Syllabus & study guide for DipIFRS 2012


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This syllabus and study guide is designed to help
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Syllabus & study guide for DipIFRS 2012

  1. 1. Diploma in International under international professional regulation and standards.Financial Reporting The DipIFR also provides essential internationalJune & December 2012 financial reporting knowledge and principles that will prepare candidates for the increasingly globalThis syllabus and study guide is designed to help market place and keep them abreast of internationalwith planning study and to provide detailed developments and how they might apply toinformation on what could be assessed in companies and businesses.any examination session. The prerequisite knowledge for DipIFR can eitherAIMS come from a country specific professionalTo provide qualified accountants or graduates, qualification, from possessing a relevant degreepossessing relevant country specific qualifications or (giving exemptions from F1, F2, F3 and F4 of thework experience with an up to date and relevant ACCA qualification) and two years’ accountingconversion course, providing a practical and detailed experience, or by having three years’ full-timeknowledge of the key international financial relevant accounting experience, supported by anreporting standards and how they are interpreted employer’s covering letter.and applied. APPROACH TO EXAMINING THE SYLLABUSOBJECTIVESOn completion of this syllabus, candidates should The examination is a three-hour paper. Most be able to: questions will contain a mix of computational and• Understand and explain the structure of the discursive elements. Some questions will adopt a international professional and conceptual scenario/case study approach. All questions are framework of accounting compulsory.• Apply relevant financial reporting standards to The first question will attract 40 marks. It will key elements of financial reports Involve preparation of one or more of the consolidated financial statements that are• Identify and apply disclosure requirements for examinable within the syllabus. This question will companies relating to the presentation of include several issues that will need to be addressed financial reports and notes prior to performing the consolidation procedures. Some of these issues may only relate to the financial• Prepare group financial statements (excluding statements of the parent prior to their consolidation group cash flow statements) including . subsidiaries, associates, and joint ventures. The other three questions will attract 20 marksPOSITION OF THE COURSE WITHIN THE each. These will often be related to a scenario inOVERALL PORTFOLIO OF ACCA’S which questions arise regarding the appropriateQUALIFICATION FRAMEWORK accounting treatment and or disclosure of a range of issues. In such questions candidates mayThe Diploma in International Financial Reporting be expected to comment on management’s chosen(DipIFR) builds on the technical and/or practical accounting treatment and determine a moreknowledge acquired from recognised country appropriate one, based on circumstances describedspecific accountancy qualifications or relevant work in the question. Occasionally one of the questionsexperience. The syllabus introduces the candidate to might focus more specifically on the requirements ofthe wider international framework of accounting and one specific International Financial Reportingthe system of standard setting. This conversion Standard.course concentrates on the application ofconceptual and technical financial accounting Some International Financial Reporting Standardsknowledge that candidates have already obtained to are very detailed and complex. In the DipIFR examthe specific requirements of financial reporting candidates need to be aware of the principles and 1 © ACCA 2012 All rights reserved.
  2. 2. key elements of these Standards. Candidates will also be expected to have an appreciation of the background and need for international financial reporting standards and issues related to harmonisation of accounting in a global context. The overall pass mark for the Diploma in International Financial Reporting is 50%. EXAMINATION STRUCTURE No. of marks 1 consolidation question 40 3 scenario questions 60 (20 marks each) 100 LEARNING MATERIALS ACCAs Approved Learning Partner - content (ALP- c) is the programme through which ACCA approves learning materials from high quality content providers designed to support study towards ACCA’s qualifications. ACCA has one Platinum Approved Learning Partner content which is BPP Learning Media. In addition, there are a number of Gold Approved Learning Partners - content. For information about ACCAs Approved Learning Partners - content, please go ACCAs Content Provider Directory. The Directory also lists materials by Subscribers, these materials have not been quality assured by ACCA but may be helpful if used in conjunction with approved learning materials. You will also find details of Examiner suggested Additional Reading which may be a useful supplement to approved learning materials. ACCAs Content Provider Directory can be found here – ontent_provider_directory/search/. Relevant articles will also be published in Student Accountant.2 © ACCA 2012 All rights reserved.
