How Darden Teaches Accounting Using the Case Method



my name is Luanne Lynch I am a part of our accounting faculty here at Darden I teach our first year MBA core accounting class in financial and managerial accounting and I have a second year elective with our second year MBA students in management accounting we frequently get questions about how one might be able to use the case method to teach accounting and this will help to provide somewhat of an introduction to that process when we think about asking a student to prepare a case for class the following day what we're thinking about is that there's basically about a four step process that we would expect that they would go through first is a period of individual preparation in which the student would read the case prepare his or her own draft analysis and prepare to attend a learning team meeting later in the day the second step would be the learning team meeting itself and that's when the student meets with his or her learning team which would consist of about five or six students from various sections in the first year and they would discuss the case somewhat as a dry run for the classroom discussion the following day but also because the different perspectives from the five or six different students can help facilitate each other's learning really else is a microcosm of what happens in this in your section when you get to LT members of your learning team will challenge you so when I get to class and I have 60 of my classmates of 61 of my classmates querying me about so why did you do this I have entirely different numbers I can with confidence whether my numbers are right but with confidence explain my thinking process the third step would be the classroom discussion itself the student comes to the classroom prepared from his or her individual prep and from the Learning Team meeting and we can hold a larger discussion among 60 individuals where we hope the learning is as synergistic even more than in the learning team and then finally after class we would ask the students to take some time on their own to reflect about the major lessons associated with the case and come to some sort of closure about the topic itself each of our first-year classes is divided into five sections of approximately 60 students and each section develops its own trade one of the traditions of this particular section is to begin the day with an enthusiastic beating on the desks to get themselves fired up for the day's classes and it seems to serve to wake them up quite a bit and to increase the enthusiasm and readiness for the class that we're getting ready to start whenever we're dealing with a case before we jump into the numbers we like to get a little bit of a context of you know what the case is about the company the industry oh my goodness are we gonna ask stories sometimes a lot to have a bit of fun and we usually kind of talk about a particular industry for longer than we should but you know that's kind of part of the fun of being in the case study method anybody know what a marker is the MGM case is about accounts receivable and bad debt expense it is part of our core accounting course for our first year MBA students this is sort of an opportunity to navigate the annual report in ways that we really haven't had before and we'll start seeing more of those as we get into our discussions about inventory discussions about property plant and equipment etc we'll be presenting you with some financial statement information some notes to the financial statements and then you'll be sitting back trying to figure out how to navigate through some of these numbers and figure out what's going on Martha can you help us track through some of these numbers generally each day when we begin class I will start the class by calling on a student in the classroom and ask that student to bring it to begin the discussion for the day I've always made sure that I'm prepared to at least be cold-call in class not everyone always has the right answer but it's a very it's a very comfortable environment the cold call is a way for students to continue to stay engaged throughout the class discussion the students see it both as a motivation to prepare but they also see it as an opportunity to shine it shouldn't be in negative 3448 Oh so what do you want me to do with this oh you said put a negative in front of or don't you want me to put it back over here no no but you should also have the net right off underneath that correct Carol hey no passion what would that be that's fourteen thousand seventy six okay so we got right off just about any type of student interaction properly facilitated in the classroom will help solidify their understanding a lot more than if they're just sitting there listening to one person in front of the classroom tell them things it's an entirely different when it professor lectures to you because you're pretty much filling in bubbles for the most part as opposed to actively taking a look at what is before you and being able to tell a story until I got here I couldn't really tell you the server company but just a nice balance sheet or they said not for cash flows but I can tell you now where companies stunts relative to its industry or its peers by just that it's cash flows on what it owns Jennifer can you articulate for us what this eighty five 504 balance needs without going and looking up what we decided yesterday what does eight five 504 tells what in works the blend of students in the classroom makes for what I consider a magical learning experience those students that don't have an accounting background force all of us in the classroom to think intuitively and conceptually about accounting rather than thinking about it as a rudimentary debit and credit those students that have a very in-depth accounting background see the classroom as an opportunity to take their technical skills and learn how to convey the information that they have inside to the lay person or to the people that they're going to be in a meeting with when they leave Darden and enter the workplace so that we're doing with euphemistically called managing or okay right they want to show fairly consistent revenue growth not working sure but they want to