INTERNATIONAL FINANCIAL REPORTING (ACCT 411)

AIM

This course aims to develop knowledge and skills for understanding and applying accounting standards and the theoretical framework for the preparation of financial statements of entities, including groups, and for analysing and interpreting those financial statements. The course focuses on the application of IFRS in financial reporting because in Cambodia, IFRS and IFRS for SMEs are required by law for all companies meeting certain size requirements. The regional and international trend is that IFRS is becoming increasingly common for financial reporting.

Accounting and finance graduates will face extensive interaction with financial statements. This may be in the role of a financial accountant, responsible for preparing the financial statements. It may also be in the role of a lender, or investment analyst utilizing data drawn from the financial statements. It could be in the role of an auditor whose responsibility includes assessing whether financial statements comply with the relevant accounting standards. Thus, it is essential to have a deep and firm knowledge of financial reporting and the standards used in financial reporting.

  • COURSE DESCRIPTION
  • ROLE IN CURRICULUM
  • LEARNING OUTCOMES
  • STUDY PLAN
  • TEACHING METHODS
  • ASSESSMENT AND GRADING
  • TEXTBOOKS AND REFERENCES

COURSE DESCRIPTION

This course begins with a review of key IFRS principles, continuing to study each IFRS in detail, with continuous reference to the relevant IFRS standards. In the first week, the course covers the regulatory framework and a full set of financial statements following IFRS. We will then cover non-current assets and revenue and later, towards the middle of the course, the subject of study is consolidation and accounting for associates. After consolidation, the course returns to accounting for individual companies, covering financial instruments with the focus on loans receivable and payable. Then we progress to accounting for leases, inventory, biological assets, tax and cash flow statements. The course culminates with financial statement analysis, alternative approaches, and cash flow statements.

Credits: 5
Lecture Hours: 75

Self-Study Hours:

  • Reading: 54 (162 pages of technical reading)      
  • Review: 42 (3 individual case studies, final case study)
  • Assignment: 54 (research, analysis, writing)
    150  

Total Study Hours: 225

ROLE IN CURRICULUM

Prerequisites

Students must have finished Financial Accounting 1 and 2 before attempting this course.

LEARNING OUTCOMES

The learning outcomes for this course cover four main areas: regulatory frameworks, international financial reporting standards, preparation of financial statements and financial statement analysis. On successful completion of this course, students will be able to:

1  Knowledge

Level of Learning PLO CLO Learning Outcome
Understand PK5 CK1 Explain objective applicability and development of IFRS.

2  Cognitive Skills

Level of Learning PLO CLO Learning Outcome
Apply PC7 CC1 Apply IFRS to a broad range of transactions and recognition and measurement of assets and liabilities common to large companies and multinationals.
Create PC7 CC2 Construct the four main financial statements for a large company in compliance with IFRS.
Evaluate PC1 CC3 Appraise business performance and position using financial statement analysis from the perspective of an investor.

3  Communication, Information Technology, and Numerical Skills

Level of Learning PLO CLO Learning Outcome
Apply PCIT1 CCIT1 Utilize spreadsheets to facilitate financial statement analysis and financial reporting.

4   Interpersonal Skills and Responsibilities

Level of Learning PLO CLO Learning Outcome
Evaluate PIP1 CIP1 Exercise professionalism and professional skepticism in financial reporting and analysis.

STUDY PLAN

The course has 50 lessons detailed below. Each lesson is 1.5 class hours each; there are a total of 75 class hours. The study plan below describes the learning outcome for each lesson, described in terms of what the student should be able to do at the end of the lesson. Readings should be done by students as preparation before the start of each class. Implementation of this study plan may vary somewhat depending on the progress and needs of students.

No Lesson Learning Outcomes Teaching and Learning Activities, Assessment
 1

Course Introduction, Financial Statement Analysis

  1. Describe the objectives and elements of financial reporting in accordance with the IFRS Framework (CC1)
  2. Explain the source and applicability of international financial reporting standards and Cambodian international financial reporting standards (CK1)
  3. Define, calculate and interpret key financial ratios relevant for investors and managers (CC3, CCIT1, CIP1, CIP2)
 Lecture Discussion Kahoot!Reading:References: BPP Text Chapter 1 pp 4-8, Chapter 2 pp 31-35, Chapter 19
2

Financial Statement Analysis

  1. Describe limitations of financial statement analysis (CC3, CIP2)
  2. Define, calculate and interpret key financial ratios relevant for investors and managers (CC3)
 Lecture Discussion Case studyReading:References: BPP Text Essential Reading 19 pp 704-706, Chapter 19
3

