Course Outline

Accounting Theory
(Accounting in Society)

Fall 2023

Department of Accountancy
John Molson School of Business
Concordia University

General Information
Course Number: ACCO 400
Sections: A, C, D
Credits: 3
Class Time and Room:
A: Monday, 11:45AM ‒ 2:30PM, MB 2.445
C: Monday, 5:45PM ‒ 8:15PM, MB 5.265
D: Tuesday, 8:45AM ‒ 11:30AM, MB 2.435 (Note: The last class is on Saturday, Dec. 2,
10:00AM ‒ 12:45PM. The same room.)

Professor: Luo He, Ph.D.

Email: luo.he@concordia.ca
When you email me, please include ACCO 400 and your section letter in the subject line to
ensure a timely response.
Telephone: (514) 848-2424 ext. 2730
Office: MB 14.239
Office hours: By appointment

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Territorial Acknowledgement
Concordia University is located on unceded Indigenous lands. The Kanien’kehá:ka Nation is recognized as
the custodians of the lands and waters on which we gather today. Tiohtià:ke/Montréal is historically known
as a gathering place for many First Nations. Today, it is home to a diverse population of Indigenous and
other peoples. We respect the continued connections with the past, present, and future in our ongoing
relationships with Indigenous and other peoples within the Montréal community.

Course Description
This course examines the theoretical foundations of the contemporary approach to financial reporting, and
the political and pragmatic considerations in the development of the conceptual framework underlying
current accounting standards. Alternative theories of accounting are discussed and controversial areas are
emphasized.

Objectives
Accounting is beyond mere bookkeeping. Accounting numbers are socially constructed. All stakeholders
have their own interests and incentives and will influence the construction of the accounting numbers.
Hence, one needs a critical mindset when preparing and using accounting numbers.

The primary goal of this course is to expose you to and advance your understanding of emerging ideas on
accounting, new topics and their impact on accounting and accountants, and develop your ability to
critically analyze financial reporting practices. We take the perspective of the various stakeholders of the
accounting world: the preparers (accountants and managers), the primary users (shareholders and
debtholders, active and potential), the auditors, the analysts, the regulators and standard setters, etc. The
social construction of accounting numbers and ethical and responsible behaviour are main guiding
principles for all topics discussed.

By the end of this course, you should develop an understanding of the different theories we study. More
importantly, you should learn to think in a conceptual way, foster the ability to abstract from the particulars
of a situation, and be able to explain why financial accounting practices are the way they are in terms of
underlying theories. Finally, you should be able to apply proper theories to critically analyze current issues
being considered in contemporary accounting literature.

Instructional and Learning Methods

This senior level course focuses on inculcating a culture of self-learning. The instructor is a facilitator who
encourages students to engage in the process of self-learning. While I use lectures to illustrate some
accounting theories and conceptual issues, your own reading and our discussion in class will be the key
modes of learning. The most effective learning takes place via a process of self-discovery through careful
and critical reading of the required material, interactions with peers and the instructor, and digging deep
into an accounting issue that interests you and your team members. Your own preparation and the effort
you exert will determine how much you learn from this course.

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Schedule

Week # Date Topic

Week 1 A&C: Monday, Sept. 11 Introduction and History of Accounting
D: Tuesday, Sept. 12
Week 2 A&C: Monday, Sept. 18 Standard Setting and Political Issues
D: Tuesday, Sept. 19 Due: Group Composition
Week 3 A&C: Monday, Sept. 25 Investors / Shareholders
D: Tuesday, Sept. 26
Week 4 A&C: Monday, Oct. 2 Creditors
D: Tuesday, Oct. 3
Thanksgiving and Fall Break
Week 5 A&C: Monday, Oct. 16 The Stewardship Role of Accounting Numbers
D: Tuesday, Oct. 17 Due: Group Project Topic Decided & Approved
Week 6 A&C: Monday, Oct. 23 Managers (1/2) – Earnings Management
D: Tuesday, Oct. 24
Week 7 A&C: Monday, Oct. 30 Managers (2/2) – Corporate Disclosure
D: Tuesday, Oct. 31
Week 8 A&C: Monday, Nov. 6 Ethical Accounting
D: Tuesday, Nov. 7
Week 9 ALL sections: Hot Topic Session:
(Guest speaker Monday, November 13, Sustainability Accounting
via Zoom. No in- 6:30PM – 8:00PM
person class)
Week 10 A&C: Monday, Nov. 20 The Auditor
D: Tuesday, Nov. 21 Due: Hot Topic Essay (Wednesday, Nov. 22)
Week 11 A&C: Monday, Nov. 27 Corporate Governance
D: Tuesday, Nov. 28
Week 12 A&C: Monday, Dec. 4 International Dimensions
D: Saturday, Dec. 2 Wrap Up and Q&A
10AM ‒ 12:45PM Due: Group Project Report (Monday, Dec.4)

