Accounting for Financial Institutions and Financial Instruments
Full Time// 3rd Semester, Course Code: ΜΕΧΡΗ336
Part Time // 3rd Semester, Course Code: ΜΕΧΡΗ-Μ336
Credits: 6
Learning Outcomes
Teaching Results
The purpose of this module is to provide participants with the necessary theoretical knowledge and techniques for:
- the basic concepts of accounting for financial instruments, frequently found in the financial statements of banks and financial institutions.
- understanding the nature and particularities of banking institutions’ accounting system, as well as Leasing for lessees.
- the analysis and interpretation of the factors that contribute and play a catalytic role in drawing up their financial statements.
- Drawing of useful information and conclusions necessary in decision-making.
The module material is developed based on International Financial Reporting Standards – IFRS) and the basic Standards covered by the module are FRS 9 – Financial Instruments, Recognition and Measurement; IAS 32 – Financial Instruments: Presentation; and IFRS16 – Leasing.
At the end of the semester the students should be able to:
- Acknowledge which IAS and IFRS associate with different types of financial instruments.
- Select an appropriate measurement method for specific financial instruments, and understand the measurement choices given by the Standards, when such choices exist, as well as the effect of these choices on reported financial statements, and especially the financial position and the comprehensive income of the firm.
- Understand the principles of recognition and measurement after initial recognition, and derecognition for financial instruments and their different measurement categories, as well as the effect of these events in respect to reported financial statements.
- Record using journal entries and T accounts of accounting events related to the recognition and measurement after initial recognition for financial instruments.
- Understand the basic problems and practical challenges that may occur in the everyday business world regarding the recognition and measurement after initial recognition for financial instruments and what is the side-effect in respect to financial statements.
- Understand the degree of discretion that exists for corporate managers about recognition and measurement post-initial recognition for financial instruments while bearing the responsibility of validation/verification.
General Competences
- Searching, analysis and synthesis of financial data and relevant information.
- Critical thinking on scientific topics related to the content of the module, relevant decision-making.
- Development of analytical and synthetic thinking, ability for autonomous work.
- Working in an international environment, understanding the challenges of applying accounting rules in an international environment.
- Working in a multidisciplinary environment, collaborating with scholars of closely related scientific fields.
- Production of creative and deductive thinking and critical reasoning.
Course Content
- Financial instruments: Introduction, applicable Standards, and definitions.
- Classification of financial instruments by their issuer into equity or debt instruments based on IAS 32 – Financial Instruments: Presentation.
- Accounting recognition and measurement for financial assets and liabilities; debt, equity, derivative instruments; SPPI (solely payments for principal and interest) test – based on IFRS 9 – Financial Instruments, recognition, and measurement.
- Basic differences between IFRS9 and the previous standard on financial instruments IAS 39.
- IFRS 9 after 1.1.2018 adjustments (and/or afterwards)
- Bookkeeping (journalising, use of T accounts) for accounting events related to financial instruments: measurement at fair value through profit and loss/at fair value through other comprehensive income, measurement at amortised cost.
- Expected loss model, impairment losses for financial instruments.
- Accounting for compound instruments, convertible bonds, split accounting: separation of convertible debt into its debt and equity components.
- Disclosures relevant to financial instruments, IFRS 7 -Financial Instruments: Disclosures.
- Accounting for leasing, IAS7 vs IFRS 16 – Leasing.
- IAS 37 Provisions, Contingent Liabilities and Contingent Assets
Student Performance Evaluation
The evaluation process is in the language that the course is taught (Greek or English) and consists of:
I. Compulsory written final examination at the end of the semester (weighting factor 70% at least) which may includes:
- Multiple choice questionnaires
- Open-ended questions
- Problem solving
- Oral examination
Evaluation criteria: correctness, completeness, clarity
II. Optional written exam or essay during the semester (weighting factor 30%) which may includes:
- Multiple choice questionnaires
- Open-ended questions
- Problem solving
- Essay/report
- Oral examination
Evaluation criteria: correctness, completeness, clarity
Special learning difficulties:
Students with special learning difficulties in writing and reading (as they are certified and characterized by a competent body) are examined based on the procedure provided by the Department.
Specifically-Defined Criteria:
The evaluation criteria are made known during the first lesson and are clearly stated on the course website and the Open e-class platform. The students are allowed to see their exam paper after its grading (during the announced office hours) and receive explanations about the grade they received.
Bibliography
Suggested Bibliography
- Module material uploaded on Eclass
- Kontos, G. (2019), Accounting for Banks and Leasing Companies, Factoring και Forfaiting3rd Edition Diplografia Editions
- Kieso, Wegandt, Warfielfd, (2018), Intermediate Accounting, IFRS Edition, Third Edition, Wiley Edition
- Alexander/Britton/Jorissen/Hoogendoorn/van Mourik (2017), International Financial Reporting and Analysis, Cengage, 7th Edition.
- Stolowy/Ding (2015), Financial Accounting and Reporting – A global perspective, Cengage, 5th Edition.
- Picker/Clarck/Dunn/Kolitz/Livne/Loftus/van der Tas (2016), Applying International Financial Reporting Standards, Wiley, 4th Edition.
Related Academic Journals
- Acharya, V.V., and Ryan, S.G. (2016). Banks’ financial reporting and financial system stability, Journal of Accounting Research, 54(2), 277-340.
- Amel-Zadeh, A., Barth, M., and Landsman, W.R. (2017). The contribution of bank regulation and fair value accounting to procyclical leverage, Review of Accounting Studies, 22(3), 1423-1454.
- Bhat, G., and Ryan, S.G. (2015). The impact of risk modeling on the market perception of banks’ estimated fair value gains and losses for financial instruments, Accounting, Organizations, and Society, 46, 81-95.
- Bierey, M., and Schmidt, M. (2017). Banks’ use of accounting discretion and regulatory intervention: The case of European banks’ impairments on Greek government bonds, The International Journal of Accounting, 52(2), 122-141.
- Boulland, R., Lobo, G.J., and Paugam, L. (2019). Do investors pay sufficient attention to banks’ unrealized gains and losses on available-for-sale securities? European Accounting Review, published online ahead of print.
- Dong, M., and Zhang, X.-J. (2018). Selective trading of available-for-sale securities: Evidence from U.S. commercial banks, European Accounting Review, 27(3), 467-493.
- Fiechter, P. (2011). Reclassification of financial assets under IAS 39: Impact on European banks’ financial statements, Accounting in Europe, 8(1), 49-67.
- Teixeira Lopes, P., and Lima Rodrigues, L. (2007). Accounting for financial instruments: An analysis of the determinants of disclosure in the Portuguese stock exchange, The International Journal of Accounting, 42(1), 25-56.
Master of Science (M.Sc.) in
«Banking and Finance»
Specialization in
«Banking and Financial Management»