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The specialist in highly technical, market-driven accounting and IFRS training

Accounting & IFRS Courses All courses can be presented In-House or via Live Webinar

web: redliffetraining.co.uk email: [email protected] phone: +44 (0)20 7387 4484

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Advanced Negotiation Issues in M&ADate:

Location: London Standard Price: £*** + VAT Membership Price: £*** + VAT

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PUBLIC COURSES

• Advanced Financial Issues in Acquisition Agreement• IRFS 9 - The Latest Updates• Introduction to Financial Issues in Acquisition Agreements

Course• Tax issues in Mergers and Acquisitions

IN-HOUSE COURSES

• Accounting Course for Listed Companies• Accounting for Business Combinations (M&A)• Advanced Financial Analysis Training• Corporation Tax: Update• Cost Control and Management• Financial Accounting and Reporting for UK Listed

Insurance Groups• Financial Accounting and Reporting: A 3 Day Introductory

Course• Financial Reporting Requirements in Investment Circulars• Hedge Accounting Training under IFRS• IFRS 9: Accounting for Financial Instruments• IFRS Accounting Training for Investments• IFRS Accounting for Real Estate• IFRS Accounting for Transactions in Corporate Control

(M&A)• The Latest Basel III Regulatory Requirements• Understanding Financial Statements - Basic• Understanding Financial Statements - Intermediate• Transfer Pricing• Directors - The Good, The Bad & The Ugly• Share Capital

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Corporate Membership Scheme

Our Corporate Membership Schemes are not valid on any courses held on an in-house basis and are in line with our standard Terms & Conditions

If you would like to enquire about one of our Corporate Membership Schemes then please call or email us for more information.

Email: [email protected] Tel: +44 (0) 20 7387 4484

Our Corporate Membership Scheme gives clients the benefit of discounted course places with absolutely no

restrictions.

Clients pay an annual subscription fee of £595 + VAT to receive 20% discount on all public course and conference

bookings irrespective of the numbers booked.

You Corporate Membership Scheme can be used once payment is received and will be valid for one year.

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Advanced Financial Issues in Acquisition AgreementsDate: 25 Sep 2018

Location: London Standard Price: £725 +VAT Membership : £580 +VAT

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This programme is aimed at participants who already have some experience of the various purchase price adjustment mechanisms used in private M&A deals;

It starts with the basics but moves quickly to focus on the more complex aspects of Cash Free Debt Free (“CFDF”), the Working Capital Adjustment, the risks in using a Locked Box approach and how to manage the Value Accrual where sellers seek to capture accrued value in a Locked Box (e.g. profits or cash).

Many of these concepts appear simple at first glance but the devil is in the detail and inexperienced practitioners and principals can gain or lose significant value in the deal. CFDF seems a simple enough concept but ‘Cash’ is not a homogenous item and includes numerous line items, each of which can affect value. Debt offers even greater challenges whilst setting the correct Target /Peg, and NWC is arguable the most contentious and difficult area. EBITDA is another key financial aspect, being a driver for many valuations/the purchase price, earn-outs and the NWC adjustment. This is another key area but is highly fluid since it is a defined rather than a recognised accounting term under IFRS (or GAAP term). Many of the issues also overlap so adjustments to EBITDA can affect the purchase price calculation ab into (where EBITDA multiples are used), the earn out if based on EBITDA, the working capital adjustment / PEG (e.g. where expenses are either over or understated e.g. rent to the owner) and also in the locked box where a value accrual is used based on “profit”

The programme is aimed at participants with some experience of Sale and Purchase Agreements who are looking to acquire in depth knowledge of these key financial issues.

The programme will refer to relevant cases drawn from both England and US jurisdictions. Participants will also be given caselets to reinforce learning objectives.

Structuring the Purchase price– overview of different approaches ■ Enterprise vs Equity Value ■ Completion Accounts ■ Locked Box ■ Earn-outs

Typical Pricing Structure (The Equity Bridge) ■ Reconciling Enterprise to Equity Value ■ Structuring the Offer Cash free- debt free ■ Problems with Cash free/Debt-free ap-

proach ■ Four ways to protect the buyer against

value erosion• Net Debt• Working Capital• Restrictions on Capex• Equity / Net Asset Value

■ What does “Debt” include?• Obvious “debt-like” items (i.e. Interest

bearing debt)

• Contentious “debt” items ӹPensions (unfunded) ӹDeferred Capex ӹDeferred / reduced rent ӹStretched working capital

• Below the radar “debt-like” items ӹDerivatives (out-of-the-money) ӹCall-protection / early termination penal-ties on Debt ӹEnvironmental liabilities ӹDilapidation provisions ӹDeferred income ӹ JV Funding obligations

■ What does “Cash” include ■ Which cash figure matters – Bank vs Ledger ■ Review of the various items in “cash”

• Cheques – how are they treated?• Credit Card payments in transit • “Trapped” or “Restricted” cash –

ӹForeign Accounts (Structural) ӹDeposits, cash in Trust

• Operational cash requirement• Petty cash

■ Other contentious items


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• Non-operating real estate• Rent deposits

Completion Accounts ■ First principles – the 6 key issues ■ Composition of the Completion Accounts

• The three bases of preparation of the Completion Accounts

• Establishing the hierarchy & why it mat-ters ӹBuyer’s perspective ӹSeller’s perspective ӹGAAP/ IFRS override – good or bad?

