EY Diploma – Application of US GAAP

The programme is designed for accountants, finance staff and managers and directors who would like to improve their knowledge of new accounting techniques.

 

We assume familiarity with basic accounting procedures and the principle of double entry. No knowledge of US GAAP standards is required.

 

The course is conducted entirely in English.

• To apply in a practical context, advanced accounting principles and techniques
• To evaluate and apply the requirements of US GAAP
• To analyse, interpret and report on financial statements and related information to different user groups
• To increase competency to deal with the challenges of implementing US GAAP

Upcoming 2024/25 Programme

Module A	17 October 2024
Module B	5 November 2024
Module C	6 December 2024
Module D	16 December 2024
Module E	20 February 2025
Module F	6 March 2025
Module G	18 March 2025
Module H	10 April 2025

 

Details of the modularised programme

This is a modularised course programme, which will comprise a mixture of lectures, questions and answer sessions, practical exercises and illustrations, home study, home tests, and finally an exam for your diploma. Delegates will receive full course notes in English, examples, progress tests and a final examination.

There is a total of eight days of face-to-face tuition divided into eight modules. Modules may be booked separately. During the time between courses, the candidates are expected to study at home in their own time and solve tests. Candidates’ tests will be sent to us for marking and the full solutions will be sent to the candidates to check their work. There will be a hotline available to communicate with the tutor about any problems or any questions.

Participants will receive an EY Academy of Business diploma on successful completion of the final exam at the end of the programme.

If participants do not wish to participate in the full programme, they are welcome to select the modules they wish to attend but, without completing the whole programme, candidates will not receive a diploma.

Examination

Programme

Module A. Introduction. Property, Plant and Equipment

• A short introduction to the programme. Regulatory framework and fundamental concepts.
• Who makes the accounting rules? This will be introduced by a brief history of financial reporting in the US and the necessity for the SEC, the FASB and the PCAOB.
• The sources of US GAAP and what is the codification.
• The conceptual framework behind US GAAP. We will discuss its importance in the context of developing accounting standards.

• The formats of financial statements under US GAAP: statement of position, net income statement, statement of cash flows, statement of changes in equity and a discussion on the concept of comprehensive income.
• We will introduce some of the specific languages of accountants in the US.
• Related party disclosures.
• Presenting stockholders’ equity.
• Subsequent events and going concern.
• A summary of the filing requirements with the SEC.

• Basis of valuation of property, plant and equipment.
• The depreciation methods under US GAAP.
• Changes in depreciation method or useful life. We will introduce the difference between a change in estimate and a change in accounting principle.
• Interest capitalization: Which assets can interest be capitalized on and for what period can it be capitalized? Calculating the rate and amount of interest to be capitalized.
• Impairment of long-lived assets: When to test an asset for recoverability, how to decide if an impairment has occurred and the calculation of the amount of the impairment under US GAAP, grouping long-lived assets for the impairment calculation and the accounting entries involved.
• Held for sale assets and discontinued operations.
• Asset retirement obligations.

Module B. Revenue and Other Assets

• The five-step model of recognizing revenue.
• Accounting for contract modifications.
• The concepts of performance obligations and variable consideration.
• Unbundling of contracts.
• When revenue is recorded at a point in time or overtime.
• Real estate sales and construction contracts under ASC 606.
• Recognition of contract revenue and costs and recognition of expected losses on contracts.
• Accounting for contract costs, warranties and principal versus agent issues related to revenue recognition.
• Presentation and disclosure under ASC 606.

• Goodwill and negative goodwill accounting.
• Definite and indefinite life intangibles.
• Intangible assets arising in business combinations.
• The impairment test on goodwill.
• Research and development costs.
• Software development both for sale and internal use.

• Costs to be included in inventory.
• Lower cost and net realizable value and when to use lower of cost and market.
• Methods of allocating costs to units of production: FIFO, LIFO and average cost.

• Accounting changes and error corrections.
• The difference between a change in estimate and a change in principle.

