The growing global acceptance of International Financial Reporting Standards (IFRS) as a basis for the preparation of financial statements of large and medium sized entities creates a need for an increasing group of professionals to gain knowledge and experience of these standards. Even those with a basic understanding of IFRS are required to constantly update their knowledge because of the fast evolution of these standards and the growing experience that practitioners require.
International Financial Reporting Standards (IFRS) remains the most used accounting framework in South Africa, even though new frameworks like IFRS for SMEs are being introduced. Enhancing your knowledge and skills on IFRS will ensure that you deliver the best possible service to your stakeholders. In addition, most professional bodies also require their members to continually develop their professional competence.
In this three-day course you will learn how to provide up-to-date, transparent and forthright financial reporting. IFRS is changing rapidly and it is important for those using the international standards to remain abreast of the changes. This course provides a valuable technical update as it not only covers current accounting guidance, but includes information on newly issued standards and latest key developments.
IASB Structure and Operations
- The Global movement to IFRS
- The structure of the IASB and how it works
- US GAAP Convergence
IFRS Core Concepts
- Conceptual Framework
- Criteria for assets and liabilities
- Recognition criteria
- IAS 1: Presentation on Financial Statements
- Core concepts and requirements
- IAS 7: Statement of Cash Flows
- Classification of operating, investing and financing
- Non-cash transactions
Assets under IFRS
- IAS 16: Property, Plant and Equipment
- Cost capitalisation criteria
- Component accounting
- Revaluation methodology
Case Study: Exercises and group discussion of different scenarios to determine if costs can be capitalised; exercise on component accounting; exercise on application of revaluation method.
- IAS 2: Inventories
- Cost components and valuation issues
- Identifying and accounting for inventory impairment
- IAS 23: Borrowing Costs
- Qualifying assets
- Commencement and suspension of capitalisation
Case Study: Determination and calculation of interest cost that is capitalised.
- IAS 38: Intangibles
- Criteria for recognition
- Purchase price allocation considerations
- Definite and indefinite useful life
- Measurement requirements and alternatives
- IAS 40: Investment Property
- Fair value model
- Cost model
Case Study: Determining the classification of real estate property.
- IAS 36: Impairment of Non-Current Assets
- Impairment indicators
- Cash generating units and impairment of goodwill
- Recoverable amount and practicalities in its determination
- Application of impairment adjustments
Case Study: Identification of cash generating units; application of impairment testing with goodwill.
Accounting for Liabilities
- IAS 37: Provisions, Contingent Liabilities and Contingent Assets
- Identifying the obligating event
- Estimating provisions
- Restructuring and onerous contracts
Case Study: Different scenarios to determine accounting treatment under IAS 37.
- IAS 12: Income Taxes
- Permanent and temporary differences
- Treatment of tax loss carry-forward and tax credits
- Impairment of deferred tax assets
Case Study: Comprehensive example on treatment of deferred tax.
Financial Statement Presentation
- IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations
- Held for sale criteria
- Discontinued operations requirements
Case Study: Determining if IFRS 5 criteria are satisfied.
Fair Value and Financial Instruments
- IFRS 13: Fair Value Measurement
- Fair value hierarchy
- Steps to determine fair value
- Fair value in illiquid markets
- The grey areas and challenges of application for financial instruments that are thinly traded
Case Study: Determination of hierarchy rating; determination of highest and best use.
- IAS 32: Financial Instruments – Presentation
- Distinction between debt and equity
Case Study: Distinguishing if a financial instrument is debt or equity.
- IAS 39 & IFRS 9: Financial Instruments – Classification and Measurement of Financial Assets and Liabilities
- Four categories of assets (now thee under IFRS 9)
- Business model test
- Cash flow characteristics
- IFRS 9 “own credit” controversy
Case Study: Classifying financial instruments.
- IAS 39& IFRS 9: Financial Instruments – Impairment of Financial Assets
- Incurred loss model
- Expected loss model and core differences to US GAAP
- Development of key assumptions in loss model
- Practical implementation challenges
Accounting for Pensions
- IAS 19: Employee Benefits
- Defined benefit and defined contribution plans
- Current and past service costs
- Actuarial assumptions and treatment of actuarial gains and losses
Case Study: Comprehensive example on defined benefit scheme with actuarial gains and losses.
Group Accounting Matters
- IFRS 10: Consolidated Financial Statements
- Assessing control
- Principle and agent considerations
Case Study: Scenarios to assess control in a number of different scenarios where voting rights are less than 50%.
- IFRS 11: Joint Arrangements
- Types of joint venture arrangements
- Accounting treatment and adjustments required
Case Study: Scenario to determine if a structure is accounted for as a joint arrangement.
Accounting for Leases
- IAS 17: Leases
- Indicators of financial leases
Case Study: Preparing an extract of financial statements for a finance lease.
- IFRS 16: Leases
- Challenges with the current standard
- Revised single model
- US GAAP dual model approach and key differences
- Impact on financial statements and debt covenants
Case Study: Numerical application and disclosure of the new leasing standard.
Accounting for Revenue
- IAS 18: Revenue
- Sale of goods and services
Case Study: Group discussion and analysis of revenue determination under IAS 18.
- IAS 11: Construction Contracts
- Determining stage of completion
- IFRS 15: Revenue from Contracts with Customers
- Detailed review of the five step model
- Identification of the performance obligation
- Determining and allocating the transaction price
Case Study: Scenarios on applying the new five step model.
End of Course