■ The main areas of dispute (& how to re-solve them)

Completion Accounts - Working capital issues ■ The Basics ■ 4 Different working capital profiles & how

they affect the PEG ■ Major Risks for the purchaser ■ The Seller’s concerns re Working Capital ■ Setting the Working Capital PEG/Target

• “Normalising” the working capital • Normal vs Average vs Core – what’s the

difference& why it matters? ■ Potential problem areas

• Broad vs narrow• “Judgment” areas• Intra-monthly movements• Dealing with zero balances• Other areas

■ Double recovery• Lessons from OSI Systems case – (inter-

action with Indemnities)• Lessons from Brim Holdings interaction

with provisions ■ Dispute Resolution - Falling between two

stools • Lessons from Alliant

■ Some typical examples of manipulation ■ Summary of Best Practices

• Review of Chicago Bridge case

Locked box ■ Key areas of dispute ■ SPA protection

• Leakage vs Permitted Leakage• Anti-leakage provisions• Impact of MAC on passage of risk

■ Paying the buyer • Interest on equity – what’s market rate?• Market (Value accrual) approach

ӹAccrued profits ӹAccrued cash

■ Problematic areas with Value Accrual ■ Interaction with NWC definition ■ Dealing with non-cash adjustments ■ Dealing with cash-based adjustments ■ Dealing with matters affecting EBITDA ■ Potential problems in using Locked Box (& how

to mitigate them)• Carve-outs• Accounting Issues - Out-of-date, unreliable,

incomplete• Split Exchange & delayed Completion

■ Decision Tree - is the Locked Box appropriate & or desirable

EBITDA adjustments ■ The main issue – its not an IFRS/ GAAP term ■ Why do we use EBITDA for valuations ■ The “top 10” adjustments in selling a business ■ Gains / Losses not in the P&L account ■ Treatment of Extraordinary and Exceptional

items ■ Fair Value gains/ losses ■ Revaluations ■ What about Synergies ■ Buyer adjustments ■ What about synergies ■ Operating leases ■ Employee stock options ■ Pensions ■ Rental expenses ■ Reversal of provisions ■ Adjustments for additional/replacement staff ■ Treatment of Interest (if EBIT used) and tax if

(PBT used) ■ Other items

EARN-OUTS ■ Anatomy of an Earn-out ■ The two key aspects - duration & key perfor-

mance met ■ Performance metrics & problem areas

• Typical performance metrics (EBITDA/EBIT)• What about start-ups (especially Technolo-

gy?)• Buyer synergies

■ Dealing with post completion acquisitions ■ Sale of the part or all of Target (post comple-

tion) ■ Key risks for the Buyer

• Who determines how the consideration is satisfied

• Tactics for keeping the vendor interested• Premature departure of the vendor(s)





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• Issues for Listed buyers ■ Key risks for the Seller

• Disputes re the benchmark• Buyer is acquired• Security for any deferred consideration

(Buyer is insolvent)




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IFRS 9: The Latest UpdatesDate: 20 June 2018, 18 Oct 2018

Location: London Standard Price: £625 + VAT Membership Price: £500 + VAT

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Course Overview

International Financial Reporting Standard 9 (“IFRS 9”) is the accounting standard for financial instruments, which defines the classification, measurements and impairment of financial instruments. It is designed to make annual reports more meaningful to investors as well as simplify how auditors implement the rules and introduce safeguards to limit credit losses.

In July 2014, after several years of delay, the accounting regulators published the final text of IFRS 9. This combines revised versions of previously published sections with the first publication of the final and most controversial impairment section. IFRS 9 will become effective in 2018.

Through a mix of lecture and case studies, the workshop will equip participants to achieve a detailed understanding of the latest IFRS 9 standard, both for financial assets, liabilities and derivatives, including: ■ The classification and measurement of financial instruments; ■ The new impairment methodology based on expected losses; ■ The fair value of financial liabilities and deterioration of institutions’ own credit; ■ The different types of hedge accounting and the recent IFRS changes.

Session 1 - Introduction ■ What is IFRS 9? How does it differ from IAS

39? ■ What are financial assets and financial lia-

bilities? ■ IFRS 9 history and implementation over-

view

Session 2 – Financial Assets Classification & Measurement ■ Presentation of the three different catego-

ries• 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 classification of

financial instruments ■ Balance sheet 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 inter-

ests (same as amortised costs)• Unrealised gain based on NPV at current

yield of future cash flows ■ Reminder on determining fair value

• Level 1 based on unadjusted quoted price

• Level 2 based on quoted price in inactive markets or observable model input

• Level 3 based on unobservable but signif-icant inputs to the overall value

Case Study #1: participants will be presented with a few financial instruments and will classify them in their relevant categories

Case Study #2: participants will compute on Excel the impact on balance and P&L for different types of debt & equity instruments

Session 3 – Financial Assets Impairments ■ Applies to amortized cost and FVTOCI manda-

tory fixed income instruments ■ Incurred losses (IAS 39) has been replaced by

expected losses (IFRS 9) ■ Three stages process to determine impair-

ments• Stage 1: “12-month expected credit loss-

es” with effective interest rate on gross on gross carrying amount

• Stage 2: “life-time expected credit loss-es” with effective interest rate on gross on gross carrying amount

