Syllabus, DipIFRS


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Syllabus for Diploma in International Financial Reporting Standards

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Syllabus, DipIFRS

  1. 1. Diploma in International The DipIFR also provides essential internationalFinancial Reporting 2011 financial reporting knowledge and principles that will prepare candidates for the increasingly global market place and keep them abreast of internationalThis syllabus and study guide is designed to help developments and how they might apply towith planning study and to provide detailed companies and businesses.information on what could be assessed inany examination session. The prerequisite knowledge for DipIFR can either come from a country specific professionalAIMS qualification, from possessing a relevant degreeTo provide qualified accountants or graduates, (giving exemptions from F1, F2, F3 and F4 of thepossessing relevant country specific qualifications or ACCA qualification) and two years’ accountingwork experience with an up to date and relevant experience, or by having three years’ full-timeconversion course, providing a practical and detailed relevant accounting experience, supported by anknowledge of the key international financial employer’s covering letter.reporting standards and how they are interpretedand applied. APPROACH TO EXAMINING THE SYLLABUSOBJECTIVES The examination is a three-hour paper. MostOn completion of this syllabus, candidates should questions will contain a mix of computational and be able to: discursive elements. Some questions will adopt a• Understand and explain the structure of the scenario/case study approach. All questions are international professional and conceptual compulsory. framework of accounting The first question will attract 40 marks. It will• Apply relevant financial reporting standards to Involve preparation of one or more of the key elements of financial reports consolidated financial statements that are examinable within the syllabus. This question will• Identify and apply disclosure requirements for include several issues that will need to be addressed companies relating to the presentation of prior to performing the consolidation procedures. financial reports and notes These issues will often relate to the financial statements of the parent.• Prepare group financial statements (excluding group cash flow statements) including The other three questions will attract 20 marks subsidiaries, associates, and joint ventures. each. These will often be related to a scenario in which questions arise regarding the appropriatePOSITION OF THE COURSE WITHIN THE accounting treatment and or disclosure of a rangeOVERALL PORTFOLIO OF ACCA’S of issues. In such questions candidates mayQUALIFICATION FRAMEWORK be expected to comment on management’s chosen accounting treatment and determine a moreThe Diploma in International Financial Reporting appropriate one, based on circumstances described(DipIFR) builds on the technical and/or practical in the question. Occasionally one of the questionsknowledge acquired from recognised country might focus more specifically on the requirements ofspecific accountancy qualifications or relevant work one specific International Financial Reportingexperience. The syllabus introduces the candidate to Standard.the wider international framework of accounting andthe system of standard setting. This conversion Some International Financial Reporting Standardscourse concentrates on the application of are very detailed and complex. In the DipIFR examconceptual and technical financial accounting candidates need to be aware of the principles andknowledge that candidates have already obtained to key elements of these Standards. Candidates willthe specific requirements of financial reporting also be expected to have an appreciation of theunder international professional regulation and background and need for international financialstandards. 1
  2. 2. 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 READING LIST ACCA has one Approved Learning Partner – Content (Platinum) which is BPP Learning Media. In addition there are ALP–c (Gold) who also publish text books for ACCA examinations. BPP and the Gold ALP-c base their study texts on the detailed contents of the study guides as published by ACCA. All approved study content providers will be subject to extensive quality assurance by ACCA, but the highest level of approval - Platinum - will benefit from an exclusive examiner review of content. There will be only one Platinum approved study content provider over a three-year period, and BPP Learning Media are ACCA’s inaugural Platinum study content provider. In addition ACCA examiners may also suggest other text books where appropriate, which students can refer to when widening their reading beyond the approved study texts. These are listed at the end of this study guide. A learning content provider for study and/or revision material and/or extra reading can be found by searching for your paper within the following link. ontent_provider_directory/search/ Relevant articles will also be published in student accountant.2
