Euromoney Audit Training

Course overview

'International Financial Reporting Standard (IFRS)' is increasingly being adopted by organisations globally as the most sophisicated and accurate means for companies to disclose information on its financial position and performance within the market. Join us for this 5-day course to update your knowledge and uncover how you can impact on your future financial reporting.

• The application of IFRS
• Framework for the preparation of financial statements in accordance with IFRS
• The most significant standards and interpretations that are currently applicable
• An overview of the 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?

Methodology

• This course provides an answer to the continuing and growing need for information and practical guidance in relation to IFRS technical issues.
• The course will be structured around case studies, practical examples and exercises.

Who should attend this training course?

• Accountants
• Financial analysts
• Portfolio managers
• Securities analysts
• Credit / investment analysts
• Pension fund managers
• Auditors 

Supporting publications

   

DAY ONE

Becoming familiar with IFRS as a 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

  Activities:

• review model and real life financial statements for the disclosure and presentation requirements of IFRS
• evaluate income statements under both the functional and nature of expense formats and
  cashflow statements using both the direct and indirect methods
• determine the treatment of events after the reporting period

DAY TWO

Revenue recognition and non-financial assets

Revenue recognition from

• 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-rear 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 recognising impairment
• Cash generating units and impairment of goodwill

  Case study: evaluate the impairment testing of goodwill and determine whether impairment should be recognised and the assets that are potentially affected

DAY THREE

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
recognised

Case study: review the various components of a pension plan and trace relevant information to
the amounts recognised 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 liablilities
• apply recognition and measurement concepts to determine appropriate accounting treatment for a variety of situations
• calculate the correct amount of provision to recognise 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 FOUR

Application of IFRS for group transactions

Business combinations: application of the acquisition 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

  Case study: account for a business combination in which the consideration is contingent
  and for which the payment is deferred

Overview of consolidation requirements, associates and joint ventures

• Consolidated and separate financial statements, including special purpose entities
• Determining control
• Summary of consolidation procedures
• 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 right
• 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 
• discuss how the related amounts will be recognised 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 FIVE

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 entities

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 I adjustments necessary to create the statement in accordance with IFRS

Course summary and 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). She has delivered training courses around the world including in the USA, Europe, Russia, Asia and the Middle East. Karen has also assisted national governments and central banks in the reform of their accounting systems and in the implementation of international standards and best practices.
  
  In addition to teaching both public training programs and customised in-house courses, 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 graduatelevel 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.

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