Advanced Accounting and Reporting under IFRS

Financial Reporting Courses

Aims and Objectives

The aim of this course is for participants to explore a range of advanced and controversial topics in international accounting standards (IFRS) and to update themselves on current developments in this fast-changing area.

By the end of this course, participants will be able to:

• Identify the key issues to be resolved when accounting under IFRS for complex or unfamiliar transactions
• Assess critically the potential impact of recent and impending IFRS developments on a range of transactions

Methodology

To the fullest extent possible within the overall time constraints of the programme, delivery will be interactive, with a strong emphasis on learning-by-doing through exercises, group discussions and presentations.

Case Studies

Case studies will be used extensively, to give a strong practical support to the theoretical learning objectives of the programme.

Wherever it is appropriate, examples will be drawn from the client's own business.

Day One

Session 1 - Overview of current IFRS projects
• Convergence of IFRS with US GAAP
• Joint IASB/FASB projects
• Revenue recognition
• Fair value accounting
• Reducing complexity in financial statements
• Segmental reporting
Exercise: Group review of recent press coverage of accounting issues

Session 2 - Revenue Recognition
• Analysis of competing methodologies currently under scrutiny by IASB
• Accounting for long-term cross-border contracts under conditions of multiple uncertainty
• Implications of accounting for service concession agreements under IFRIC 12:
× Earnings volatility
× Dividend and tax effects
Exercise: Accounting for a toll-road concession under IFRIC 12

Session 3 - Fair Value Accounting
• What is Fair Value in unstable market conditions?
• Mark-to-model: but which model?
• Discussion of impact on earnings volatility and equity
• Discussion of pros and cons of further extensions or restrictions in use of FV accounting
• The October 2008 amendment to IAS 39
Case study: Comparing the Impact of FV accounting on a range of companies

Session 4 - Financial Instruments: 1 - Navigating the minefield of IAS 39
• Full analysis of each of the four (two) categories of financial assets (liabilities)
• Transfers between categories
• Applying the impairment provisions under unstable market conditions
• Day One Profit - problems and opportunities
• Fair valuing own debt: does it make sense?
Exercise: Impairment of AFS assets

Day Two

Session 1 - Financial Instruments: 2 - Derivatives
• Review of basic accounting for derivatives
• Analysing and accounting for complex derivatives
• Embedded derivatives
Exercises: Interest rate caps, floors and collars

Session 2 - Financial Instruments: 3 - Hedge Accounting
• Why IFRS is least friendly to some of the economically most effective hedges
• Testing hedge effectiveness under unstable market conditions
• Problems associated with ‘highly probable' forecast transactions
• Pros and cons of hedge accounting vs exercising the FVPL option
Case study: EADS (Airbus) - hedging of currency risk on $-based future sales of aircraft

Session 3 - Business Combinations
• Developments in consolidation accounting
• Partial acquisitions and disposals
• Classification of disposal groups as available-for-sale
Exercises

Session 4 - Disclosure Issues
• IFRS 7: theoretical principles vs. practical problems
• IFRS 8: Segmental reporting: balancing transparency with commercial confidentiality and the cost-benefit trade-off
Case studies: Review of 2007 annual reports based on PwC September 2008 analysis

Course Summary and Evaluation

Duration

This course can be extended to three or four days.