Cash Flow Statement

  1. Describe the sections of a cash flow statement (CC2)
  2. Conduct basic interpretation of cash flows and changes in cash flows (CC3)
  3. Prepare the operating cash flow section of a statement of cash flows (CC2)
 Lecture Demonstration and discussion Case StudyReading:References: BPP Text Chapter 21 pp 525-546
4

Cash Flow Statement

  1. Prepare a full cash flow statement according to IFRS (CC2, CCIT2, CIP2)
 Case Study Reading: References: BPP Text Chapter 21 pp 525-546
5

Foreign Currency Gains and Losses

  1. Identify the functional currency of an entity (CC1)
  2. Calculate and account for gains and losses on exchange (CC1)
 Lecture Discussion Group ExerciseReading:References: BPP Text Chapter 17 pp 421-442
6

Foreign Currency Translations

  1. Translate an income statement and statement of financial position from a functional currency to a presentation currency (CC1, CCIT2, CIP2)
  2. Explain the role of translation gain or loss in other comprehensive income (CC1)
 Lecture Discussion Group ExerciseReading:References: BPP Text Chapter 17 pp 421-442
7

EPS

  1. Calculate the EPS in accordance with relevant accounting standards (dealing with bonus issues, full market value issues and rights issues) (CC1)
 Lecture Discussion Group exerciseReading:References: BPP Text Chapter 18 pp 455-476
8

Diluted EPS

  1. Describe diluted earnings per share (CC1)
  2. Calculate diluted EPS involving convertible debt and share options (warrants) (CC1)
 Lecture Demonstration and discussion Case study discussionReading: References: BPP Text Chapter 18 pp 455-476
9

Business and Industry Analysis

  1. Perform a Porter’s Five Forces analysis to analyze a business (CC3, CIP2)
  2. Perform a SWOT analysis for a business (CC3, CIP2) 
  3. Construct a risk matrix for a business (CC3, CIP2)
 Lecture Demonstration and discussion Example and exerciseReading: References: BPP Text Chapter 19 pp 477-510  
10

Property, Plant and Equipment

  1. Define and compute the initial measurement of a non-current asset (CC1)
  2. Identify subsequent expenditure that may be capitalised, distinguishing between capital and revenue items (CC1)
  3. Compute depreciation based on cost for assets that have two or more significant parts (complex assets) (CCI, CIP1)
 Lecture Demonstration Example, exercise and group problem solvingReading: References: BPP Text Chapter 3 pp 45-70
11

Revaluation of Property Plant and Equipment 

  1. Account for the depreciation of property that has been revalued (CC1)
  2. Account for revaluation and disposal gains and losses for non-current assets (CC1)
 Lecture Demonstration Example, exercise and group problem solvingReading: References: BPP Text Chapter 3 pp 45-70
12

Investment Property

  1. Identify and distinguish PPE and investment property (CC1)
  2. Prepare the accounting entries for  investment property (CC1)
 Lecture Demonstration and discussion Example and exerciseReading: References: BPP Text Chapter 3 pp 45-70
13

Borrowing Costs

  1. Determine and account for borrowing costs to be capitalised in PPE and investment property (CC1)
 Lecture Case study discussion Group problem solvingReading: References: BPP Text Chapter 3 pp 45-70
14

Intangible Assets

  1. Define and identify intangible assets (CC1)
  2. Determine and account for the amortization of an intangible asset (CC1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 4 pp 71-90
15

Impairment of Assets

  1. Determine the recoverable amount of an asset (CC1)
  2. Define and describe fair value (CC1)
  3. Determine and account for impairment of PPE, Investment Property and Intangible Assets (CC1, CIP1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 5 pp 91-106
16

Provisions

  1. Explain why an accounting standard on provisions is necessary (CC1)
  2. Explain how provisions should be measured (CC1)
  3. Account for recognition of a provision and a change in a provision (CC1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 13 pp 329-354
17

Inventory, Biological Assets

  1. Determine and account for a write-down of inventory (CC1)
  2. Define: biological asset, agricultural activity, bearing plant (CC1)
  3. Account for fair value changes of biological assets (CC1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 14 pp 355-368
18

Financial Instruments

  1. Identify, define, and account for the main types of financial instruments as per IFRS 9 (CC1)
  2. Determine the value of financial assets using the amortized cost method (CC1, CCIT1, CIP1)
 Lecture Demonstration and discussion Example and exerciseReading: References: BPP Text Chapter 11 pp 277-298
19