• Stage 3: “life-time expected credit losses” with effective interest rate on gross on am-ortised costs

■ Accounting treatment for financial instruments already impaired when acquired

Case Study #3: participants will assess the credit deterioration of a Greek bond throughout the crisis and its different stages

Session 4 – Financial Liabilities & Own Credit ■ 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

Case Study #4: participants will assess the impact on credit deterioration on institutions’ own bonds


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Session 5 – Hedge Accounting ■ Qualification for hedge accounting ■ 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 sub-

sidiaries ■ Accounting treatment for 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 in-

cludes a derivative to be eligible hedged item

• Group of items and a net position (e.g. assets & liabilities or forecast sales & purchases) hedged collectively as group

Case Study #5: participants will classify a few hedging transactions in their relevant categories

Case Study #6: participants will value an interest rate swap accounted for as a cash flow hedge

Case Study #7: participants will review and assess different hedge scenarios including risk component hedging, aggregate exposures and net position



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Introduction to Financial Issues In Acquisition AgreementsDate: 05 Jul 2018, 29 Oct 2018

Location: London Standard Price: £550 +VATMembership Price: £440 + VAT

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Course Overview

This course is designed to help participants understand and deal effectively with the financial issues arising from sale and purchase agreements. It will help them prepare for discussions and negotia-tions around working capital and completion accounts. Cash free debt free transactions, earn out agreements and the option to apply locked box provisions.

The course will also consider some of the key current issues such as the impact of the transition to new UKGAAP from 2014, the new IFRS on revenue recognition and the full impact of fair value accounting on sale and purchase negotiations. The course will help participants to add value to the transaction.

The course is designed to be highly practical and will include case studies that will reflect the actual sale and purchase process including the most common contentious areas.

The initial steps ■ Setting the target Net Asset Value and un-

derstanding the main influences on price ■ The importance of the statutory accounts and

transactions in the critical window to comple-tion

■ Completion accounts – why they are neces-sary and what they can and should achieve

■ What pricing options work best? Based on completion values or using a locked box structure

■ Policies, estimates and uncertainties – under-standing the positives and the negatives

Case study – assessment of typical accounting and financial policies and consideration of what could be used to your advantage and disadvantage. The case study will consider contentious issues such as contingencies and provisions, financial instruments and impairments.

Debt free cash free ■ What is meant by debt free cash free and

why it is important ■ Reconciling the net proceeds amount ■ What is meant by cash, cash equivalents and

debt? ■ Cash v non-cash transactions – how and why

to tell the apart ■ Some contentious matters – invoice financ-

ing and the increasing use of fair values (net present values)

Case study – examination of a typical balance sheet and consideration of what should be included as debt and what should not. This exercise will introduce issues such as invoice financing arrangements, non-controlling interests, preferred stock and compound financial arrangements (convertibles)

Working capital ■ What is meant by working capital ■ What should be included and when is it signifi-

cant – what types of business and industry ■ Calculating working capital needs ■ Cash movement restrictions ■ Timing the transaction to maximise the advan-

tage – the window dressing opportunities Case study – calculating working capital requirements and identifying the fundamental uncertainties – how could these be used for or against you?

Locked box agreements ■ What is a locked box provision and how does it

work? ■ Why such agreements exist compared to the

traditional structures used ■ What are the likely problem areas and what

protections should be put in place? Case study – comparing a transaction applying a locked box provision to a traditional arrangement with a balance due based on values in completion accounts.

Earn outs ■ Why used and when are these best used? ■ Typical performance indicators and measures

Case study – consideration of a typical earn out agreement identifying the issues which could arise and how they should be dealt with. This example will look at revenue targets, profits and earnings measures and impact on overall value (or share price).

Structured business arrangements ■ Understanding key trading arrangements and

structures involving the entity for sale• Group companies and other related parties

– associates and joint arrangements• Inter-company transactions, asset transfers

and other barter arrangements• Service concessions, operating leases and

possible ‘off balance sheet’ arrangements


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Tax Issues in Mergers and Acquisitions

Date: 23 May 2018, 02 Oct 2018Location: London Standard Price: £695 + VAT

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Course Overview

This seminar considers the taxation implications of buying and selling businesses.

The viewpoints of the purchasers and vendors are both considered in depth, with the relevant taxes being covered with worked examples and a case study.

The seminar also covers the tax treatment of managers’ shares and tax issues relating to venture capital.

Participants will:

■ Be introduced to how to advise purchasers on the key tax issues, including capital allowances, capital gains and stamp duty

■ Have explained to them how to advise individual vendors, including entrepreneurs relief and the tax treatment of tax consideration

■ Master how to advise corporate vendors ■ Be appraised of HMRC clearances ■ Be taught about tax issues affect employee shares. ■ Have an overview on the tax issues relating to venture capital

