EY Diploma – Application of IFRS

Accountants, chief accountants, finance managers and analysts who would like to understand, interpret and apply IFRS.

The course presumes knowledge of basic accounting procedures and double entry book-keeping. No prior knowledge of accounting standards is required.

Objectives:

• To apply in a practical context advanced accounting principles and techniques
• To analyze, interpret and report on financial statements and related information to different user groups
• To ensure that preparers and users of financial statements are up-to-date with all requirements as they apply for the financial year
• On completion of the programme, candidates should be in a position to prepare, analyze and interpret financial statements under international standards

Benefits:

Online course delivery

This is a live online training program with the following features:

• ‘Classroom effect’ so that everyone knows who the other participants are and can communicate with them and tutor via chat
• Possibility to communicate via audio with small groups or when the trainer allows
• Sharing screens so that participants can view the trainer’s screen and work together with them in real time
• ‘Breakout rooms’ enabled so that the class can be divided into groups to interact among themselves and solve case studies
• Downloadable materials all in one location, printable
• Surveys, polls, MCQs and open questions during the training: responses broadcast in real time (under the trainer’s control)
• CPD certificates issued to participants
• All our trainers have many years of experience in online training delivery

CPD (Continuing Professional Development) – our training courses meet the requirements of international professional bodies (ACCA, IIA) for the continuing education of their members.

Module 1

Part A

Introduction: IFRS framework

• Historical background of financial reporting internationally
• The revised IFRS conceptual framework issued in March 2018 with emphasis on the definitions of assets, liabilities, revenues, costs and equity
• The standard setting process
• The structure of the International Accounting Standards Board including current developments and the International Financial Reporting Interpretations Committee
• The use of IFRS in the European union and in the US
• Convergence with US GAAP
• Interim financial statements

Presentation of financial statements under IFRS

• The formats of financial statements
• Discussion on the requirements of IFRS
• The operating cycle and current/non-current classification
• Fundamental accounting concepts
• The presentation of the statement of comprehensive income

Inventories

• Which costs to include in inventory
• Basis of valuation and net realizable value
• Methods of apportioning costs to units such as FIFO and weighted average

Property, plant and equipment

• Cost versus revaluation
• Accounting for revaluations and disposals of non-current assets
• Methods of depreciation
• Changes in the basis of depreciation and revision of useful life
• Exchange of assets
• The concept of impairment
• Disclosure and presentation of non-current assets
• Component accounting

Part B

Property, plant and equipment

• This topic will continue from the previous day

Borrowing costs

• Capitalization of interest and other borrowing costs
• Which assets qualify and for how long can borrowing costs be capitalized

Government grants and disclosure of government assistance

• The two methods of accounting for government grants allowed under IAS 20 and a discussion of the legality of both

Investment properties

• Definition and treatment under IAS 40
• Valuation methods using the cost model and fair value model
• Issues relating to fair valuation

Exploration for and evaluation of mineral resources (IFRS 6)

• Recognition and measurement of exploration and evaluation assets
• Impairment of exploration and evaluation assets
• Presentation and disclosure

Events after the reporting period

• Adjusting and non-adjusting events
• Discussion on the appropriate date for approval of financial statements

Accounting policies, changes in accounting estimates and errors

• Changes in accounting policies and accounting estimates
• How to make adjustments relating to previous years through equity/retained profits
• Correction of errors

Part C

Leases under IFRS 16

• The issue with leasing and substance over form
• The definition of a lease and the exemptions available for lessees
• How to account for a lease by a lessee including leasehold improvements
• Issues with which lease payments to include and estimating the lease term
• Step by step guide as to how to identify whether a lease is finance or operating and the accounting entries required for lessors
• The methods of allocating interest in  leases
• Accounting for sale and leaseback transactions and subleases
• The disclosure requirements for lessors and lessees

Intangible assets

• Definitions
• Research and development
• Measurement after recognition — Cost model and Revaluation Model
• Useful life of intangible assets Impairment losses of intangible assets Treatment of goodwill and negative goodwill
• The treatment of intangible assets on business combinations in accordance with IAS 38

Provisions, contingent liabilities and contingent assets

• Definition of provision and where they should be shown in the balance sheet
• When to account for and when to disclose contingent assets and liabilities
• Obligating events: legal and constructive obligation
• Provisions for future operating losses and onerous contracts
• Restructuring provisions

Module 2

Part A

Introduction to group accounting (equity accounting, acquisition method)

• Accounting for investments in individual company accounts and the impact of this on preparing consolidated financial statements
• When to use the various methods of consolidation
• Definitions of subsidiary, associate, control and significant influence and others related to group accounting

Consolidating the balance sheet/statement of financial position

• Step by step guide through examples to the preparation of the consolidated balance sheet/statement of financial position under acquisition accounting
• Goodwill and negative goodwill
• Revaluation of the assets and liabilities of the subsidiary to fair value
• The choice of treatments of non-controlling interests under IFRS 3
• Consolidated adjustments such as provision for unrealized profit eliminations of intra-group balances and transfer of non-current assets and the impact on depreciation in group accounts

Consolidating the income statement and/or statement of comprehensive income

• Step-by-step guide through examples to the preparation of a consolidated income statement under acquisition accounting
• Elimination of intra-group transactions and dividends
• Impact of transactions on non-controlling interest