Convertible Loans

  1. Calculate the equity portion of a convertible loan (CC1)
  2. Account for the issuance of a convertible loan and the related accrued interest (CC1)
  3. Account for conversion of a convertible loan (CC1)
 Lecture Discussion Group ExerciseReading: References: BPP Text Chapter 11 pp 277-298
20

Lessee Lease Accounting

  1. Account for right of use assets and lease liabilities in the records of the lessee (CC1, CCIT1, CIP1)
  2. Explain the exemption from the recognition criteria for leases in the records of the lessee (CC1)
 Lecture Example and exercise Group problem solving Case study discussion.Reading: References: BPP Text Chapter 12 pp 299-322
21

Lessor Lease Accounting

  1. Distinguish between lessor operating leases and finance leases (CC1)
  2. Account for operating leases of a lessor (CC1)
  3. Account for finance leases of a lessor (CC1)
 Lecture Example and exercise Group problem solving Case study discussion.Reading: References: BPP Text Chapter 12 pp 299-322
22

Sale and Leaseback Transactions

  1. Describe the nature and role of sale and leaseback transactions (CC1)
  2. Account for sale and leaseback agreements (CCI, CCIT1. CIP1)
 Lecture Example and exercise Group problem solving Case study discussion.Reading: References: BPP Text Chapter 12 pp 299-322
23

Leases: Review and Practice

  1. Calculate and present the carrying amounts of lease assets and liabilities (CC1)
  2. Calculate and present income and expense related to lease assets and liabilities (CC1, CCIT1, CIP1)
 Lecture Case study discussion Group exerciseReading: References: BPP Text Chapter 12 pp 299-322
24

Financial Statement Adjustments for Financial Statement Analysis

  1. Make appropriate adjustments to comparable companies’ statement of financial position (CC3, CIP2)
  2. Make appropriate adjustments to comparable companies’ statement of comprehensive income (CC3, CIP2)
 Case study discussion Reading: References: BPP Text Chapter 19 pp 477-510, Chapter 20 pp 511-524
25

Revenue

  1. Explain the principles of recognition of revenue (CC1)
  2. Apply the principles of recognition of revenue (CC1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 6 pp 117-142
26

Revenue from Construction Contracts

  1. Explain and apply the criteria for recognizing revenue from contracts (CC1)
  2. Explain and apply the criteria for the recognition of contract costs (CC1)
  3. Describe the acceptable methods for measuring progress towards complete satisfaction of a performance obligation (CC1)
  4. Prepare financial statement extracts for contracts where performance obligations are satisfied over time (CC2, CIP1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 6 pp 117-142
27

Government Grants

  1. Describe the two main methods for recognizing benefits from government grants (CC1)
  2. Account for government grants using the deferred grant income method (CC1)
  3. Account for government grants using the reduction in cost method (CC1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 6 pp 117-142
28

Income Tax – Deferred Tax

  1. Account for current tax in accordance with relevant accounting standards (CC1)
  2. Distinguish between taxable differences and deductible difference (CC1)
  3. Calculate and account for deferred tax (CC1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 15 pp 369-392
29

Income Tax – Deferred Tax

  1. Account for changes in deferred tax liabilities and assets (CC1)
  2. Account for deferred tax in OCI, including that arising from revaluation of property (CC1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 15 pp 369-392
30

Income Tax – Disclosures

  1. Describe the required disclosures for income tax and deferred tax (CC1)
  2. Prepare a disclosure note for changes in deferred tax assets and liabilities and temporary differences (CC1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 15 pp 369-392
31

Consolidated Statement of Financial Position

  1. Prepare a consolidated statement of financial position for a simple group (parent and one subsidiary and associate) dealing with pre and post-acquisition profits, non-controlling interests and consolidated goodwill (CC2)
  2. Describe the concept of a group as a single economic unit (CC1)
  3. Account for the effects in the financial statements of intra-group trading (CC1)
  4. Explain why it is necessary to eliminate intra group transactions (CC1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 7 pp 153-176, Chapter 8 pp 177-218
32

Consolidated Statement of Financial Position – Unrealised Profit, Goodwill

  1. Calculate and adjust for unrealised profit on consolidation (CC1)
  2. Identify and calculate deferred consideration and its impact to goodwill (CC1)
  3. Consolidate the statement of financial position (CC2)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 8 pp 177-218
33

Consolidated Statement of Financial Position – Fair Value Adjustments

  1. Calculate goodwill, adjusting for fair value adjustments of acquisition target’s assets and liabilities (CC1)
  2. Consolidate the statement of financial position with required adjustments needed for fair value adjustments on acquisition (CC2, CIP1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 8 pp 177-218
34