  3. 3. SYLLABUS CONTENT 5) Related party disclosuresA International sources of authority 6) Operating segments1) The International Accounting Standards Board (IASB) and the regulatory framework 7) Reporting requirements of small and medium- sized entities (SMEs)B Elements of financial statements D Preparation of external financial reports for1) Revenue recognition combined entities, associates and joint ventures2) Property, plant and equipment 1) Preparation of group consolidated external3) Impairment of assets reports4) Leases 2) Business combinations – intra-group adjustments5) Intangible assets and goodwill 3) Business combinations – fair value adjustments6) Inventories and construction contracts 4) Business combinations – associates and joint7) Financial instruments ventures8) Liabilities – provisions, contingent assets and EXCLUDED TOPICS liabilities The following topics are specifically excluded from9) Accounting for employment and post- the syllabus: employment benefits • Partnership and branch financial statements10) Taxation in financial statements11) The effects of changes in foreign currency • Complex group structures, including sub- exchange rates subsidiaries or mixed groups and foreign subsidiaries12) Agriculture • Piece-meal acquisitions, disposal of13) Share-based payment subsidiaries and group re-constructions14) Exploration and evaluation expenditures • Financial statements of banks and similar financial institutionsC Presentation and additional disclosures • Preparation of statements of cash flows (single1) Presentation of the statement of financial company and consolidated) position, income statement and statement of comprehensive income • Schemes of reorganisation/reconstruction2) Earnings per share • Company/share valuation3) Events after the reporting date • Accounting for insurance entities4) Accounting policies, changes in accounting • International financial reporting exposure drafts estimates and errors and discussion papers 3 © ACCA 2012 All rights reserved.
  4. 4. • The international public sector perspective • Multi-employer benefit schemes • Information reflecting the effects of changing prices and financial reporting in hyperinflationary economies • Share-based payment transactions with cash alternatives KEY AREAS OF THE SYLLABUS The key topic area headings are as follows: • International sources of authority • Elements of financial statements • Presentation of accounts and additional disclosures • Preparation of external reports for combined Entities, associates and joint ventures.4 © ACCA 2012 All rights reserved.
  5. 5. Study Guide • State and appraise the effects of the IASBs rules for the revaluation of property, plant andA INTERNATIONAL SOURCES OF AUTHORITY equipment1. The International Accounting Standards • Account for gains and losses on the disposal of Board (IASB) and the regulatory framework re-valued assets• Discuss the need for international accounting • Calculate depreciation on: standards and possible barriers to their – revalued assets, and development – assets that have two or more major items or significant parts• Explain the structure and constitution of the IASB and the standard setting process • Apply the provisions of accounting standards relating to government grants and government• Understand and interpret the Financial assistance Reporting Framework • Describe the criteria that need to be present• Progress towards international harmonisation before non-current assets are classified as held for sale, either individually or in a disposal• Account for the first-time adoption of group International Financial Reporting Standards. • Account for non-current assets and disposalB ELEMENTS OF FINANCIAL STATEMENTS groups that are held for sale1. Revenue recognition • Discuss the way in which the treatment of investment properties differs from other• Outline the principles of the timing of revenue properties recognition • Apply the requirements of international• Explain the concept of substance over form in accounting standards to investment properties. relation to recognising sales revenue 3. Impairment of assets• Discuss the various points in the production and sales cycle where it may, depending on • Define the recoverable amount of an asset; circumstances, be appropriate to recognise define impairment losses gains and losses – give examples of this • Give examples of, and be able to identify,• Describe the IASB’s approach to revenue circumstances that may indicate that an recognition. impairment of an asset has occurred2. Property, plant and equipment • Describe what is meant by a cash-generating unit• Define the initial cost of a non-current asset (including a self-constructed asset) and apply • State the basis on which impairment losses this to various examples of expenditure, should be allocated, and allocate a given distinguishing between capital and revenue impairment loss to the assets of a cash- items generating unit.• Identify pre-conditions for the capitalisation of 4. Leases borrowing costs • Define the essential characteristics of a lease• Describe, and be able to identify, subsequent expenditures that should be capitalised 5 © ACCA 2012 All rights reserved.
