The growing global acceptance of 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. As of 2005 approximately 9000 listed European companies transferred to IFRS reporting. Russia, China, Canada, Japan, Australia, India, South Korea, Malaysia and many other countries are adopting IFRS or have plans to converge their national standards with IFRS.

This course provides an answer to the continuing and growing need for information and practical guidance in relation to IFRS technical issues.

This practical 5-day course gives you a profound knowledge of IFRS and covers:

• The application of IFRS
• The framework for the preparation of financial statements in accordance with IFRS
• The most significant standards and interpretations that are currently applicable
• Fully up-to-date information that highlights the most recent and newly effective changes
• Expected changes to these standards in the near future
• Outstanding exposure drafts and discussion papers
• What issues are involved in moving from existing GAAP to IFRS reporting?

Who Should Attend?

• Financial Analysts
• Accountants
• Portfolio Managers
• Securities Analysts
• Credit / Investment Analysts
• Pension Fund Managers
• Auditors
  

Day 1

Becoming familiar with IFRS as basis for the preparation of financial statements

Introduction to IFRS

• The IASB and its IFRS
• Application of IFRS
• Update on current projects of the IASB

Activity: To identify and review relevant internet sources to keep up to date with IFRS.

 IFRS basic principles

• Framework for the preparation and presentation of financial statements
• Financial statement elements: assets, liabilities, equity, income and expenses
• Measurement and recognition principles (including discussion of fair value accounting)

Activity: Practice with illustrations showing how the Framework principles are applied in real-world situations.

Financial statement presentation

• Statement of Financial Position
• Statement of Comprehensive Income
• Statement of Changes in Equity
• Statement of Cash Flows: choice between direct and indirect method

Disclosure issues

• Events after the reporting period
• Changes in accounting policies, estimates and accounting errors
• Related parties
• Discontinued operations
• Operating segments

Activity: Use real-world and model financial statements to review the new disclosure and presentation requirements of IFRS. Evaluate financial statement items and alternative presentations. Determine the treatment of events after the reporting period.

Day 2

Revenue recognition and non-financial assets

• Sale of goods
• Services
• Interest, royalties and dividends

Case study: The effective interest rate method is illustrated through the accounting for a sale of goods with a deferred payment.

Exercise: Numerous scenarios are evaluated to determine the appropriate accounting for arrangements with various terms and factors to consider.

Inventories

• Cost components and valuation issues
• Identifying and accounting for inventory impairment

Case study: Evaluate a situation to determine whether an inventory impairment should be recognised and the appropriate treatment of a subsequent change in value.

Non-current assets: recognition and measurement

• Property, plant and equipment
• Measurement of the cost of an asset, including asset retirement obligations
• Borrowing costs
• Component approach
• DepreciatioN
• Revaluation
• Non-current assets held for sale issues

Class practice: Cost and revaluation.
Determine the appropriate accounting for revaluation over a multi-year period.

Example: All relevant transactions relating to the construction and use of an oil rig (site preparation, acquisition, environmental obligations) are treated.

• Investment property
• Definition
• Measurement alternatives
• investment property transfers

Case study: Identify the correct dates and valuations relating to investment property transfers and costs.

• Intangible assets
• Purchased intangibles
• Acquisition as part of a business combination
• Internally generated intangible assets
• Measurement requirements and alternatives

Case study: Determine the appropriate accounting treatment of purchased and internally generated intangible assets.

Impairment of assets

• Identifying impairment indicators
• Determining recoverable amount
• Measuring and recognizing impairment
• Cash generating units and impairment of goodwill

Case study: Evaluate the impairment testing of goodwill and determine whether impairment should be recognized and the assets that are potentially affected.

Day 3

Non-financial liabilities and financial instruments

• Leases
• Classification of lease contracts
• Accounting for lease contracts
• Operating lease incentives

Case studies: Apply your knowledge of lease contracts to evaluate the terms of a lease and classify it as a finance or operating lease.  Review contractual arrangements to determine whether they meet the definition of a lease and require lease accounting.

Examples: Accounting by the lessor and lesee for lease classification, finance and operating leases. Accounting for sale and leaseback transactions.

• Employee benefits
• Short-term employee benefits
• Pension plans, defined benefit and defined contribution plans
• Termination benefits

Exercises: Decide under various circumstances whether and when an employee benefit should be recognized.

Case study: Review the various components of a pension plan and trace relevant information to the amounts recognized on the financial statements.