Course Materials
• Class slides: The slides are posted in advance on Moodle.
• Required readings (see list below): Available in electronic version through Concordia Library
reserves or at the links provided below.
• Additional material posted on Moodle.

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Week # Topics and Required Readings
Week 1 Introduction and History of Accounting
• Chapters 1, 3, and 4 of Chatfield, M. (1974) “A History of Accounting Thought”, Hinsdale, Ill: The Dryden
Press.
Week 2 Standard Setting and Political Issues
• Scott, W. R. & O’Brien, P. C. (2020) “Financial Accounting Theory”, Eight Edition, Chapters 12.2, 12.3,
12.4, 12.5, 13.2, 8.6
Week 3 Investors / Shareholders
• Scott, W. R. & O’Brien, P. C. (2020) “Financial Accounting Theory”, Eight Edition, Chapters 4.2, 4.3, 4.6,
4.7, 5.3, 6.1, 6.2.1, 6.2.2, 6.3
Week 4 Creditors / Debtholders
• Scott, W. R. & O’Brien, P. C. (2020) “Financial Accounting Theory”, Eight Edition, Chapters 8.2, 8.3, 8.4,
8.5
• O’Brien, P. C., and Scott, W. R. (2012) Contract Theory, CA Magazine, April.
Week 5 The Stewardship Role of Accounting Numbers
• Scott, W. R. & O’Brien, P. C. (2020) “Financial Accounting Theory”, Eight Edition, Chapters 10.3, 10.4.1
• O’Connell, V. (2007) Reflections on Stewardship Reporting, Accounting Horizons 21(2): 215–227.
• Pages 364–368 of Shivakumar, L. (2013) The Role of Financial Reporting in Debt Contracting and in
Stewardship, Accounting and Business Research 43(4): 362-383.
• Pages 64‒71 of Air Canada 2023 Notice of Annual Meeting of Shareholders and Management Proxy
Circular. (Note: On p. 64, start from “Air Canada compensation comparator group”)
Week 6 Managers (1/2) – Earnings Management
• Scott, W. R. & O’Brien, P. C. (2020) “Financial Accounting Theory”, Eight Edition, Chapters 11.1, 11.2,
11.3, 11.4
• Sections 1, 3, and 4 from Graham, J. R., Harvey, C. R., and Rajgopal, S. (2005) The Economic Implications
of Corporate Financial Reporting, Journal of Accounting and Economics 40: 3‒73.
Week 7 Managers (2/2) – Corporate Disclosure
• Pages 1–4 of Cazier, R.A. & Pfeiffer, R.J. (2016) Why Are 10-K Filings So Long? Accounting Horizons
30(1): 1–21.
• Blogpost “The Corrosive Effect of Offshore Financial Centers on Multinational Firms’ Disclosure
Strategy” by W. Ben Amar, L. He, T. Li, and M. Magnan, October 9, 2018. Available online at
https://sites.duke.edu/thefinregblog/2018/10/09/the-corrosive-effect-of-offshore-financial-centers-on-
multinational-firms-disclosure-strategy/
Week 8 Ethical Accounting
• Chapter 2 from Duska, R., Duska, B. S., Ragatz, J. (eds) (2011) “Accounting Ethics”, UK: West Sussex.
• Code of Ethics of CPA Quebec. Available online at
http://legisquebec.gouv.qc.ca/en/ShowDoc/cr/C-48.1,%20r.%206
Week 9 Hot Topics Session: Sustainability Accounting