Advising the Purchasers

■ Purchase of shares or assets? ■ Tax relief for goodwill and intangibles ■ Capital allowances considerations, particu-

larly fixtures in buildings ■ Taking advantage of trading losses in target ■ Capital gains de-grouping charge ■ Financing the transaction – tax relief for

interest costs ■ Stamp Duty and Stamp Duty Land Tax con-

siderations

Advising Individual Vendors

■ Pre-sale planning ■ Sale of shares or sale of assets? ■ Maximising CGT entrepreneurs’ relief ■ The importance of “trading company” status ■ Tax treatment of consideration – cash,

shares, loan notes and earn-outs ■ QCBs or Non-QCB loan notes? ■

Advising Corporate Vendors ■ Pre-sale planning ■ Form of consideration – cash, shares, loan

notes and earn-outs ■ Changes to the substantial shareholdings

exemption ■ Definition of “trading company” for sub-

stantial shareholdings exemptionHMRC Clearances, in particular

■ Section 138 TCGA 1992 re capital gains ■ Section 701 ITA 2007 re tax advantages

Tax Issues affecting employee shares ■ Taxation of employee shares including re-

stricted securities ■ Impact on “earn outs” and MBOs ■ The use of share options to attract and

retain key staff ■ Availability of CGT entrepreneurs’ relief for

the management team

Tax Issues relating to Venture Capital ■ An overview of the Enterprise Investment

Scheme (EIS) and Seed EIS ■ Qualifying companies and excluded activi-

ties ■ Conditions for the individual investor ■ Significance of being “connected” with the

company ■ The “Business Angel” rule ■ Venture Capital Trusts


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Accounting for Listed Companies

In-house or via Live Webinar

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Course Overview

This course has been designed to compare and contrast the accounting requirements of those companies that are listed on either the AIM market, or on the full market (either premium or secondary listing) with the regulations which apply to private companies.

The course will concentrate primarily on the additional obligations imposed by the relevant listing rules but it will also consider the other differences that exist within the legislation and within specific accounting and other professional standards.

The course is organised so that the three alternative sets of rules will be considered under the following topic headings. The course will also consider the audit issues raised by the additional obligations placed upon the management when an entity becomes AIM listed.

Regulatory environment

■ Companies Act 2006 categories of compa-ny and the basic framework; SME, other private and, PLC and listed

■ What is defined as ‘listed’ for different re-porting purposes; Companies Act and FRC regulations

■ Definition of Public Interest Entities (PIEs) and the additional retsrictions that apply.

■ Summary of listing requirements for annual and interim reports for Full and AIM listings – the importance of interim accounts to support dividend payments

■ IFRS/ UKGAAP options and the implications of joining and moving between markets

■ Options within IFRS and UKGAAP Standards – overview

Narrative reports

■ Cutting clutter – latest FRC and IFRS guid-ance applicable to statements such as Stra-tegic Reports and Accounting Policies

Additional listed company statements ■ Interim reports

• Required format and contents• Variations from year end policies permit-

ted ■ Reporting payment practices ■

Other reporting concessions and options ■ Related party transactions and the exemp-

tion for wholly owned subsidiaries ■ Consolidated and individual company state-

ments of cash flow ■ Group and holding company profit and loss

statements ■ Statutory concessions and exemptions from

consolidation for example

Audit issues ■ Amendments to the ‘standard’ audit report for

listed entities• Key audit matters reporting• Going concern issues arising from EU direc-

tive ■ Appointment of auditors – for PIEs – the FRC

guidance ■ Ethical Standards – additional restrictions for

the auditors of PIEs and how other profession-al obligations network and forum member-ships may affect these


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Accounting for Business Combinations (M&A) Training Course

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Course Overview

This intensive course is designed to give a comprehensive insight into the principles and practice of IFRS accounting and reporting for the full range of transactions under the general umbrella of M&A. In addition to transactions where there is a full change of control, it also considers transactions involving joint control and ‘significant influence’ (i.e. associate status) and transfers among each of these categories. Transactions are considered from the perspectives of all participants (i.e. selling and target entities as well as buyer).

The course will reflect the latest state of the following recently introduced or amended accounting standards and of emerging practice with regard to each of them:

■ IFRS 3 – Business Combinations ■ IFRS 10 – Consolidated Financial Statements ■ IFRS 11- Joint arrangements ■ IFRS 12 – Disclosure of Interests in Other Entities ■ IFRS 13 – Fair Value Measurement ■ IAS 27 – Separate Financial Statements ■ IAS 28 – Investments in Associates and Joint Ventures

The course will also offer a preview of the principal relevant changes resulting from the impending replacement of IAS 39 Financial Instruments: Recognition and Measurement by IFRS 9 Financial Instruments, as well as an insight into the main differences between IFRS as published by the IASB (‘full IFRS’) and the UK’s recently introduced FRS 102 and associated regulations (The New UKGAAP).

The course is interactive in approach and participants are encouraged to bring their own experience (and problems) to bear on group discussions and on the many (almost exclusively real-world) case studies and exercises with which the course is illustrated – and enlivened.