  3. 3. SYLLABUS CONTENT b) Earnings per share1 International sources of authority c) Related party disclosuresa) The structure of the International Accounting d) Interim financial reporting Standards Board (IASB) e) Effects of changes in foreign exchange ratesb) The standard setting process f) Operating segmentsc) The role of the International Financial Reporting Interpretations Committee (the 4 Preparation of external financial reports for content of specific IFRICs will not be combined entities and joint ventures examined) a) Definitions of subsidiaries, investments ind) Progress towards international harmonisation associates and joint venturese) The accounting framework b) Preparation of consolidated statements of financial position, income statements,f) The first time adoption of international financial statements of comprehensive income and reporting standards. statements of changes in equity2 Elements of financial statements c) Equity accountinga) Property, plant and equipment d) Proportionate consolidation and joint ventures.b) Intangible assets EXCLUDED TOPICSc) Goodwill The following topics are specifically excluded from the syllabus:d) Current assets including inventories • Partnership and branch financial statementse) Construction contractsf) Liabilities • Complex group structures, including sub- subsidiaries or mixed groups and foreigng) Financial instruments subsidiariesh) Provisions and contingencies • Piece-meal acquisitions, disposal of subsidiaries and group re-constructionsi) Employment and post-employment benefits • Financial statements of banks and similarj) Current and deferred tax financial institutionsk) Biological assets and agricultural produce • Statements of cash flowsl) Share-based payment • Schemes of reorganisation/reconstructionm) Exploration and evaluation expenditures • Company/share valuation3 Presentation and additional disclosures • Accounting for insurance entitiesa) Events after the reporting date • International financial reporting exposure drafts 3
  4. 4. and discussion papers • 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 and joint ventures.4
  5. 5. Study Guide rules for the revaluation of property, plant and equipmentINTERNATIONAL SOURCES OF AUTHORITY • Account for gains and losses on the disposal of re-valued assets1. The International Accounting Standards Board (IASB) and the regulatory framework • Calculate depreciation on: – revalued assets, and• Discuss the need for international accounting – assets that have two or more major items standards and possible barriers to their or significant parts development • Apply the provisions of accounting standards• Explain the structure and constitution of the relating to government grants and government IASB and the standard setting process assistance• Understand and interpret the Financial • Describe the criteria that need to be present Reporting Framework 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 disposalELEMENTS OF FINANCIAL STATEMENTS groups that are held for sale2. 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 4. 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 occurred3. Non-current assets – tangible • 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 5. Leases borrowing costs • Define the essential characteristics of a lease• Describe, and be able to identify, subsequent expenditures that should be capitalised • Describe and apply the method of determining a lease type (ie an operating or finance lease)• State and appraise the effects of the IASBs 5
  6. 6. • Explain the effect on the financial statements of • Describe the ways in which contract revenue a finance lease being incorrectly treated as an and contract cost may be recognised operating lease • Calculate and disclose the amounts to be • Account for operating leases in the financial shown in the financial statements for statements of the lessor and the lessee construction contracts. • Account for finance leases in the financial 8. Financial instruments statements of the lessor and lessee • Account for debt instruments, equity • Outline the principles of accounting standards instruments and the allocation of finance costs for leases and the main disclosure requirements. Note: the net cash investment • Account for fixed interest rate and convertible method will not be examined. bonds 6. Intangible assets and goodwill • Discuss the definition and classification of a financial instrument • Discuss the nature and possible accounting treatments of both internally generated and • Discuss the measurement issues relating to purchased goodwill financial instruments • Distinguish between goodwill and other • Explain the current measurement proposals for intangible assets financial instruments including the use of current values, hedging and the treatment of • Define the criteria for the initial recognition and gains and losses measurement of intangible assets • Describe the nature of the presentation and • Explain the subsequent accounting treatment, disclosure requirements relating to financial including the principle of impairment tests in instruments relation to purchased goodwill • Discuss the key areas where consensus is • Identify the circumstances in which negative required on the accounting treatment of goodwill arises, and its subsequent accounting financial instruments. treatment 9. Liabilities – provisions, contingent assets and • Describe and apply the requirements of liabilities international accounting standards to internally generated assets other than goodwill (eg • Explain why an accounting standard on research and development) provisions is necessary – give examples of previous abuses in this area • Describe the method of accounting specified by the IASB for the exploration for and evaluation • Define provisions, legal and constructive of mineral resources obligations, past events and the transfer of economic benefits 7. Inventories and construction contracts • State when provisions may and may not be made, and how they should be accounted for • Measure and value inventories • Explain how provisions should be measured • Define a construction contract and describe why recognising profit before completion is • Define contingent assets and liabilities – give generally considered to be desirable; discuss if examples and describe their accounting this may be profit smoothing treatment6