  6. 6. • Describe and apply the method of determining generally considered to be desirable; discuss if a lease type (ie an operating or finance lease) this may be profit smoothing • Explain the effect on the financial statements of a finance lease being incorrectly treated as an • Describe the ways in which contract revenue operating lease and contract cost may be recognised • Account for operating leases in the financial • Calculate and disclose the amounts to be statements of the lessor and the lessee shown in the financial statements for construction contracts. • Account for finance leases in the financial statements of the lessor and lessee 7. Financial instruments • Outline the principles of accounting standards • Account for debt instruments, equity for leases and the main disclosure instruments and the allocation of finance costs requirements. Note: the net cash investment method will not be examined. • Account for fixed interest rate and convertible bonds 5. Intangible assets and goodwill • Discuss the definition and classification of a • Discuss the nature and possible accounting financial instrument treatments of both internally generated and purchased goodwill • Discuss the measurement issues relating to financial instruments • Distinguish between goodwill and other intangible assets • Explain the measurement requirements for financial instruments including the use of • Define the criteria for the initial recognition and current values, hedging and the treatment of measurement of intangible assets gains and losses • Explain the subsequent accounting treatment, • Describe the nature of the presentation and including the principle of impairment tests in disclosure requirements relating to financial relation to purchased goodwill instruments • Identify the circumstances in which negative • Discuss the key areas where consensus is goodwill arises, and its subsequent accounting required on the accounting treatment of treatment financial instruments. • Describe and apply the requirements of 8. Liabilities – provisions, contingent assets and international accounting standards to internally liabilities generated assets other than goodwill (eg research and development) • Explain why an accounting standard on provisions is necessary – give examples of • Describe the method of accounting specified by previous abuses in this area the IASB for the exploration for and evaluation of mineral resources • Define provisions, legal and constructive obligations, past events and the transfer of 6. Inventories and construction contracts economic benefits • State when provisions may and may not be • Measure and value inventories made, and how they should be accounted for • Define a construction contract and describe • Explain how provisions should be measured why recognising profit before completion is6 © ACCA 2012 All rights reserved.
  7. 7. • Define contingent assets and liabilities – give examples and describe their accounting • Distinguish between reporting and functional treatment currencies• Identify and account for: • Determine an entity’s functional currency – Onerous contracts – Environmental and similar provisions 12. Agriculture• Discuss the validity of making provisions for • Recognise the scope of international future repairs or renewals. accounting standards for agriculture9. Accounting for employment and post- • Discuss the recognition and measurement employment benefit costs criteria including the treatment of gains and losses, and the inability to measure fair value• Describe the nature of defined contribution, reliably multi-employers and defined benefits schemes • Identify and explain the treatment of• Explain the recognition and measurement of government grants, and the presentation and defined benefit schemes under current disclosure of information relating to agriculture proposals • Report on the transformation of biological• Account for defined benefit schemes including assets and agricultural produce at the point of the amounts shown in the financial statements harvest and account for agriculture related (and notes to the accounts). government grants.10. Taxation in financial statements 13. Share-based payment• Account for current tax liabilities and assets in • Understand the term ‘share-based payment’ accordance with international accounting standards • Discuss the key issue that measurement of the transaction should be based on fair value• Describe the general principles of government sales taxes (eg VAT or GST) • Explain the difference between cash settled share based payment transactions and equity• Explain the effect of taxable temporary settled share based payment transactions differences on accounting and taxable profits • Identify the principles applied to measuring• Outline the principles of accounting for deferred both cash and equity settled share-based tax payment transactions• Identify and account for the IASB requirements • Compute the amounts that need to be recorded relating to deferred tax assets and liabilities in the financial statements when an entity carries out a transaction where the payment is• Calculate and record deferred tax amounts in share based. the financial statements. 14. Exploration and evaluation expenditures11. The effects of changes in foreign currency exchange rates • Outline the need for an accounting standard in this area and clarify its scope• Discuss the recording of transactions and translation of monetary/non-monetary items at • Give examples of elements of cost that might the reporting date for individual entities in be included in the initial measurement of accordance with relevant accounting standards exploration and evaluation assets 7 © ACCA 2012 All rights reserved.
