electiveHQ

This Accounting and Finance Module may appear to some to be outside the typical scope of study normally attributed to Engineering, but Engineers, like many professionals, either undertake or are responsible for a wide range of business activities which ultimately affect the economic performance of the organisation. And how is the economic performance of an organisation managed? By measuring (“If you’re not Measuring – you’re not Managing”). Measuring economic performance in a business context invariably introduces money-values. And this leads one into the field of accounting for costs and revenues. Engineers must therefore be familiar with the concepts, not just of financial accounting itself, but more importantly, in the analysis of accounts, the assessment of the cost-benefit of projects, costing, budgeting, and similar measuring techniques which will impact on the work of Engineers during their careers. While this module has the objective of providing Engineers with the basic accounting and financial management skills required to meet the foregoing needs, it is not intended as a foundation accounting course, and hence avoids where possible the technical intricacies of ‘double-entry’ book-keeping. It focuses rather on the ‘bigger picture’ of understanding the underlying features of compiling and analysing financial statements, and developing good quality financial information needed for effective decision-making. The text for this course is: “Accounting for Non-Accounting Students” (8th. Edition) by John R. Dyson (Prentice Hall). The indicative content of the module is as follows: Introduction: • Financial Reporting Statements in an Engineering context • Business Types & Legal Frameworks • Rules / Code-of-Practice and International Standards in Accounting • Introduction to the basic Financial Statements Basic Accounts 1: • Accruals • Prepayments • Depreciation • Taxation • Revenue Expenditure • Capital Expenditure • The ‘dual’ concept – Debits / Credits (Book-keeping) Basic Accounts 2: • Profit & Loss Account • Balance Sheet Managing Liquidity: • Profit – v – Cash • Working Capital • Controlling Stocks and Debtors • Cash budgets Interpretation of Accounts: • Ratio Analyses • Performance measurement • Financial management Costing and Pricing: • Types of costs • Break-even point • Product Costing: Absorption costing / Activity Based Costing (ABC) • Pricing tactics Contribution and Pricing Decisions: • What is ‘Contribution’? • Contribution and Break-even analysis • Contribution’s role in pricing decisions Engineering Economic Analysis: (Using financial data for decision-making in an Engineering Environment) • Make or Buy decisions • Accept / reject one-off order • Returns to a limiting factor • Transfer pricing • Product withdrawal Project Accounting: • Understanding complexities of Financial Management of Projects • Estimating cost of Projects • Concept of Earned Value • Progress Claims • Impact on cash-flow Project Investment Appraisal (Capital Budgeting): • Simple Payback method • ‘Time Value’ of money • Discounted cash Flows (NPV + IRR) Budgeting and Management Accounting: • Why Budget? • The Budgeting process • Standards / ‘Standard Costing’ • Variance analyses • Financial control