The concept of control

■ Parent and subsidiary undertakings ■ Special purpose entities and arrangements ■ Quasi-subsidiaries

• Review of key concepts for business combinations and associated transactions: principles and applications ■ ‘Control’ ■ ‘Significant influence’ ■ ‘Joint control’ ■ ‘A business’

Accounting for acquisition and disposal of full control ■ Deciding whether the subject is a business or

a collection of assets: pros and cons of each ■ Identifying the acquirer, the seller and the

date of acquisition

■ Identifying all assets and liabilities (including previously unrecognised intangibles)

■ Establishing fair values ■ Treatment of transaction costs ■ Calculating goodwill (also negative goodwill) ■ Acquiring control in stages ■ Treatment of deferred and contingent consid-

eration ■ Provisional and final valuations ■ Relinquishing control in stages ■ Transitions to and from associate or JV status ■ Accounting for acquisition in standalone ac-

counts of parent ■ Consolidation procedures

• Adjustment to parent company accounting policies

• Adjustment to fair values• Elimination of intercompany items• Non-controlling interests: share of net as-

sets or ‘full goodwill’ basis?• Allocation of goodwill across CGUs for fu-

ture impairment reviews• Treatment of foreign currency translation


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Accounting for Business Combinations (M&A) Training CourseContinued...

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gains and losses• Special cases – 1: Parent and subsidiary

with different functional currencies• Special cases – 2: Exemption for con-

solidation for assets held for resale• Special cases – 3: SPVs – consolidate or

not? Does accounting treatment neces-sarily follow regulatory treatment?

■ Disclosures:• Initial disclosure of the transaction itself• Subsequent disclosures, e.g. related

party transactions

Accounting for equity method investments – associated companies

■ Applying the ‘significant influence’ and ‘joint control’ criteria in practice: some ‘counter-intuitive’ cases

■ Equity accounting for associates in consoli-dated financial statements• Establishing the initial share of net as-

sets• Goodwill (initial and after subsequent

review)• Changes in value of share of net assets:

distributions• Elimination of proportion of intercompa-

ny profits and losses ■ Special considerations for accounting for

joint arrangements:• Joint operations or joint venture?• Equity accounting for joint venture (no

more ‘proportional consolidation’) ■ Transitions to and from associate/JV status

Some special topics

■ Secondary impact of transactions on eps, banking covenants, investor ratios and public perceptions

■ Impact of IFRS 13 Fair Value Measurement on initial accounting and on subsequent impairment and impairment reversal re-views

■ Hedging / hedge accounting for M&A transactions (under IAS 39 and IFRFS 9)

■ Hedging / hedge accounting for ongoing net investment in foreign undertaking (un-der IAS 39 and IFRS 9)

■ Overview of principal changes in IFRS 9 as regards accounting for ‘portfolio’ equity instruments:• introduction of new ‘Fair Value through

OCI’ category• new enhanced disclosure requirements• Exemptions available for ‘investment

entities’ and for sub-groups


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Advanced Financial Analysis Training Course

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Course Overview

Understanding financial statements and forecasts used to analyse and value businesses is fundamental to the role of any analyst or investor. Unfortunately companies at times have incentives to manipulate their reported results (for better or worse) that are not aligned with investors in the business.

This course helps the participants to understand firstly, the main types of manipulation that take place in practice (including recent public company examples), then looks at how these types of manipulation can be identified and an assessment of the quality of a company’s financial reporting arrived at through the use of analytical techniques.

The course deals with numerous accounting issues and provides the latest state of accounting under IFRS and US GAAP. This course is run in an interactive, participative format, where participants learn by doing. The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work.

The approach has been designed to equip participants to put key concepts into practical use immediately.

By the end of this course participants will understand:

■ The key methods used to manipulate financial statement and forecasts ■ How to analyse historic financial statements using advanced ratio analysis to assess the quality of

the financial reporting and the financial health of the business ■ How to analyse and assess financial forecasts using different accounting issues

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse financial models:

■ Building up from partially-complete models ■ Working with integrated financial statements ■ Running scenarios, iterating and optimising

Each participant should bring a lap top with USB port to the course to facilitate modelling work


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Day 1Accounting overview – where manipulation and fraud commonly take place

■ Conditions that may result in accounting manipulation• Incentives and pressures to manipulate• Opportunity• Attitude of management

Case study – Analysing the conditions for fraud – Enron

Common forms of manipulation and fraud – income statement

■ Revenue recognition issues• When is a sale not a sale• Accounting rules governing revenues• Earning revenue – principal or agent?• The problems with long term contracts

■ Abnormal sales growth, the Symbol effect ■ Revenue recognition red flags

Case study – The participants analyse a case company’s accounting for revenue and suggest adjustments to correct manipulation

Case study – Symbol Inc

■ From revenue to EBIT• Increasing income from one off events• Misleading classifications• Capitalising interest

■ Manipulation of cost of goods sold• Cost deferral and impairments

■ Inventories, growth vs sales and valuation issues

■ EBIT manipulation red flags

Case study – Enron red flags

■ Other income statement issues ■ Shifting current expenses to a later period

• Identifying capitalisation issues

Case study – Thomson Research

■ Techniques to hide expenses or losses ■ Shifting current income to a later period ■ Shifting future expenses to an earlier pe-

riod

Case study – Xerox

Day 2Evaluating the quality of financial reporting – ratio analysis

■ Quantitative tools used to assess financial reporting quality

■ Dupont analysis• ROE and ROCE analysis• Extended Dupont analysis

■ Further ratio analysis• Working capital and asset based analysis• Assessing divisional performance• Credit based analysis • Altman z scores• Accruals based analysis

Case study – The participants analyse the case study company and produce the first set of ratios to assess the quality of the financial reporting to identify where the accounts may have been manipulated

Case study – The participants analyse a case company’s accounting for further income statement issues and suggest adjustments to produce a “clean” set of historic numbers

Common forms of manipulation and fraud – balance sheet

■ Long life assets• What does an asset cost?

