• Current agenda topics
• New IFRSs and IFRIC views
• Changes to IFRS
• Challenges faced in the implementation of IFRSs – Discussion

Group discussion: Challenges you are facing in your organisation when implementing the existing IFRSs and how the new changes could benefit

• Overview of current standard
• Changes proposal
• Definition of a lease – a lease and a service
• Measurement of lease liabilities
• Cash flow presentation
• Disclosure and Transition

Group Work: Benefits and application of the new standard – issues and Challenges

• Classifying financial assets
• Initial and subsequent measurement of financial instruments
• Financial asset impairment
• De recognition
• Difference between equity and liabilities
• Accounting for financial liabilities

• A single and integrated standard
• Classification and measurement. Comparison with IAS 39
• Classification and measurement approach
• Business model for managing financial assets
• Contractual cash flow
• Financial liabilities in IFRS 9
• Own credit

Case study / Group Work: Assessing significant increases in credit risk since initial recognition and Recognition and Measurement of expected credit losses

• IFRS 1 – First Time Adoption: Meaning of “effective IFRSs”
• IFRS 3 – Business Combinations:
  • Scope exception for joint ventures
  • Accounting for contingent consideration in a business combination
• IFRS 8 – Operating Segments:
  • Aggregation of operating segments
  • Reconciliation of the total of the reportable segments’ assets to the entity’s assets
• IFRS 40 – Investment Property: Interrelationship between IFR 3 and IAS 40 when classifying property as investment property or owner-occupied property

• Definition of control – new approach
• Exposure to variable returns – examples
• Meaning of power
• Changes from IAS 27 (control) and SIC 12 (risks and rewards)
• Relevant activities – definition and examples
• Potential voting rights – unexercised options and warrant
• Protective rights – definition and examples
• Substantive rights – description and examples
• Franchise agreements
• Options and warrants – in and out of the money
• Business purpose and exit strategy
• Typical characteristics of an investment entity
• Exception to consolidation: Fair Value through P/L required
• Treatment
• Parents of an investment entity
• Change in investment entity status
• Amendments to IFRS 10, IFRS 12 and IAS 28 – investment entities
• And consolidation exception
• Participant discussion of when control exists

Examples from published accounts

• IAS 39 – recap of requirements
• Incurred loss model – consequences of financial crisis
• Assets carried at amortised cost
• Available for sale assets and complications
• Assets carried under cost exemption
• IFRS 9, expected loss approach – overview
• Measuring expected credit losses – present value measurement
• Impairment at initial recognition
• Stages 1, 2 and 3 – assessment of credit deterioration
• 12-month expected credit losses and lifetime expected losses
• Effects of changes in credit risk
• Meaning of low credit risk

• Problems with existing requirements under IAS 11 & 18
• Withdrawal of IFRICs 13 and 15
• Overview of IFRS 15 – 5-step approach
• Identifying the contract:
  • Goods and services
  • Payment terms
  • Probability assessment of collection of consideration
• Combining contracts
• Contract modifications – separate contract?
• Performance obligations:
  • Distinct goods and services and examples
  • Bundles of goods and services
  • Series of distinct goods and services
• Satisfaction of performance obligation over time or at a point in time
• Customer control of an asset
• Indicators of transfer of control of asset
• Conditions for performance obligation satisfied over time
• Measuring progress for performance obligations satisfied over time
• Recovery of costs incurred
• Transaction price:
  • Variable consideration including constraining estimates
• Significant financing components

• Consideration payable to a customer
• Measurement of refund liabilities
• Allocation of price to performance obligations:
  • Relative stand-alone selling price basis
  • Estimates of stand-alone selling prices
• Allocation of discounts
• Contract costs – when can an asset be recognised?
• Disclosure requirements:
  • Disaggregation into categories
  • Descriptions of performance obligations
  • Significant judgements applied
• Software and telecoms industries
• Examples:
  • Sales with right of return
  • Warranties
  • Principal or agent
  • Participant case studies – identifying performance obligations and
  • Determining pattern of revenue recognition
  • In practice, what will change?
  • Effective date – Jan 2017
  • Transition requirements

• IFRS 14, Regulatory Deferral Accounts
• Restriction to first-time IFRS adopters
• Meaning of regulatory deferral account balance
• Differences from other IFRS
• IAS 16 & IAS 38 – amendments to depreciation and amortisation
• Prohibition on methods linked to revenue
• IFR3 and IAS 40 amendments – businesses and investment properties
• IAS 24 Amendments – Related Party disclosures – key management
• Personnel service
• IAS 34, Interim Financial Reporting – disclosure ‘elsewhere in financial Report’
• IAS 36 Amendments – recoverable amount disclosures
• Interpretation of IAS 37
• Interpretation of IAS 37
• ED Proposed Amendments to IFRS 2
• ED Proposed Amendments to IAS 7, Statement of Cash Flows – Disclosure
• Initiative
• Issues raised by regulators, FRC Corporate Reporting Review 2014
• Common areas of challenge by FRC