The course ‘Accounting Finance & Control’ (AFC) aims at providing students with the state-of-art, theoretical frameworks and instruments to measure and manage the overall performance of a (for profit) enterprise

The course fits into the overall program curriculum pursuing some of the expected learning goals. In particular, the course contributes to the development of the following capabilities:

1. Understand context, functions, processes in a business and industrial environment and the impact of those factors on business performance
2. Design solutions applying a scientific and engineering approach (Analysis, Learning, Reasoning, and Modeling capability deriving from a solid and rigorous multidisciplinary background) to face problems and opportunities in a business and industrial environment

At the end of the course, students will know and understand:

• The main methods for reporting and assessing the financial and non-financial performance of an enterprise, as well as the main linkages among them
• The organisational role of the “Accounting, Finance and Control” Units in an enterprise and its evolution over time
• The goals, the structure and the processes of the Planning & Control (P&C) Cycle
• The motivational implications of the use of management control tools

Students will be able to:

• Apply the methods and models discussed during the course to real cases (e.g., to enterprises that belong to different sectors or have different organizational structures)
• Design tailored performance measurement systems (e.g., systems that match the goals and the peculiarities of real enterprises)
• Prepare performance reports tailored to the information needs of different stakeholders
• Read and interpret the financial (and non-financial) performance of an enterprise (and of its constituencies)

The context

• The “Accounting, Finance and Control” (AFC) domain: the role of financial accountants and controllers and its evolution over time
• The “AFC” organizational unit within the enterprise
• The main activities performed by the “AFC” organizational unit

(Advanced) Financial Accounting: the concept of corporate group (or “group of companies”). Consolidated Financial Statements: theories and consolidation methods

(Corporate) Performance Measurement

• Accounting-based Performance Measures. The application to a real case: the analysis of consolidated financial statements of a business group
• Value Based indicators: Discounted Cash Flow techniques. Enterprise Value vs. Equity Value. The calculation of Free Cash Flows. The discounting factor: the cost of capital. Relative Valuation.
• Value Drivers (non-financial performance measures and risk indicators)

The integrated Planning & Control Cycle

• The “Planning” phase: the elaboration of operating, capital and cash flow budgets, and financial planning.
• The “Control” phase: periodic management reporting. The structure and content of management reports. Corporate dashboards and balanced scorecards.
• Measuring and reporting performance of internal responsibility centres.
  • The performance of internal profit/investment centres (Business Units, Divisions). Corporate costs allocation and transfer pricing.

Students are required to know the basics of:

• Financial Accounting
• Cost Accounting
• Management Accounting
• Long- and short-term decision making

The potential knowledge gaps can be bridged with these (not mutually exclusive) sources:

1. Open Online Course “Fundamentals of Financial and Management Accounting” (mandatory for all AFC students – except those holding a Bachelor in Management Engineering achieved at Politecnico di Milano)
2. The following chapters/annexes of the textbook “Performance Measurement and Management for Engineers”:
• eAnnexes to the book (freely available online):
• eAnnex 2: Financial Accounting
• eAnnex 3: Cost Accounting
• Chapter 7 (Long- and short-term decision making)

The exam consists of three parts:

1. Written group assignment (weight: 30% of the final grade), which aims at assessing students’ capability to apply (some of) the methods illustrated during the course to real cases
2. Written test (weight: 10% of the final grade), which aims at assessing students' knowledge of key concepts that are at the basis of the methods and tools illustrated during the course 
3. Oral test (weight: 60% of the final grade), which aims at assessing students’:

• Knowledge and full comprehension of methods and tools illustrated during the course (with particular focus on pre-requirements for their application, pros and cons of alternative solutions, etc.)
• Capability to choose the most appropriate solution (among the different alternatives) according to the peculiarities of the application context