■ Amortisation and depreciation issues• Asset lives and depreciation rates

Case study – The participants analyse a case company’s accounting for PPE and Intangibles for manipulation

■ Off balance sheet financing• Accounting for leases – the operating

lease disappears• Treatment of leases for valuation purpos-

es• Liability calculation• Balance sheet adjustments• Treatment effects on financial ratios

■ Pension accounting – income statement and balance sheet issues• Accounting for pensions• Correct allocation of costs – EBIT or not• Which liability and effect on valuation• Treatment effects on financial ratios

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Day 3

Common forms of manipulation and fraud – balance sheet (continued)

■ Financial instruments – recognition and valuation• The after effects of the financial cri-

sis – new accounting rules for financial instruments

• Fair vs historic cost – assessment and effects on valuation

• Treatment effects on financial ratios•

Case study – The participants analyse a case company’s accounting for various balance sheet items and suggest adjustments to correct manipulation

■ Foreign currency issues – translation and transaction effects• Which currency to use• Calculation of translation effect• Implications for valuation• Treatment effects on financial ratios

Case study – The participants analyse a case company’s accounting for various balance sheet items and suggest adjustments to correct manipulation

Common forms of manipulation and fraud – cash flow

■ Picking up the trail – earnings vs cash ■ Operating vs other cash flows – improving

cash conversion ■ Manipulating working capital for cash flow

• Receivables• Payables

■ Accounting for cash and the quality of cash holdings• Does the cash exist?• Polly Peck and Cyprus

Case study – The participants analyse a case company’s accounting for various cash flow statement items and suggest adjustments to correct manipulation




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Corporation Tax: Update


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Course Overview

This course provides a summary of corporation tax, with particular emphasis on recent developments including those in Finance Act 2016. We also look at recent cases from the courts and tribunals, and at guidance produced by HMRC.

The course views the subject from a practical perspective for company accountants, and for accountants in practice who advise companies. The subject is illustrated by many worked examples.

This perspective is firmly rooted in the legislation which is quoted throughout the accompanying notes

Introduction ■ Scope, brief history and sources of law and

guidance ■ Rates, including recent changes and new rate for

restitution interest ■ Residence of companies

Basic calculation of tax ■ Accounting periods ■ Identifying different sources of income ■ Role of accounting standards ■ Definition of profits, and calculation of adjusted

profits ■ Marginal relief for pre-1 April 2015 profits, and

augmented profits Trading income ■ Whether a company is trading ■ When a trade commences and ceases ■ What expenses are tax-deductible ■ Valuation of stock and work in progress ■ Post-cessation receipts ■ Loss relief, including newly introduced restric-

tions Capital allowances ■ Different types of allowance, including annual

investment allowance ■ Summary of capital allowance calculations ■ Plant and machinery ■ Cars ■ Features integral to a building ■ Intangible assets (including Finance Act 2016

changes) Particular types of company ■ Close companies ■ Research and development, including patent box ■ Charities and voluntary bodies ■ Brief notes on specific provisions for charities, oil

companies, shipping and others Extracting profits from companies ■ Consideration of salaries, dividend, rent, loans

etc. ■ Substantial shareholding exemption

Groups of companies ■ Structure and group relief ■ Consortium relief ■ Transfer pricing

■ Reconstructions and amalgamations Other sources of income ■ Loan relationships ■ Investment income ■ Property income ■ Chargeable gains

Administration ■ Self-assessment, and directors’ responsibilities ■ Filing returns ■ HMRC powers of enquiry ■ Due date and penalties ■ Relationship with Companies House filing ■ Payment of tax, including quarterly instalments for

larger companies ■ Liquidation of companies

Tax planning and avoidance ■ Current position with regard to tax avoidance ■ DOTAS, GAAR, TAAR and other anti-avoidance

measures ■ Funding through tax-advantages schemes of EIS,

SEIS and VCT ■ Tax-advantaged schemes of investment by employ-

ees Other provisions ■ Annual tax on enveloped dwellings ■ Construction Industry Scheme ■ Apprenticeship levy ■ Miscellaneous matters



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Cost Control and Management


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Course Overview

This intensive course is designed to cover all aspects of controlling costs within most corporate environments, including manufacturing and professional services, and using cost controls to make better business decisions. This will be covered from a performance analysis perspective as well as a products and services valuation perspective.

Who will benefit?Anyone dealing with management of cost centres or profit centres, such as financial directors and controllers, directors and chief financial officers, divisional/branch managers and directors.

Introduction to cost control and management

Costing products and services

■ Absorption, variable costing and CVP anal-ysis• Fixed vs Variable costs• The high-low method• CVP analysis and the breakeven point• The concept of allocating indirect costs• Impact on inventory and profits

Exercise: The participants will be required to calculate the fixed costs based on different production volumes, identify the breakeven point and calculate the total costs of the projected production volume.

■ Standard costing• Setting the standard cost rates• Allocating costs to products and services

Exercise: The participants will be required to calculate standard cost rates and the total cost of production based on projected figures.

■ Activity Based costing (ABC)• Identifying relevant activities• Identifying the cost drivers• Calculating the allocation rates

Exercise: The participants will be required to identify the relevant cost drivers for various activities, allocate costs accordingly and calculate the total cost of production. They will also be required to compare the cost per unit to the standard cost and comment on the reasons for any differences.

