This course introduces the principles of accounting and regulation of banks. It starts by identifying the peculiarities and risks of banks’ business models that affect the structure and the content of their financial statements. Students will learn the difference between the economic and accounting measurement concepts for financial instruments and issues related to fair value accounting and loan loss accounting. The course covers the rationale for bank regulation, outlines the regulatory and supervisory landscape in the European Union and highlights the interaction between bank accounting and regulation. We will also discuss the role of accounting and bank regulation in the financial stability of banks. A particular focus will be on the accounting for financial instruments in accordance with the International Financial Reporting Standards (IFRS). Specifically, the course covers the definition and presentation of financial instruments, classification and measurement, impairment, and disclosures. In addition to the accounting regulation, we also discuss the regulatory rules and supervisory guidance relevant for the accounting for financial instruments. The course also highlights the key aspects of banks accounting under Austrian GAAP (BWG, UGB, AFRAC guidance). Throughout the course, we will discuss the insights and evidence from academic studies and critically assess the (consequences of) extant accounting rules for financial instruments.

After completing this course, students will:

• Know the key accounting and regulatory issues affecting banks from a conceptual perspective
• Know the key aspects of bank regulation and supervision in the European Union
• Have a deeper understanding of the accounting rules for financial instruments
• Understand the structure and key components of banks’ financial statements
• Understand how different business models are reflected in financial statement presentation, recognition and measurement
• Appreciate the impact of differing accounting standards (IFRS, UGB, BWG) and (changes in) risk on the financial statements
• Understand the interaction of accounting and bank regulation/supervision and how this interaction (potentially) affects financial stability

Cognitive and Subject Specific Skills:

After completing this course, students will be able to:

• Apply the most important accounting rules for banks
• Interpret information presented in bank financial statements under IFRS and Austrian GAAP
• Evaluate the impact of risks in the financial statements of banks
• Assess how changes in accounting and/or bank regulation might affect banks and financial stability

Key Skills:

After completing this course, students will have:

· Developed their analytical skills and

· Enhanced their ability to reflect critically on accounting standards and financial numbers reported in bank financial statements

This course is a PI course with 80% attendance.

The course is a mixture of lectures, practical exercises, group work and student-led presentations. The lectures explain the key concepts of relevant IFRS and bank regulation. The practical exercises and group work help students to engage actively with the material, to deepen their understanding and to learn how to apply accounting rules in practice. Invited practitioners will provide more in-depth insights from their industry practice. Students are expected to be prepared and actively participate in each class.

Students’ assessment is based on several modes of assessment to provide students with different opportunities and ways to engage with the material and to demonstrate their acquired knowledge and skills. The assessment will consist of three compononents:

Individual homework (30%)

Quizzes (30%)

Group work including presentations (40%)

Further information will be provided in the first lecture of the course.

In order to pass the course, students are required to achieve more than 50 % of the total possible points.

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