• Provisions, contingent liabilities and contingent assets
• Recognition requirements
• Measurement of provisions
• Future operating losses and onerous contracts
• Provisions for restructuring
• Contingencies
• Contingent liabilities acquired in a business combination
• Disclosures

Group work: Distinguish between liabilities, provisions and contingent liabilities.  Apply recognition and measurement concepts to determine appropriate accounting treatment for a variety of situations. Calculate the correct amount of provision to recognize in various situations.

• Share-based payment
• Equity settled share-based payments
• Cash settled share-based payment

Exercises: Identify the pertinent facts in share-based payment scenarios, determine the financial statement impacts and contrast the accounting treatment of share options and share appreciation rights.

Financial instruments

• Classifying financial assets
• Initial and subsequent measurement of financial instruments
• Financial asset impairment
• Derecognition
• Difference between equity and liabilities
• Accounting for financial liabilities
• Disclosure requirements
• NEW IFRS 9 on classifying and measuring financial instruments

Exercises and examples: Accounting for a variety of financial instruments, including:

• Initial recognition
• Classification of financial assets
• Valuation of different classes of financial instruments
• Derecognition
• Impairment
• Differentiating between financial liabilities and equity

Illustrations: Gain familiarity with the new financial instrument disclosure requirements by reviewing real-world financial statement disclosures. Review the calculation and use of the effective interest method applied to a bond.  Evaluate the separating conditions and accounting requirements for embedded derivatives; examine the accounting transactions for a cash flow hedge. Overview of IFRS 9 and the new classification and measurement requirements.

Day 4

Application of IFRS for group transactions

Business combinations: application of the purchase method

• Identifying the acquirer
• Measuring the cost of the business combination
• Recognition and valuation of the acquired assets, liabilities and contingent liabilities
• Calculation of goodwill
• Changes to provisional values
• The new business combinations standard and how it changes current practice

Case study: Account for a business combination in which the consideration is contingent and for which the payment is deferred, including a comparison with treatment under the new standard effective for years beginning on or after 1 July 2009.

Overview of consolidation requirements, associates and joint ventures

• Consolidated and separate financial statements (including special purpose entities
• Determining control
• Summary of consolidation procedure
•  Investments in associates
• Determining significant influence
• Overview of the equity method
• Interests in joint ventures
• Jointly controlled;
• Assets
• Operations
• Entities

Case studies: When should a special purpose entity be consolidated? Assess whether an entity controls another entity without having more than 50% of the voting rights. Application of the equity method

Foreign currency issues

• Foreign currency transactions
• Overview of foreign currency financial statement translation

Exercises: Determine an entity’s functional currency. Identify items resulting in foreign exchange gain or loss. Calculate the foreign exchange gain or loss resulting from amounts payable and receivable in foreign currencies and discuss how the related amounts will be recognized on the financial statements.

Example: Review the translation of financial statements of a foreign subsidiary to financial statements in the functional currency of the parent.

Day 5

Income taxes, first-time adoption of IFRS

Accounting for income taxes: current and deferred taxes

• Temporary and other differences
• Recognition and measurement of deferred taxes
• Treatment of tax loss carry-forwards and tax credits

Case study: Evaluate a variety of situations to identify deferred tax implications.

Group discussion: Based on their individual country’s tax codes, participants will identify items that result in deferred tax recognition under IFRS for their organizations.

Example: Calculation of the deferred taxes commonly associated with various assets and liabilities.

Overview of IFRS I first-time adoption of IFRS

• Basic principles of IFRS I
• Preparing the opening statement of financial position
• Mandatory exceptions from other IFRS
• Optional exemptions
• Presentation and disclosure requirements

Case study: Starting from  a national GAAP financial statement, participants will follow-through the IFRS 1 adjustments necessary to create the statement in accordance with IFRS.

Course summary & close

• Karen Kalishek

  Karen Kalishek is an international instructor and consultant specialising in International Financial Reporting Standards (IFRS and US Generally Accepted Accounting Principles (US GAAP)). Karen also writes technical accounting material for publication and is a content author for IFRS and US GAAP e-learning programs.
  
  She is a US Certified Public Accountant (CPA), a Certified Management Accountant (CMA), a Certified Fraud Examiner (CFE) and earned an MBA from the University of Wisconsin. Prior to entering the international arena, she taught graduate level business and finance courses in the USA as well as CPA examination review courses. Karen was formerly Senior Vice-President in a regional bank holding company and also served for eight years on the accounting examination and licensing board of her state. Karen’s extensive experience and engaging teaching style have made her a popular instructor with many repeat clients.

IFRS: International Financial Reporting Standards

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