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DM 863 – Financial & Managerial Accounting

Course Objectives

Whether working in the public or private sector, engineers are constrained by financial realities. Knowledge of accounting – how it works, its assumptions, and its usefulness – is an essential prerequisite to informed participation in business decision-making. The purpose of this course is therefore to provide a sound basic understanding of accounting – the “language of business” – and to develop skills in the interpretation and use of accounting information. The course will provide an understanding of how accounting information is used in organizations. We will consider reporting to external parties (financial accounting), and consider in more depth the measurement of product and activity costs (cost accounting), and the use of cost information for decision-making, planning, budgeting, and the measurement of performance (management accounting).

The course is taught from the perspective of a user of accounting information, not a preparer. The objective is to enable you to use accounting information intelligently, not to make you into accountants!

Course Leader: Prof. Darroch (Rick) Robertson, Ph.D, MBA, FCPA, FCA, Ivey Business School, Western

Course Description and Class Process

The course will be generally be taught using the case method. This 3-step learning process requires participants in the course to first read and prepare individually a case prior to each class, second to discuss their analyses in small learning teams, and then third bring the results of their group’s discussions to class for further discussion and analysis. In this highly effective learning method, the responsibility for learning rests primarily with the student, not the teacher. The instructor’s role is that of facilitator and discussion leader. We will discuss several cases each day. During the day, just under an hour has been allocated for individual preparation of the second and third cases, and a further 30 minutes for learning team discussion. You will have to prepare the first case of the day in the evening before class.


Module 1

The first module covers the important fundamentals of financial reporting. Financial reporting is the activity by which management reports externally on its stewardship to the firm’s shareholders. In Canada, financial statements are required by securities regulators (e.g., the Ontario Securities Commission) to be prepared using International Financial Reporting Standards or accounting standards acceptable in the United States.

  1. Fundamental accounting concepts, an overview of the accounting cycle, preparation of financial statements
  2. Interpretation of income statement, balance sheet, and statement of cash flows, their usefulness and limitations
  3. Ratio analysis and the measurement of performance

Module 2

The second module explores the internal use of cost information for product and service pricing, measuring performance, controlling activities, and decision-making. Since no external users are involved, management may prepare information as they see fit. The amount of information is determined only by management’s evaluation of a cost-benefit tradeoff: does the value of the information justify the cost of collecting it? We explore various uses of cost information.


R. Anthony, D. Hawkins and K. Merchant, Accounting: Text and Cases (13th edition, 2011) McGraw-Hill Irwin.


There are no formal prerequisites other than those for the programme as a whole. We assume that you have no previous accounting experience.

Course Requirements

At the end of the first module there will be a short group report analyzing a company’s financial statements, which will contribute 35% of the course grade. At the end of the second module a case will be distributed for individual preparation and hand-in two weeks after the end of the module.

Participation in class discussion (the quality, not quantity, of your discussion, questions and answers) will contribute 30% to your course grade. Quality is measured by the extent to which a contribution moves the discussion of the case forward; it can include a relevant example from work experience, a question that captures a key issue in the case, or an answer to that question.

To summarize:

Group hand-in end of Module 1 35%
Independent case hand-in end of Module 2 35%
Contribution 30%

Group Hand-In

Between the two modules, you should begin work on your group paper, which will be due at the start of the second module. This paper should be short (about 8 double-spaced pages) and focus on financial reporting.

Obtain a copy of the most recent annual report of a company of interest to you. As a consultant, your group has been hired to write a recommendation regarding the attractiveness of the company as a potential investment. You are asked to prepare a report of the financial condition of your company using only the information in the annual report. Your report should compare the current stock price with what one share buys an investor in terms of economic return, and any other analysis of the information in the financial statements that you consider relevant. Consider what the critical accounting policies are for the company and the level of disclosure being provided by the company.

Biography of Course Leader

Rick Robertson

Darroch (Rick) Robertson is an Associate Professor in the Management Accounting and Control area at the Richard Ivey School of Business with a teaching emphasis in taxation and financial accounting. He has taught in all of School’s degree programs and was the founding director of Financial Analysis for Non-financial Executives, a highly rated, five-day executive program. He was won several teaching awards at Ivey including being a three time winner of the David C. Burgoyne Award for outstanding commitment to student development. His research interests are currently in the area of corporate income taxes and the provision of pension benefits by corporations.

Dr. Robertson received his undergraduate degree, MBA and PhD from Ivey. He earned his CA in 1979 with the accounting firm that is now known as Ernst & Young and returned to work for them in 1991 as a senior tax manager. He has completed the CICA In-depth Tax Course. In 1997, he was elected a fellow (FCA) of the Institute of Chartered Accountants of Ontario. Rick has been the Chairperson of the Examinations Committee at the Institute of Chartered Accountants of Ontario (ICAO) and served as a member of the CICA Task Force on Corporate Income Tax. Rick served as Chair of the Audit Committee of Stackpole Limited, a TSX listed company, prior to its takeover and as Chair of the Audit Committee of Northcore Technologies Inc., a TSX listed company.