Week 10 The Auditor

• Brewster, B. E., Butler, J. B., and Watkins, A. L. (2019) Eliminating Biases That Jeopardize Audit Quality,
Journal of Accountancy, 228 (2): 42–47.
• CPAB Regulatory Oversight Report: 2022 Annual Inspections Results. Available online at
https://cpab-ccrc.ca/docs/default-source/inspections-reports/2022-annual-inspections-results-en.pdf

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 • Selling, T. I. (2015) On the Coexistence of Professionalism and Commercialism in CPA Firms, The CPA
Journal, May.
• Farrell, S. (2019) Watchdog Finds Work of Patisserie Valerie Auditor Unacceptable. The Guardian, July 10.
Week 11 Corporate Governance
• Chapter 1 from Larcker, D., and Tayan, B. (2016) “Corporate Governance Matters”, Pearson Ed.
Week 12 International Dimensions
• Sections 1, 2, 3, 4 from De George, E. T., Li, X., and Shivakumar, L. (2016) A Review of the IFRS Adoption
Literature, Review of Accounting Studies, 21: 898‒1004.

Course Evaluation
The final grade for the course is based on the following components:
A. Individual work
1. Contribution to class discussion 10%
2. Hot Topic essay 15%
3. Final exam 50%
75%
B. Group project 25%
TOTAL 100%

A. Individual work (75%)

1. Contribution to class discussion (10%)
See a separate file for the detailed instructions.

2. Hot Topic essay (15%)

The essay is a reflection on the discussion in the Hot Topic Session of Week 9. The essay should draw
links between the Hot Topic and the course content and/or other related experience or interests the
student may have. (Detailed instructions for the essay will be provided by Week 7.)

3. Final exam (50%)

There is an in-person three-hour final exam scheduled in the regular final examination period. This
exam is common across all sections of ACCO 400.

B. Group project (25%)

The group project provides students with the opportunity to apply accounting theory or standards to
evaluate accounting phenomena. Groups are self-formed with four or five members. Group
composition should be submitted via Moodle by Week 2 of class. Every group needs to decide on their
project topic and obtain instructor approval by Week 5. The final report is due by Week 12.

Note that an optional peer valuation form is available. If the group members choose to submit the form,
this will be taken into consideration to determine a student’s final grade for the group project.

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Grading
The standard grading chart below is applied for this course.

Numeric grade Letter grade Grade points

90-100 A+ 4.30
85-89 A 4.00
80-84 A− 3.70
77-79 B+ 3.30
73-76 B 3.00
70-72 B− 2.70
67-69 C+ 2.30
63-66 C 2.00
60-62 C− 1.70
57-59 D+ 1.30
53-56 D 1.00
50-52 D− 0.70
0-49 F, FNS 0

Ethical Behaviour
All individuals participating in courses are expected to be professional and constructive throughout the
course, including in their communications. Concordia students are subject to the Code of Rights and
Responsibilities of Concordia University, which applies when they are physically and virtually engaged in
any University activity, including classes, seminars, and meetings. Students engaged in University activities
must respect this Code when interacting with any Concordia community members, including faculty, staff,
and students, whether such interactions are verbal or in writing, face-to-face or online. Failing to comply
with the Code may result in charges and sanctions outlined in the Code.

Plagiarism:
The most common offense under the Academic Code of Conduct is plagiarism, which the Code defines as
“the presentation of the work of another person as one’s own or without proper acknowledgement.” This
includes material copied word for word from books, journals, Internet sites, professor’s course notes, etc.
It refers to material that is paraphrased but closely resembles the original source. It also includes for example
the work of a fellow student, an answer on a quiz, data for a lab report, a paper or assignment completed
by another student. It might be a paper purchased from any source. Plagiarism does not refer to words alone
―it can refer to copying images, graphs, tables and ideas. Finally, if you translate the work of another
person into any other language and do not cite the source, this is also plagiarism.

In Simple Words: Do not copy, paraphrase, or translate anything from anywhere without saying where you
obtained it (Source: the Academic Integrity Website).

AI tools:
Large language models like ChatGPT have been known to refer to sources that do not exist and generate
imaginary quotes. There are also concerns that AI uses text without the consent of the original authors and
reinforces common societal biases. Please, therefore, consider the ethical implications of using these tools.