  8. 8. • Describe how exploration and evaluation assets – where there has been a rights issues of should be classified and reclassified shares during the year • Explain when and how exploration and • Explain the relevance to existing shareholders evaluation assets should be tested for of the diluted EPS, and describe the impairment circumstances that will give rise to a future dilution of the EPS C PRESENTATION OF ACCOUNTS AND ADDITIONAL DISCLOSURES • Compute the diluted EPS in the following circumstances: 1. Presentation of the statement of financial – where convertible debt or preference shares position, income statement and statement of are in issue comprehensive income – where share options and warrants exist • State the objectives of international accounting • Identify anti-dilutive circumstances. standards governing presentation of financial statements 3. Events after the reporting date • Describe the structure and content of • Distinguish between and account for adjusting statements of financial position, income and non-adjusting events after the reporting statements and statements of comprehensive date income including continuing operations • Discuss the importance of identifying and 4. Accounting policies, changes in accounting reporting the results of discontinued operations. estimates and errors • Define and account for non-current assets held • Identify items requiring separate disclosure, for sale and discontinued operations including their accounting treatment and required disclosures • Discuss ‘fair presentation’ and the accounting concepts/principles • Recognise the circumstances where a change in accounting policy is justified • Recognise the content and format of interim financial statements. • Define prior period adjustments and ‘errors’ and account for the correction of errors and 2. Earnings per share changes in accounting policies. • Recognise the importance of comparability in 5. Related party disclosures relation to the calculation of earnings per share (EPS) and its importance as a stock market • Define and apply the definition of related indicator parties in accordance with international accounting standards • Explain why the trend of EPS may be a more accurate indicator of performance than a • Describe the potential to mislead users when company’s profit trend related party transactions are accounted for • Define earnings • Explain the disclosure requirements for related party transactions. • Calculate the EPS in the following circumstances: 6. Operating segments – basic EPS – where there has been a bonus issue of • Discuss the usefulness and problems shares/stock split during the year, and associated with the provision of segment8 © ACCA 2012 All rights reserved.
  9. 9. information 2. Business combinations – intra-group• Define an operating segment adjustments• Identify reportable segments (including • Explain why intra-group transactions should be applying the aggregation criteria and eliminated on consolidation quantitative thresholds) • Report the effects of intra-group trading and7. Reporting requirements of small and medium- other transactions including: sized entities (SMEs) – unrealised profits in inventory and non-• Outline the principal considerations in current assets developing a set of accounting standards for – intra-group loans and interest and other SMEs intra-group charges, and – intra-group dividends• Discuss solutions to the problem of differential financial reporting. 3. Business combinations – fair value• Discuss the reasons why the IFRS for SME’s adjustments does not address certain topics. • Explain why it is necessary for both the consideration paid for a subsidiary and theD PREPARATION OF EXTERNAL REPORTS subsidiary’s identifiable assets and liabilities to FOR COMBINED ENTITIES AND JOINT be accounted for at their fair values when VENTURES preparing consolidated financial statements • Prepare consolidated financial statements1. Preparation of group consolidated external dealing with fair value adjustments (including reports their effect on consolidated goodwill) in respect of:• Explain the concept of a group and the purpose – Depreciating and non-depreciating non- of preparing consolidated financial statements current assets – Inventory• Explain and apply the definition of subsidiary – Monetary liabilities companies – Assets and liabilities (including• Identify the circumstances and reasoning when contingencies), not included in the subsidiaries should be excluded from subsidiary’s own statement of financial consolidated financial statements position• Prepare a consolidated statement of financial 4. Business combinations – associates and joint position for a simple group dealing with pre ventures and post acquisition profits, non-controlling interests and goodwill • Define associates and joint ventures• Explain the need for using coterminous year- ends and uniform accounting polices when • Prepare consolidated financial statements to preparing consolidated financial statements include a single subsidiary and an associated and describe how it is achieved in practice company or a joint venture.• Prepare a consolidated income statement, statement of comprehensive income and statement of changes in equity for a simple group, including an example where an acquisition occurs during the year where there is a non-controlling interest. 9 © ACCA 2012 All rights reserved.
  10. 10. Summary of changes to Diploma in International Financial Reporting ACCA periodically reviews its qualification syllabuses so that they meet the needs of stakeholders such as employers, students, regulatory and advisory bodies and learning providers. There has been some reordering to the syllabus to ensure that these correspond to the ordering within the study guide learning outcomes. Some of the learning outcomes have been reworded to create greater clarity without adding or deleting elements of the outcome. The main areas to be added to the syllabus are shown in Table 1 below: Section and subject area Syllabus content C7) Reporting requirements of small and • Outline the principal considerations in developing a set of medium-sized entities (SMEs) accounting standards for SMEs • Discuss solutions to the problem of differential financial reporting. • Discuss the reasons why the IFRS for SME’s does not address certain topics. The main areas to be deleted to the syllabus are shown in Table 2 below: Section and subject area Syllabus content D4 • Distinguish between equity accounting and proportional consolidation • Describe and prepare accounts under the two formats of proportional consolidation The following items in table 3 have been deleted from the examinable documents: Section and subject area Syllabus content IAS7 Statement of cash flows10 © ACCA 2012 All rights reserved.