Consolidated Statement of Profit and Loss and Other Comprehensive Income

  1. Consolidate revenue (CC1)
  2. Consolidate cost of goods sold (CC1)
  3. Prepare a consolidated statement of profit or loss, adjusting for inter-company transactions and NCI (CC2, CIP1)
 Lecture Demonstration Case study discussion Group exerciseReading: References: BPP Text Chapter 9 pp 219-242
35

Group Disposals

  1. Determine the gain or loss on disposal of a subsidiary (CC1)
  2. Account for the disposal and/or loss  of control of a subsidiary (CC1)
 Lecture Demonstration Case study discussion Group exercise Reading:References: BPP Text Chapter 9 pp 219-242
36

Financial Statement Analysis of Groups

  1. Adjust group financial statements for the purpose of comparison (CC3)
  2. Analyze segment performance (CC3, CIP2)
  3. Adjust risk based measures to reflect segment risk (CC3)
 Case study discussion Reading: References: BPP Text Chapter 9 pp 219-242
37

Accounting for Associates

  1. Identify an associate (CC1)
  2. Account for an associate in the statement of financial position (CC1)
  3. Account for an associate in the statement of profit or loss (CC1)
  4. Adjust for inter-company transactions with an associate (CC1)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 10 pp 243-266
38

Consolidation with Associates

  1. Prepare a consolidated statement of profit or loss for a group including a single subsidiary and an investment in an associate (CC2)
  2. Prepare a consolidated statement of financial position for a group including a single subsidiary and an investment in an associate (CC2)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 10 pp 243-266
39

Changes in Policy and Estimates, Errors, Events After the Reporting Period

  1. Define and designate the accounting treatment for accounting errors, changes in estimate, and changes in policy (CC1)
  2. Describe and identify adjusting events and non-adjusting events, giving recommendations for their treatment (CC2, CIP2)
 Lecture Discussion Group exerciseReading: References: BPP Text Chapter 13 pp 328-355, Chapter 17 pp 421-442
40

Non-Current Assets Held for Sale,  Discontinued Operations

  1. Prepare a statement of profit or loss including a discontinued operation (CC2)
  2. Identify and account for assets and disposal groups held for sale (CC1)
 Lecture Case study discussion Group problem solvingReading: References: BPP Text Chapter 17 pp 421-442
41 Review  
42 Practice  
43 Practice  
44 Practice  
45 Practice  
46 Practice  
47 Practice  
48 Practice  
49 Practice  
50 Practice  
51 Final Assignment Presentations  
Total Hours: 76.5

TEACHING METHODS

This course is primarily lecture based; assigned readings will support learning and serve as a reference to material covered in class.  During class, approximately half of the class will be devoted to lectures with another half of the class for working on and reviewing the solutions to case studies and problem sets.

ASSESSMENT AND GRADING

Grades will be determined based on a grading score, calculated using the following assessments and score allocations:

Assessment Weight of each assessment Learning Outcome Assessed
CLO PLO
Participation 10% CIP1 PIP1
Controlled case studies (3) 24% CK1, CC1, CC2, CCIT1 PK5, PC7, PCIT1
Assignments 24% CC3, CCIT1, CIP1 PC1, PCIT1, PIP1
Presentation (2) 12% CC3, CIP1 PC1, PIP2
Final controlled case study 30% CC1, CC2, CCIT1 PC7, PCIT1
Total grading score 100% All  

Individual Assignment

Work Group: Individual
Output format: APA Format Report
Language: English
Assignment: At the end of the course, each student will choose a public company that follows IFRS (the company’s last year’s annual report has to be available in English). Companies will be chosen on the first-come, first-served basis and this process will be moderated by the instructor. Students will conduct an analysis of the company’s strategic position, performance and conclude as to whether the business should be considered as a potential investment.

TEXTBOOKS AND REFERENCES

Textbooks

  1. Kaplan Publishing, Paper F7 Financial Reporting (FR), (For exams from September 2021 to  June  2022).
  2. Kaplan Publishing, Practice & Revision Kit Paper F7 Financial Reporting, (For exams from For exams from September 2021 to  June  202).

References

  1. IFRS Foundation, IFRS Standards, 2018.
  2. BPP Learning Media, Paper F7 Financial Reporting, (For exams from September 2021 to  June  2022).
  3. BPP Learning Media, Practice & Revision Kit Paper F7 Financial Reporting, (For exams from September 2021 to  June  2022)

Education Resources