IFRS Accounts - Advanced

• By the end of the advanced accounting IFRS course, participants will be able to prepare a full set of IFRS financial statements with confidence
• Participants will be aware of all the most significant current issues and what would be considered good and poor compliance with the Standards
• By the end of the training course, participants will have been given an answer to any questions that they may have regarding how IFRS accounts would apply to their business

Parts 1 and 2 – Business combinations (IFRS 3 & IFRS 10)

• The concept of control and the requirement to prepare group consolidated accounts
• Preparing the consolidated balance sheet with examples including inter-group transactions and pre-acquisition reserves
• Consolidated income statements
• Consolidated cash flow statements
• Treatment of goodwill and intangible assets acquired – amortisation and impairment testing requirements
• Consolidating overseas, branches and subsidiaries – calculating the foreign exchange gains and losses
• More complex group structures including horizontal, vertical and D-Shaped groups
• Disposals of interests in subsidiaries – including calculation of the gain on disposal
• IFRS accounting for reorganisations, restructuring and other uses of merger accounting – including group hive-ups and hive-downs
• Accounting for associates and joint ventures, the treatment of the investor and parent company
• Exemptions from consolidation – investment entities and assets to be disposed of
• Current key topics such as the definition of a ‘business’ and accounting for the purchase of a group of assets 

Part 3 – Financial instruments and hedge accounting

• Rep What is IFRS 9? How does it differ from IAS 39?
• What are financial assets and financial liabilities?
• IFRS 9 history and implementation overview
• Presentation of the three different categories
  • Amortised Costs;
  • Fair value through Profit & Loss (FVTPL);
  • Fair value through Other Comprehensive Income (FVTOCI)
• Accounting treatment determined by (i) business model (ii) nature of cash flows
• Decision tree to decide on the classification of financial instruments
• Balance sheet IFRS and P&L calculation of a bond at amortized cost
  • Based on the Internal Rate of Return (IRR) of future cash flows
  • Treatment of fees in the IRR calculation
• Balance sheet and P&L calculation of a bond at FVTPL and FVTOCI
  • Effective interest rate method for interests (same as amortised costs)
  • Unrealised gain based on NPV at the current yield of future cash flows
• Reminder on determining fair value
  • Level 1 is based on unadjusted quoted price
  • Level 2 is based on quoted price in inactive markets or observable model input
  • Level 3 is based on unobservable but significant inputs to the overall value
• Applies to the amortized cost and FVTOCI mandatory fixed income instruments
• Incurred losses (IAS 39) has been replaced by expected losses (IFRS 9)
• Three stages process to determine impairments
  • Stage 1: “12-month expected credit losses” with an effective interest rate on gross on gross carrying amount
  • Stage 2: “life-time expected credit losses” with an effective interest rate on gross on gross carrying amount
  • Stage 3: “life-time expected credit losses” with an effective interest rate on gross on amortised costs
• Accounting treatment for financial instruments already impaired when acquired
• Financial liabilities at amortised cost or FVTPL
• Own credit deterioration reduces institutions’ liabilities
• Liability reduction due to rating downgrade to be now classified in OCI
• Qualification for hedge accounting IFRS
• Different types of hedge accounting, same as IAS 39, except for time value of money and forward points in foreign exchange forward
  • Cash flow hedge
  • Fair value hedge
  • Net investment hedge for foreign subsidiaries
• Accounting treatment for the time value of money for options: a two-step process through OCI
• Accounting treatment for foreign currency forward points in OCI
• IFRS 9 hedge accounting more closely aligned to risk management policy
  • Removal of hedge effectiveness criteria (80% to 125%)
  • Extends eligibility of risk component to include non-financial items
  • Permits aggregate exposure that includes a derivative to be an eligible hedged item
  • Group of items and a net position (e.g. assets & liabilities or forecast sales & purchases) hedged collectively as group 

Part 4 – IFRS 16 - leases

• Definition of a lease
• Impact on lessor accounting
• Exemptions available for a short life and low-value leases
• Interaction with IAS 38 Intangible assets and IFRS 15 – Revenue from Contracts with Customers
• Illustrative examples of issues with determining what types of contracts are within IFRS 16 scope
• Identifying the cash flows and other issues in valuing the ‘Right of Use’ lease asset
  • Variable and contingent payments
  • Lease incentives
  • Identifying the IFRS lease accounting term
  • Foreign currency leases and the impact on existing hedging arrangements
  • Re-assessment of lease payments
  • Discount rate to apply
  • A numerical example of day 1 and subsequent reporting of Right of Use asset and lease obligation
• Options available for transition including the option to adopt early
• Presentation in Income Statement, Statement of Financial Position and Cash Flow Statement
• Specific disclosure requirements
• Specific additional year one disclosure
• Illustration of presentation requirements
• Consolidation issues – not all the group reports under IFRS (International Financial Reporting Standards)?
• Impact on KPIs and how to present – FRC guidance
• Latest developments and comments on early adopters
• COVID 19 implications including guidance on the treatment of rental holidays granted by landlords.

The trainer qualified as a Chartered Accountant in 1987 with a six-partner firm, Gilberts, following completion of an accountancy foundation course. In the same year, he joined Binder Hamlyn to work in their Business Development Group. In 1990 he joined a major training company to work as a trainer on their accountancy exam courses. During the next four years, he taught auditing, financial reporting and taxation for ACA, ACCA, CIMA and AAT exams, he also taught the ACA multi-disciplinary case study. he mainly taught fulltime courses organised for Deloitte, PWC and EY; he was also personally responsible for the ACA final level auditing paper. In 1993 he became a director of post-examination CPD training for accountants. He was also responsible for financial training programmes for non-accountants, especially solicitors. Around this time, he also started training in International Accounting Standards initially for Ernst & Young’s non-UK based professional staff in Europe. Since 1998 he has been training on a freelance basis, concentrating on financial training for both accountants and non-accountants. The trainer also specialises in training on IFRS finance and US accounting standards and has presented on both subjects throughout Europe for the past 20 years. He has considerable experience in presenting training on the following topics:

• Advanced accounting IFRS for financial instruments and insurance contracts
• IFRS financial reporting issues for energy and pharmaceutical businesses
• Completion accounts and the role of financial standards in corporate finance transactions
• Accounting for business combinations – mergers, acquisitions and all joint and special purpose arrangements.