Performance measurement

■ Responsibility accounting• Assessing cost centres, revenue centres

and profit centres• Assessing investment centres

■ Flexible budgets• Budgeting for different sales volume within

the relevant range• Adjusting the budget for actual sales vol-

ume ■ Variance analysis under standard costing

• Computing the variances• Preparing a performance report

Exercise: The participants will be required to prepare a flexible budget based on the original budget, calculate the standard cost variances and prepare a report to explain the performance for the period.

The Balanced Scorecard ■ Focus on the strategic agenda



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■ Qualitative analysis ■ Use of KPIs – financial and non-financial ■ Comparison to targets

Exercise: The participants will be required to review the strategic agenda of an enterprise and identify which KPIs would be most relevant to monitor the enterprise’s performance against its strategic objectives.

Cost benefit analysis and decision making ■ What are relevant costs? ■ What is a cost benefit analysis? ■ Making short term business decisions

• Pricing decisions• Special order and outsourcing decisions• Product mix decisions• Drop a product and sell as is or process

further decisions

Exercise: The participants will be required to complete a number of exercises relating to short term business decisions, and justify their recommendations.

Total Quality Management (TQM) ■ What is TQM? ■ The four types of quality costs ■ Deciding whether to adopt a new quality

program

Exercise: The participants will be required to calculate the potential cost savings of adopting a number of quality programs and make a recommendation as to whether to go ahead with a specific program or not at all.

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Financial Accounting and Reporting for UK Listed Insurance Groups


Course Overview

This financial reporting and accounting course is intended to give preparers and users of the published financial reports of UK listed insurance entities a detailed insight into:

■ the current regime for insurance accounting under the supposedly ‘temporary’ IFRS4 published in 2004, with special emphasis on the practical problems arising from its lack of a comprehen-sive conceptual basis; and

■ the current state of play in the progress towards a comprehensive new standard, with special emphasis on its primary characteristics, the outstanding unresolved issues, and the interface with other existing and proposed standards (especially IFRS 9); and

■ the challenges that are likely to arise in the long period of transition to final adoption in about 2017

The Current Regime Introduction to Accounting for Insurance Business

■ Why insurance accounting is generally problematic:• Very long timescales• Uncertainties of future cash flows• Matching of revenue with expense• Complexity of products, especially op-

tionality characteristics• Requirement for financial and regulatory

reporting to be aligned (unlike banking / Basel)

■ Why insurance accounting poses specific problems to the IFRS regime;• Primary focus of IFRS: providing rele-

vant and reliable information about the ӹAmount ӹTiming ӹUncertainties of future cash flows

• Time value of money: to be identified, quantified and separately accounted for

• Risk: to be explicitly identified and quantified

• Strict distinction between equity and liability: problematic for insurance products with discretionary participation features

• IFRS regime for insurance companies’ principal assets (financial instruments): not especially ‘insurance-friendly’: re-sult – accounting mismatches

Overview of current ‘patchwork’ regime

■ IFRS 4 (2004) as a ‘holding operation’:• Lack of consistent principles, with par-

tial exemptions from IAS 1, IAS 8 and Framework

• Overview of banned and permitted ex-isting practices, and scope for ‘improve-ments’

■ Study of selected features of existing IFRS 4 treatment:• Definition of ‘insurance contract’• Unbundling• Treatment of [deferred] acquisition

costs• Treatment of optionality features includ-

ing discretionary participation features• Asymmetric treatment of assets and

obligations• Inconsistent use of historic cost and fair

value methodology

Case Studies

■ The Equitable Life case and its lessons ■ Detailed examination of impact of incon-

sistencies in current regime on compara-bility between;• Two UK insurers• A UK group and a continental European

group

Day Two: The Proposed Regime

Outline of the new model for all insurance contracts

■ The two components:• Risk-adjusted expected present value of

all cash flows arising from fulfilment• Contractual service margin reporting

profitability over the coverage period ■ Estimating the expected value of cash


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flows:• Explicit, current estimates at the report-

ing date• Estimates that do not contradict availa-

ble market information• Unbiased use of all available information

■ Identifying the cash flows to be included:• Cash flows from future premiums• Acquisition costs

ӹBasis of measurement ӹBasis of identification

■ Adjusting the cash flows to reflect the time value of money• General principles for all contracts• Accretion of interest on the contractual

service margin• Using current, market-consistent esti-

mates of time value of money• Reflecting liquidity factors in the dis-

count rate• Disclosure of yield curve• Reflecting dependence of assets on the

discount rate• Adjusting the cash flows to reflect risk• General rationale for risk adjustment• Techniques for adjustment• Confidence level disclosure• Diversification benefits

■ Other issues:• Recognition and measurement of the

contractual service margin• Reinsurance contracts held• Business combinations• Separating components and embedded

derivatives

Outstanding issues

■ The second (June 2013) Exposure Draft:• Adjustments for changes relating to fu-

ture insurance coverage• Cash flows expected to vary with returns

on underlying items• Presentation of revenue and expense• Determining interest expense

■ The interface with new IFRS 9 Financial In-struments:• Problems arising from the original two-

test basis for classification of assets (busi-ness model and cash flow characteristics)

• Problems arising from the IASB’s pro-posed amendments: ‘AFS by another name’?