show net income that's fairly consistent and therefore they may be adjusting the provision in order to do that so what did you call that yesterday I call it patrician or the win over the cushion or the wiggle room right so does this wide bend might get suspicious as an autumn when he sees the left-hand side too is this one would hope then we'll get suspicious we see a left hand side to to the allowance a camera right because this is what Ben's going to be but we're not going to look to bed are we I think you think we should I'm going to go in and test all of their assumptions Ben is a good example of someone who brings some a particular type of expertise to the classroom he was a public accounting Auditor prior to entering Darden and so he has served as one of the checks and balances on the financial statements if you will as a result he is a student that we can go to to test some of our assumptions when we as managers in the classroom are trying to engage in the decision making process and so MGM as it's the mid second largest hotel in the world they have the largest casino in Vegas in terms of square footage and theirs in size they're only second to the Venetian and they're really diversifying into full entertainment business as opposed to casino business so with increasing incomes of people kind of coming out of that bubble of a one I think they're just there they're the amount of money that's coming into the casino for non or Hotel for not just you know calculate activities is increasing relative to casino gambling okay and so there they're just there I think they're being more prudent who they really extent markers at Darden we're not trying to train our students to be accountants what we're trying to do is train them to be managers and to be intelligent users of financial information students in the classroom can simulate holding a management responsibility using accounting information to make decisions and using it intelligently to make decisions and then understanding the impact of their decisions on the financial statement you have this case which tells your story but it's infused by the stories of your classmates you know we would talk about relationship building and I would give up my experiences at lobbyists you know we have classmates talking about yeah a company trying to forge the accounts and how they found out sometimes business or learning is very abstract but here it's very real and for that reason you tend to remember more than not you round a number here you're on and over there and also is accounting more of an art or more of a science definitely more of an art in some cases there is a science to accounting you know there's this is how the balance sheet needs to look there are certain elements of accounting that are a little bit more of an art form in respect that there are different ways all of which are certainly legitimate in accounting but there are many different ways in which you can approach a particular let's say costing situation as a general manager you're going to make certain decisions based on allocating your costs in a you know in a more accurate way and there are better ways to do it a lot better ways to do it that's where that's where the art form color comes in last question here at urine you're an analyst on Wall Street you have a five minute opportunity to talk to the management of MGM and you're puzzled about this issue and you really like to get your hands around it and resolve the issue why it looks like collectability is getting better what we've got five questions we can ask them they have five minutes to respond one of the top five questions we want to ask there are some things that we can conclude and there are still some things that we would like to know but we don't have sufficient information yeah are any specific measures that they in order to or decrease accounts outstanding from like greater than 180 days and are there any specific costs associated with those measures because we would take those positive does anybody have a question that's so important that they want to argue to take one of these off the list to give that question online I was trying to force the students to think thoroughly about the question they wanted to ask why they wanted to ask it and make sure that it was of a very high priority that it was one of the top five questions that they wanted an answer to okay I'm conscious of the time so I didn't want to bring it to a close couple of things I want to say is that there's a lot that we can learn and there's certainly a story that we can tell from looking at the financial statements and from looking at the footnotes that accompany the financial statements for any of these balance sheet and income statement accounts our task is users of the financial statements is to figure out what story these things tell and then after we've mapped out a story what questions remain outstanding that we'd like to get answers to and find avenues to get those answers having said all that we can't figure out anything about what the story is unless we can understand unless we can work through what the numbers are right there's a lot of pieces in this puzzle we need to be able to put them together pretty effectively and pretty efficiently so that we can infer the story from that and then generate follow-on list of questions that we'd like to ask if we have a chance to talk to manage it's nine-thirty is friday mountings over have a good weekend

5 thoughts on “How Darden Teaches Accounting Using the Case Method”

  1. I learned accounting from Prof Coleman in 1974 using his incr/decr method. I went on to pass the CPA exam in 1978 and am retiring this year, having worked for a Big Eight firm back in the day, partner in local firms, Controller of multiple independent oil companies, played integral roles in two IPO’s and was CAO of public MLP in the SOX era. The Darden way sure worked for me.

  2. Extremely illuminating video on the value add of the Case study method. Really helped me to visualize myself in the class and allowed me to appreciate the use of case studies in core accounting classes..I recommend all prospective Darden students to watch this,

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