The Accounting Module

Accounting: Why?

Before running a marathon better to learn how to walk, before playing a symphony better to learn how to play scales, and before being involved into a business better to learn enough accounting for the role we want to play.

Accounting might be a tough subject for somebody (as it is to me), even esoteric at the beginning, but it has proven to be a useful tool in my pocket to overcome the technical perimeter of the roles I covered so far, providing me with an embedded business-friendly sensitivity, especially in difficult situations.

While it is called the language of business, it is easy to understand why MBA programs set it as core discipline and strong asset in the skillset of any professional, manager or not.
Understanding the impact of financial transactions on financial statements, learning to read and prepare balance sheets, income and cash flow statements, using such instruments to understand the profitability and financial health of an organization, interpreting the decisions of choosing between equity and debt to finance the growth of a firm, they all reveal a wealth of information about the history, current financial health, and future potential of it.

What I have found in the Accounting box?

Over the years I had the chance to undertake different courses from managing financial resources to project finance, they were both introductory and specialist ones. I believe that the concentration I attended during the online executive MBA helped me to put together all the pieces and fill the gaps between them. I don't want to consider myself a specialist in this subject area after that but the opposite, looking at accounting as a whole new world to discover and interpret.

It is relevant to understand how companies need to record their revenues, expenses, and cash flows, and adhere to governmental regulations, so to keep track of what they owe, and to whom they belong.
Financial statements are also strong communication and decision support tools, providing and revealing information about companies' history and future the potential to prospect investors, shareholders, lenders, and regulators, and help them better understand company's value.
I believe that, as employees, we should consider ourselves stakeholders as well, and use these tools to out advantage.

With an eagle's eye on the content of the courses I attended so far, I drafted below a list of the key subjects that I believe a MBA student should keep in mind when facing the subject:

Budgets and management costing tools

Full costing
Contribution costing
Break-even analysis

Principles of accounting and financial statements

Debits and Credits
Revenues ad Expenses
Assets, liabilities and equities, since financing if typically through debt and equity valuation of:
- Bond / Debt Valuation
- Stock / Shares Valuation
Balance Sheet
Income Statements
General Journal
General Ledger

Ratio analysis

Profitability
Liquidity and solvency
Operating efficiency
Investors ratios

Time Value of Money (TVM) provides an understanding of alternative decision criteria and their strength and weaknesses:

Simple and compounded interests
Net present value (NPV)
Internal Rate of Return (IRR)
Profitability

Project financing

Financial models, Investment decisions and capital structures
Risk management and Risk revenues
Project legal structuring and contract clauses
Government support
Short term vs. long term project bias

Managerial accounting: Solve common business problems using accounting data to analyze the impact of decisions on a company's financials

Job costing analysis and studying the difference between manufacturing costs and service costs.
Activity-based Costing vs plant-wide costing and cost pools

Keep into consideration that this list is meant to be useful, but obviously not comprehensive of all possible subjects.

How I consider accounting training useful

Today, as an Information Management and Program Quality Officer, I often find myself dealing with anything from renewal of software licenses to outsourcing of specialist competences, drafting budget and contract proposals, and looking after work progress reports.
So the knowledge of the processes of:

Budgeting
Procurement
Purchasing

is fundamental to everything going smoothly, on time and on budget.

Being in the position of building knowledge management infrastructure to support investments and program management decisions, it is even more important having a sound understanding of accounting and financial management practices, to provide and improve the supporting tools to those processes and people's activities.

Further to it, I consider Accounting a relevant tool to understand if the company we work for, and therefore our job, is in danger and take the right preventive actions to protect it.
Accounting training and knowledge also help reflection on the ethical aspects and social impact of accounting techniques for both small businesses and big corporations: business is not just about money and production, but it also involves the impact and usefulness of it on the society, communities and peoples life, both as employees and customers.

Takeaways

The most relevant experience was enjoying and sharing the learning process with other course-mates, preparing the study group exam through distance collaboration and video-calls.
We had an extremely tight amount of time to go through all the possible group dynamics, including overcoming language, cultural and competence barriers, and work together to reach the ambitious goal of getting the best evaluation possible.. and we did it!
I found the collaborative approach at learning accounting more enjoyable than being on my own, especially when evaluating assumptions and decisions was necessary.

On the learning side, three are my main takeways of undertaking the Accounting course:

Learning how to put the discipline into perspective to better control the financial aspects of my role within the company
Obtaining the knowledge and instruments to appreciate the technical aspects and usefulness of such discipline;
Improving my understanding of financial statements and the impact of cash flows through the company's functions to make them effective tools of business health evaluation.

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