Part B

Impairment of assets

• Measurement of recoverable amount and impairment loss
• Value in use under IAS 36 and how to calculate it
• Reversal of impairment losses
• Identifying cash generating units (CGUs) and allocating impairment losses to specific assets in a CGU

First time adoption of international standards

• IFRS 1: First time adoption of international Financial Reporting Standards and the issues involved in implementing the changes for the first time and the impact on the prior year amounts in the financial statements (comparatives)

Statement of cash flows

• The necessity for a statement of cash flows and how they are prepared from the information contained in the income statement, balance sheet and notes to the financial statements
• The indirect and direct method of presenting operating cash flows

Part C

Revenue from contracts with customers under IFRS 15

• The five step model of recognizing revenue
• Accounting for contract modifications
• Some accounting issues in recognition of revenue and substance over form
• The concepts of performance obligations, variable consideration
• The unbundling of contracts
• When revenue is recorded at a point in time and over time
• Discussion of the need for discounting when revenue is to be received in the future and the entries required when discounting — significant financing components
• Real estate sales and construction contracts under IFRS 15
• Sale and repurchase agreements
• Recognition of contract revenues and costs and recognition of expected losses on contracts
• Accounting for contract costs, warranties and principal versus agent issues related to revenue recognition
• Disclosure and presentation under IFRS 15

Related party transactions

• Definition of related parties and why it is necessary to disclose transactions and balances and sometimes just the fact that there is such a relationship

Deferred taxation

• Accounting for deferred taxation using the balance sheet liability method
• Tax base of assets and liabilities
• Recognition of deferred tax assets

Module 3

Part A

Discontinued operations and assets held for sale

• What is a discontinued operation and when to start separately disclosing the results in accordance with  IFRS 5
• The classification of groups of assets as held for sale and subsequent measurement of such assets
• The effect on the comparatives

Earnings per share

• The calculation of basic and diluted earnings per share
• Impact of issue of shares at full market price, rights issue and bonus issue on the calculation of EPS
• The treatment of options, warrants, convertible loans and convertible debentures
• The effect on diluted earnings per share of the order in which items are taken and whether they are dilutive or anti-dilutive

Accounting for employee benefits

• Short-term and long-term employee benefits
• The operation of pension schemes and end-of-service type schemes
• Defined benefit and defined contribution pension schemes The removal of the “corridor” approach under the revised IAS 19 and how to account for each type of scheme
• Disclosure requirements in the income statement and balance sheet

Part B

Associates and joint arrangements and comparison of the various consolidation methods

• Accounting for joint arrangements under IFRS 11
• Joint operations and joint ventures
• Investments in associates and the definition of significant influence
• The journal entries required for equity accounting

Advanced group accounting

• Exemptions from preparing group accounts
• Fair value in the context of acquisition accounting
• Provisions of IAS 27, IFRS 10 and IFRS 3
• Discussion on how IFRS 3 has changed group accounting. How IFRS 10 will impact on the decision whether to consolidate
• The impact of IFRS 12 and the additional disclosure requirements for subsidiaries, associates, joint arrangements and structured entities
• The concept of investment entities and their exemption from the requirement to consolidate

Changes in foreign exchange rates (including foreign subsidiaries)

• Functional and presentation currencies
• Treatment of exchange differences
• The closing rate method of consolidating foreign subsidiaries
• Hyperinflation

Part C

Financial instruments under IFRS 9 and IFRS 7

• Classification of equity and liabilities
• Disclosure of the various risks under IFRS 7
• Compound financial instruments such as convertible loan stock
• Accounting for financial assets and financial liabilities
• The various categories of financial assets whether investments in debt or equity and how to account for the various gains and losses
• The impact of IFRS 9 on the classification and measurement of financial assets and liabilities
• The amortized cost method
• Impairment of financial assets
• The difference between 12-month and lifetime expected credit losses
• Fair value and cash flow hedges
• Embedded derivatives

Module 4

Part A

Group statement of cash flows

• Dealing with the various issues that arise on preparation of group statements of cash flows such as investments in associates, dividends paid to non-controlling interests and the acquisition and disposal of subsidiaries during the period

More complex consolidations

• More complex group structures and how to deal with the decision as to what method of consolidation to use
• Piecemeal acquisitions, including computation of goodwill and computation of gains or loss on re-measurement
• Disposal of subsidiaries and the difference in treatment when all of the investment is disposed of, an investment remains, an associate remains or after disposal the group still has a controlling interest

Part B

Share based payment

• Accounting for share-based payment under IFRS 2
• Equity-settled and cash-settled transactions
• The impact of vesting conditions and cancellations or modifications

Operating segments under IFRS 8

• The necessity for segmental reporting
• The requirements for identifying segments and the chief operating decision-maker
• Disclosure requirements
• Inter-segment transactions

Fair value measurement

• The requirements of IFRS 13 as they relate to the measurement and disclosure of fair value

Analysis of financial statements

• Introduction to ratio analysis
• When various ratios should be used

Part C

Revision

• Discussion and revision of the most significant issues in order to prepare for the final examination
• A sample examination will be conducted