COURE NUMBER: MBA 223.1

COURSE TITLE: Corporate Financial Reporting

UNITS OF CREDIT: 3 units

INSTRUCTOR: Suneel Udpa

E-MAIL ADDRESS: udpa@haas.berkeley.edu

PREREQUISITE(S): MBA202 Financial Reporting

CLASS FORMAT: Lecture (70%) and Case & Class Problems (30%)

REQUIRED READINGS: Financial Reporting & Analysis. Revsine, Collins, et al. McGraw Hill, 7^th Edition, ISBN-10: 1259722651, ISBN-13: 978-1259722653

BASIS FOR FINAL GRADE: Take-home project, Home-work assignments, Exams

CAREER FIELD: Finance professionals – Equity and credit analysts, investment bankers, lenders, portfolio managers, consultants, private equity investors, M&A professionals, venture capitalists, and personal investors. In addition, the course is useful for managers, board members, and others charged with monitoring corporate performance (such as enforcement personnel at the SEC).

ABSTRACT OF COURSE’S CONTENT AND OBJECTIVES: 

Finance professionals need to be skilled users of financial statements since they are the primary source of company-specific information. Users of financial statements face two challenges: One, the financial reporting environment is complex and dynamic. The primary organization in the U.S. setting accounting standards (the Financial Accounting Standards Board [FASB]) and its global counterpart (the International Accounting Standards Board [IASB]) has in the past few years issued a large number of new and complex (tortuous is a better term) standards. It is crucial for financial professionals and other users to understand how these standards affect financial statements and the measurement of earnings. In addition, it is important for them to understand the key similarities and differences between US GAAP and IFRS (International GAAP), since investing a global undertaking.

Two, users of financial statements find themselves ‘assaulted” with a continuous stream of news announcements of accounting irregularities. These irregularities have many labels, such as aggressive accounting, earnings management, income smoothing, accounting distortions, and fraudulent financial reporting. Regardless of the label and the degree to which they distort financial statements, they have similar effects – the financial statements which serve as a basis for analysis and valuation are biased, distorted, and misleading.

The purposes of this course are twofold: To help you understand the financial reporting standards and practices in both the U.S. and abroad and to help you avoid being misled by financial statements that have been distorted by creative accounting practices.

After a general introduction to the basics of accounting and the financial reporting environment, we will delve into the specific accounting topics, including the income statement, receivables, inventories, off-balance sheet financing, income tax reporting, and merger accounting. For each topic, we will first understand the accounting standard (GAAP), then examine how companies can distort the financial statements (that is, identify potential red flags in financial reporting practices) and then determine how to undo the accounting distortions and restate financial statements.

The skills developed in this class will also overlap with those required by the Chartered Financial Analyst (CFA) program.

BIOGRAPHICAL SKETCH: 

Suneel Udpa, PhD, is Continuing Lecturer and Distinguished Teaching Fellow at the Haas School of Business, University of California, Berkeley. He was awarded the Earl F. Cheit Award for Excellence in Teaching in 2003, 2007, 2010, and 2013, and in 2015 was awarded the Berkeley-Haas Lifetime Achievement Award. Suneel consults extensively in the area of mergers & acquisitions and provides litigation support in cases involving valuation and damage estimation. Suneel received his MS in Business Administration and PhD in Accounting from the John M. Olin School of Business, Washington University in St. Louis.