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Financial Accounting for Lenders

Business Issue - Understanding how cash flows through a business is fundamental to sound commercial lending—lenders need to understand how financial accounting issues and practices affect the financial statements being analyzed. Since most financial accounting courses take the point-of-view of the accountant, many lenders have trouble understanding cash flow cycles and evaluating financial risk in a business.

Omega Performance’s Solution - Financial Accounting for Lenders is Omega Performance’s system for teaching accounting and cash flow analysis as they relate to commercial credit decisions. Its hands-on approach that is specific to financial institutions shows lenders how to identify asset conversion cycles, which explain the underlying reasons businesses borrow, and provide the key for accurately judging whether a borrower will be able to repay the loan. Lenders learn to assess accounting risk inherent in business financial statements. Financial Accounting for Lenders is an ideal prerequisite to our Commercial Loans to Business or Commercial Loans to Small Business training programs.

What Is Included

The five modules of Financial Accounting for Lenders teach participants to understand accounting and cash flow analysis from the lender’s perspective:

Financial Reporting introduces the primary financial statements (balance sheet, income statement, owner’s equity and cash flow) and the notes and identifies the connections among these. A key focus is on issues concerning the financial reporting environment, including guidance and the roles of organizations that influence GAAP, the role of management and the role of the CPA in audit and attest services and in review services. The various levels of assurance to a lender from independent accountant opinions are described.

Introduction to Accrual Accounting concentrates on the fundamentals of accounting for business activities over time. Timing differences between actual cash flow and recognition are described and illustrated through the use of balance sheet and income statements. This module introduces the principles of sources and uses of cash and provides simple techniques to trace cash through common business activities.

Accounting for the Operating Cycle illustrates the operating cycle as a model for getting behind the numbers to understand business activities and risks. The focus is on evaluating revenue and expense recognition practices and understanding the cash flow implications on accounts receivable, inventory and cost of goods sold. This module also covers reporting requirements for other comprehensive income and reporting requirements for public companies.

Accounting for the Capital Investment Cycle and Other Assets introduces the capital investment cycle as a model and the impact of the capital investment cycle on cash flows related to fixed assets, other long-term assets including goodwill and other intangibles, and depreciation and amortization. This module introduces calculations to determine the cash effect of sale of fixed assets with an emphasis on valuation and impairment of fixed assets and goodwill assets.

Accounting for Liabilities and Equity examines various types of long- and short-term liabilities including information and disclosure of commitments and contingencies and other potential obligations. Participants examine the cash flow implications of various stock transactions and how different tax treatments affect a company’s revenue, expenses and profitability.

Delivery Options

To effectively implement Financial Accounting for Lenders, Omega Performance recommends one of four approaches: self-study, self-study with mentor, self-study with workshop, or online. All of the content for Financial Accounting for Lenders is available online, including pre- and post-testing, online progress checks, and online skill assessment corresponding to each module of content, with feedback and remediation links to relevant content.