Module C. Leases, Taxes and Contingencies

• The need for a new standard on leasing.
• Identifying whether a lease is financed or operating for lessees.
• Accounting for finance leases including the allocation of interest and capital elements and depreciation of the asset.
• When to use the imputed rate of interest in the lease and when the incremental borrowing rate of the lessee should be used.
• Accounting for operating leases for lessees and the balance sheet impact.
• Lessor accounting for sales-type and operating leases.
• Sale and leaseback transactions.
• Accounting for subleases.

• ASC 740 on deferred taxes.
• Temporary and permanent differences.
• Classification of temporary differences.
• Deferred tax on acquisition of a subsidiary.
• Deferred tax assets and valuation allowances, net operating losses carried forward.
• Uncertainty in income taxes.

• Contingent gains and losses.
• Uncollectible receivables, product warranties, loan guarantees and other loss contingencies.
• Environmental liabilities.
• Compensated absences.
• Disclosure of certain significant risks and uncertainties.
• Advertising costs.

Module D. Introduction to Group Accounting

• The concept of groups and consolidated accounts.
• The consolidated balance sheet.
• Goodwill and negative goodwill.
• Valuation considerations of the consideration and the assets acquired.
• The consolidated statement of net income.

• The use of fair value measurement in financial reporting and as it relates to acquisitions.

Module E. Earnings per share, statement of cash flows and segments

• Basic and diluted EPS.
• Complex capital structures including convertible instruments and the treatment of options in the calculation of EPS.

• Some basic principles as to why such a statement is necessary and gross versus net reporting.
• The categories of operating, investing and financing activities under US GAAP.
• The direct and indirect methods of reporting cash flows from operating activities.

• Identifying an operating segment for reporting purposes.
• What has to be disclosed?
• Enterprise-wide disclosures.

Module F. Financial Instruments and Investments

• When to use the various classifications of held-for trading, held-to-maturity and available-for-sale for debt securities.
• The basis for valuation in the balance sheet and the impact on earnings.
• The impact on percentage holding if common stock is held.
• Investments in equity securities (ASC 321).
• The new credit-impairment model under ASC 326.

• The concept of significant influence.
• Equity accounting effects on the income statement and balance sheet.
• The impact of impairment on goodwill in an equity investee.

• What is a derivative? How does ASC topic 815 define them and some exceptions?
• Embedded derivative instruments.
• Cash flow and fair value hedges.
• The fair value option for financial assets and liabilities.
• Recent changes to hedge accounting under ASU 2017-12.

• The treatment of notes issued.
• The treatment of discounts and premiums.
• Loan origination fees and costs.
• Impairment of loans.
• Extinguishment.

Module G. Foreign Currencies. Advanced Group Accounting

• The concept of functional currency.
• Monetary and non-monetary items and how they are treated.
• Forward exchange contracts, including hedging.

• The concept of functional currency.
• The current rate method and the re-measurement basis and when to use them.
• Treatment of exchange differences.

• Piecemeal acquisition.
• The accounting treatment depending on the shareholding remaining in the income statement and statement of position.
• The calculation of the consolidated profit or loss on disposal.
• Loss of control in a subsidiary.

• How are intermediate holding companies treated?
• The calculation of percentage ownership for group accounting purposes.
• The consolidation of variable interest entities.

Module H. Employee Benefits. Share-based payments. Revision for the exam

• Short term benefits.
• Defined benefit and defined contribution schemes and their accounting issues.
• Current service and past service cost, interest cost, actuarial gains and losses and unrecognised gains and losses.

• The historical basis behind the need for such a standard.
• Equity versus cash-settled transactions.
• Vesting conditions.
• Modification of awards of equity instruments.

• For SEC companies, they need to file particular forms, some of which incorporate the US GAAP financial statements.
• The laws that govern the securities industry.
• A brief guide to a corporate filing.

• With the elimination of the necessity for a reconciliation of IFRS financial statements and the SEC proposal to allow US domestic companies to use IFRS, convergence is now a hot topic for US companies.

• To prepare for the final examination, we will go through several typical questions on topics covered throughout the course.