group Presentation: Case Study
Total coursework
Final Examination
Total

20%
15%
5%
40%
60%
100%