Financial Accounting – an MBA course at Said Business School

A core course taken in the first term
8 lectures, plus 4 1 hour support classes

Pre-course thoughts
According to the course material this is primarily about how to interpret annual reports, and to a lesser extent how to write them. I’ve read plenty of annual reports in my time, but have to admit that a quick skim of the chairman’s letter and a glance at the balance sheet totals is about as in-depth as I’ve ever got with them.

Now it seems I can look forward to an entertaining study of liquidity, capital structure, gearing and so on. However I suspect that what may have been quite a dull course will be enlivened by questions like ‘but what about Enron?’ and ‘come on, we all know this stuff is made up really!’. That’s a bit flippant, but it does seem that with all kinds of reforms to this stuff about to kick off this may be the course ‘of the moment’ come Michaelmas term.

Is it all made up really? I’ll tell you at the end of the course…

Post course thoughts
It is all made up. Accounting is one big fictional construct, but that doesn’t mean it’s not useful. Once we got past a couple of lectures on technical accounting stuff (dull) we got into the meat of the thing – how to understand, analyze and compare financial reports. I can honestly say I’d never realized how important or useful these things were before. My revision consisted of analyzing the annual reports of premiership football clubs and its amazing how a bit of background knowledge lets you fill out your understanding of what a business is doing. I mean, I knew Leeds and Chelsea were in debt, but I never knew just how much trouble they’d got themselves into till I looked into it.

Anyway, there was a big chunk of the course on creative accounting, and the issues surrounding the recent scandals and accounting reform. What was interesting is how little attention people seemed to have paid to what was behind the numbers, a lot of very highly paid analysts really do seem to have done nothing but swallow the company line and never questioned some extremely dubious practices or incongruous numbers.

So, it may not have changed my mind about not wanting to work in, with or anywhere near accounting, but it definitely taught me a bunch of useful stuff.