  7. 7. • Identify and account for: • Determine an entity’s functional currency – Onerous contracts – Environmental and similar provisions 13. Agriculture• Discuss the validity of making provisions for • Recognise the scope of international future repairs or renewals. accounting standards for agriculture10. 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.11. Taxation in financial statements 14. 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. 15. Exploration and evaluation expenditures12. 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• Distinguish between reporting and functional • Describe how exploration and evaluation assets currencies should be classified and reclassified 7
  8. 8. • Explain when and how exploration and – where convertible debt or preference shares evaluation assets should be tested for are in issue impairment – where share options and warrants exist PRESENTATION OF ACCOUNTS AND • Identify anti-dilutive circumstances. ADDITIONAL DISCLOSURES 18. Accounting policies, changes in accounting 16. Presentation of the income statement and estimates and errors statement of comprehensive income • Distinguish between and account for adjusting • State the objectives of international accounting and non-adjusting events after the reporting standards governing presentation of financial date statements • Identify items requiring separate disclosure, • Describe the structure and content of income including their accounting treatment and statements and statements of comprehensive required disclosures income including continuing operations • Recognise the circumstances where a change • Discuss ‘fair presentation’ and the accounting in accounting policy is justified concepts/principles • Define prior period adjustments and ‘errors’ • Recognise the content and format of interim and account for the correction of errors and financial statements. changes in accounting policies. 17. Earnings per share 19. Related party disclosures • Recognise the importance of comparability in • Define and apply the definition of related relation to the calculation of earnings per share parties in accordance with international (EPS) and its importance as a stock market accounting standards indicator • Describe the potential to mislead users when • Explain why the trend of EPS may be a more related party transactions are accounted for accurate indicator of performance than a company’s profit trend • Explain the disclosure requirements for related party transactions. • Define earnings 20. Operating segments • Calculate the EPS in the following circumstances: • Discuss the usefulness and problems – basic EPS associated with the provision of segment – where there has been a bonus issue of information shares/stock split during the year, and • Define an operating segment – where there has been a rights issues of shares during the year • Identify reportable segments (including applying the aggregation criteria and • Explain the relevance to existing shareholders quantitative thresholds) of the diluted EPS, and describe the circumstances that will give rise to a future PREPARATION OF EXTERNAL REPORTS FOR dilution of the EPS COMBINED ENTITIES AND JOINT VENTURES 21. Preparation of group consolidated external • Compute the diluted EPS in the following reports circumstances: • Explain the concept of a group and the purpose8
  9. 9. of preparing consolidated financial statements – Depreciating and non-depreciating non- current assets• Explain and apply the definition of subsidiary – Inventory companies – Monetary liabilities• Identify the circumstances and reasoning when – Assets and liabilities (including subsidiaries should be excluded from contingencies), not included in the consolidated financial statements subsidiary’s own statement of financial position• Prepare a consolidated statement of financial position for a simple group dealing with pre 24. Business combinations – associates and joint and post acquisition profits, non-controlling ventures interests and goodwill • Define associates and joint ventures (ie jointly• Explain the need for using coterminous year- controlled operations, assets and entities) ends and uniform accounting polices when preparing consolidated financial statements • Distinguish between equity accounting and and describe how it is achieved in practice proportional consolidation• Prepare a consolidated income statement, • Describe and prepare accounts under the two statement of comprehensive income and formats of proportional consolidation statement of changes in equity for a simple group, including an example where an • Prepare consolidated financial statements to acquisition occurs during the year where there include a single subsidiary and an associated is a non-controlling interest. company or a joint venture (both allowed methods).22. Business combinations – intra-group adjustments• Explain why intra-group transactions should be eliminated on consolidation• Report the effects of intra-group trading and READING LIST other transactions including: This section only contains examiner suggested – unrealised profits in inventory and non- reading which is in addition to the study texts current assets and/or revision materials and/or other reading listed – intra-group loans and interest and other within the learning content provider directory. intra-group charges, and – intra-group dividends Additional examiner suggested reading: DipIFR does not have any examiner suggested reading.23. Business combinations – fair value adjustments Further details on reading lists and Approved Learning Content can be found in the first few• Explain why it is necessary for both the sections of this guide and on the following link. consideration paid for a subsidiary and the subsidiary’s identifiable assets and liabilities to be accounted for at their fair values when ontent_provider_directory/search/ preparing consolidated financial statements• Prepare consolidated financial statements dealing with fair value adjustments (including their effect on consolidated goodwill) in respect of: 9