22610 Accounting for Insolvency

Subject level: Undergraduate

Handbook description

This subject provides the accounting knowledge needed for businesses which are being liquidated. It studies the characteristics and financial management mistakes leading to the failure of such businesses and introduces the accounting requirements of deceased estates. Topics covered include: executorship; bankruptcy; the practice of termination accounting; and case studies, including financial management aspects of failed businesses.

Subject objectives/outcomes

On the successful completion of these subjects, students should be able to:

1. understand the role of accountants and the essential elements of accounting for insolvency, bankruptcy and liquidations
2. identify, explore and assess the characteristics and financial management mistakes leading the failure to the failure of these business enterprises
3. demonstrate communication and teamwork skills as well as a capacity for independent learning and research
4. further develop their information technology and accounting application skills.

Contribution to graduate profile

This subject provides the students with a study of accounting for insolvency that is an optimal stream in the study of accounting discipline. It provides an essential set of concepts, skills and techniques to business and other majors who are potential managers in business. The subject is also designed to provide students with learning experiences that will enable them to gain an understanding of the financial management mistakes leading to these business failures or near failures. It develops an understanding and an appreciation of the accounting requirements for business enterprises that have become insolvent. It encourages students to develop a basis for research and analytical skills specifically appropriate for diagnosing issues and problems as well as evaluating and interpreting the different characteristics related to business rescue, reconstruction and liquidations by the use of case studies and participating in a group research project. The subject covers a number of important current events and will not only inform students about the major issues, ideas and developments, but also stimulates further inquiry and debate.

Teaching and learning strategies

The subject is taught in a three hour lecture format each week for a thirteen week semester at the City campus. UTSonline is available for student use. The focus of the learning process is to expose students to the fundamental conceptual and technical material through lectures where theoretical material and illustrations of developments in practice will be covered. This will be supported by a combination of practical exercises, case studies, debates, videos, discussion questions and the latest media business information. Students will also participate in an independent group research project where they will explore selected material in greater depth and diagnose issues and problems related to a failed business. The group will then present their findings through a class presentation and a written report.

Content

• Introduction to accounting for insolvency
• Contemporary developments and impact of business failure
• Introduction to the accounts of liquidators
• Company liquidations, amalgamations and reconstructions
• Role of management in company collapse
• Analysis and review of company reconstructions
• Company rescue and recovery strategies
• Research and report on a business liquidation.

Assessment

Assessment item 1: Class Assessment

Assessment item 2: Formal in-class examination

Assessment item 3: Major Group Report and Presentation

Required text(s)

C. Burns, Insolvency Trading, latest edn

Clarke, F.L., G.W. Dean, K.G. Oliver, Corporate Collapse, Cambridge University Press, Melbourne

M. Murray, Keay's Insolvency, latest edn

Allens Arthur Robinson, Director's Duties During Insolvency, latest edn

Faculty of Business, Guide to Writing Assignments, Faculty of Business, University of Technology, Sydney.

Indicative references

Smyth, E.B., Kenley, W.J. and Syme, B., Advanced Accounting, Sydney, The Law Book Company

Tomasic, R., Australian Corporate Insolvency Law, Sydney, Butterworths

Keay's Insolvency: latest ed. Thomson

Kharbanda, O.P. and Stallworthy, E.A. Company Rescue, London

Altman, E. (1983), Corporate Financial Distress: A Complete Guide to Predicting, Avoiding and Dealing with Bankruptcy, London: John Wiley & Son