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If they are used, be sure to use them critically. And please cite them as you would any source, in APA style:
https://apastyle.apa.org/blog/how-to-cite-chatgpt.

Student responsibilities:
• Consistently read the required readings for each class and do any other assigned work.
• Consistently work on the group project. Immediately, openly, and respectfully address any
disagreements with your teammates. Working through disagreements is a necessary part of
learning to work in a team.
• Comply with the Code of Rights and Responsibilities and the Code of Conduct, as stated above.

Accessibility and Support Services at Concordia

The instructor will strive to make learning experience as accessible and inclusive as possible. If you have
accessibility needs that require academic accommodations, please see an advisor from the Access Centre
for Students with Disabilities (ACSD) as soon as possible to set up an accommodation plan.

Concordia University offers many support services that are available to students free of charge. The web
page linked is a useful facility that guides students to a specific support service that can provide appropriate
assistance.

Sexual violence, including sexual harassment and sexual assault, is not tolerated at Concordia. Please see
Concordia’s policy on sexual violence for more information about awareness and prevention, support for
survivors/victims, responding to disclosures and procedures for reports and complaints. You can also
contact the Sexual Assault Resource Centre for information and support by email sarc@concordia.ca or
phone (514) 848-2424 x 3353.

Use of Third-Party Software and Web Sites

Students are advised that external software and/or websites may be used in the course and students may be
asked to submit or consent to the submission of personal information (for example, name and email) to
register for an online service. Students are responsible for reading and deciding whether or not to agree to
any applicable terms of use. Use of the software and service is voluntary. Students who do not consent to
the use the software or service should identify themselves to the course instructor as soon as possible, and
in all cases before the DNE deadline, to discuss alternate modes of participation.

Note that, as a part of this course, some of the lectures and/or other activities in this course may be recorded.
Recordings will be focused on the instructor and will normally exclude students. It is possible, however,
that your participation may be recorded. If you wish to ensure that your image is not recorded, speak to
your instructor as soon as possible.

Also, please note that you cannot share recordings of your classes and that the instructor will only share
class recordings for the purpose of course delivery and development. Any other sharing may be in violation
of the law and applicable University policies and may be subject to penalties.

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For some of your course work, the instructor may use the software Ouriginal (previously Urkund). It uses
text matching technology as a method to uphold the University’s high academic integrity standards to detect
any potential plagiarism. Ouriginal is integrated into Moodle. For the assignment set up to use Ouriginal,
the software will review your paper when you upload it to Moodle. To learn more about Ouriginal’s privacy
policy, please review its Privacy Policy.

Intellectual Property (IP)

Content belonging to instructors shared in online courses, including, but not limited to, online lectures,
course notes, and video recordings of classes remain the intellectual property of the faculty member. It may
not be distributed, published or broadcast, in whole or in part, without the express permission of the faculty
member. Students are also forbidden to use their own means of recording any elements of an online class
or lecture without express permission of the instructor. Any unauthorized sharing of course content may
constitute a breach of the Academic Code of Conduct and/or the Code of Rights and Responsibilities. As
specified in the Policy on Intellectual Property, the University does not claim any ownership of or interest
in any student IP. All university members retain copyright over their work.

Private Tutoring Companies

Private tutoring companies, some of whom aggressively promote their services on and off-campus, are not
authorized by Concordia University to distribute flyers on University premises and may not use Concordia
University facilities to promote or provide their services. Concordia University and its academic
departments do not have any affiliation with these companies even though names such as JMSB, Concordia,
or references to specific departments often appear visibly.

Extraordinary Circumstances
In the event of extraordinary circumstances and pursuant to the Academic Regulations, the University may
modify the delivery, content, structure, forum, location and/or evaluation scheme. In the event of such
extraordinary circumstances, students will be informed of the changes.

Under extraordinary circumstances, the instructor reserves the right to make changes to some of the topics
covered, homework and assignments, dates, and grading policies at any time during the semester. These
changes will be updated via the Moodle course website. Students are responsible for keeping up with any
class-related announcements via the Moodle course website.

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