■ Transitional considerations:• ‘IFRS 4 Replacement’ not to be published

until IFRS 9 is finalised: the IASB-EU stand-off and its implications

• Further 3-year delay planned before IFRS 4 Replacement becomes mandatory in 2017 – or even later?

• Problems arising from introduction of Sol-vency 2 before IFRS 4 Replacement


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Financial Accounting and Reporting: A 3 day Introductory Course


Course Overview

This course:

■ Provides an introduction to the basic principles and practice of financial accounting and reporting ■ Combines theoretical rigour with a strong element of everyday commercial reality and a wealth of

practical detail ■ Is slanted towards the needs of users rather than preparers

It therefore present not only a beginner’s course in bookkeeping for historic transactions, but also a primer on the objectives, conventions, methods and limitations of financial reporting, as a future-orientated aid to decision making by external stakeholders, such as equity shareholders, investment analysts, lenders, and credit risk managers;

■ Assumes no prior technical knowledge of accounting or bookkeeping

However, participants are expected to have a general appreciation of the concept of profit and loss, and of a business or other organisation as a legal entity (referred to as “the entity” in what follows) distinct and separate from its owners or controllers

■ Is presented at a basic level where the nuances of the differences between IFRS, US GAAP and other national accounting frameworks rarely matter

But in the interest of consistency and transparency, it is presented throughout in accordance with the principles and terminology of IFRS. This can of course be adjusted in the light of the specific situation and preference of the client.

Course Content

Regulatory environment

■ Companies Act 2006 categories of compa-ny and the basic framework; SME, other private and listed

■ What is defined as ‘listed’ for different re-porting purposes; Companies Act, APB, ASB

■ Summary of listing requirements for annual and interim reports for Full, AIM and Plus listed companies

■ IFRS/ UKGAAP options and the implications of joining and moving between markets

■ Accounting changes – update on option to move to IFRS and planned concessions for qualifying subsidiaries

■ Options within IFRS and UKGAAP Standards – overview

■ Latest changes to accounting for business combinations – the ‘new test for control

Narrative reports

■ Accounting policies and uncertainties – the basic requirements

■ Directors report contents and the review of the business

■ Operating and financial reviews ■ Other additional statements and summa-

ries – regulatory framework and reporting obligations

■ Review of latest proposals for strategic report

Directors and management information

■ Directors’ interests, changes in directors, loans and other transactions with directors and other key reportable events

■ The directors’ remuneration report; legal, listing and accounting disclosure obligations – including for share option arrangements

■ Proposal for high level summary remunera-tion report

■ Corporate governance statements and the obligations of management and advisors

■


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Additional listed company statements

■ Segmental reporting obligations• Single segment businesses; and• Information that is commercially dam-

aging ■ Interim reports

• Required format and contents• Variations from year end policies per-

mitted

Other reporting concessions and options ■ Related party transactions and the exemp-

tion for wholly owned subsidiaries ■ Consolidated and individual company

statements of cash flow ■ Group and holding company profit and loss

statements ■ Statutory concessions and exemptions

from consolidation for example ■ Planned concession from audit for qualify-

ing subsidiaries

Concluding points

■ Future developments and plans – the fu-ture for UKGAAP (overview)

■ Key contentious issues for advisors

Objective of financial accounting and reporting

To record, in an orderly and systematic way, historic transactions and other events that may ■ provide information that is relevant to the

amount, timing and uncertainty of the en-tity’s future cash flows;

■ have effects on the entity that are reliably measurable in financial terms and

■ be useful to external stakeholders in making decisions about the future, and specifically in decisions to provide financial resources to the entity.

Basic conventions of financial accounting and reporting ■ The entity principle: the entity has definite

boundaries and is separate from its own-ers, managements, controllers and spon-sors

■ The accruals principle: transactions are re-corded when the entity becomes a party to them, and not when any associated cash flows might occur

■ The going concern principle: it is assumed that the entity will not have to liquidate or

curtail its operations in the near future ■ The reliable measurement principle: trans-

actions and events are usually recorded only when and to the extent that their impact can be reliably measured in financial terms. This is a severely limits the ability of financial accounts to present what is commonly called ‘the whole picture’ of an entity

Distinction from management accounting

■ Financial accounting is primarily designed to inform outsiders about the implications of historic transactions and events on the financial condition (balance sheet), financial performance (income statement) and cash position (cash flow statement) of the entity;

■ Management accounting is primarily de-signed to assist management in running the entity more profitably and efficiently, and is therefore not confined to financial measures but contains much non-financial informa-tion, e.g. about the volumes and make-up of goods and services, the time taken by processes etc.

The method of financial accounting (so-called ‘double-entry bookkeeping’) : ■ Financial accounting is a process that traces

• the inflow and outflow of resources (as-sets) into and out of the entity;

• increases and decreases in the entity’s obligations (liabilities) to third parties; and

• the impact of a) and b) on the entity’s owners’ residual economic interest in it (equity)

■ Every transaction or other relevant event impacts the entity’s resources and/or the entity’s obligations and/or the entity’s own-ers’ residual interest in it, in two separate ways

Exhaustive practical exercises in the basic recording of a wide range of transactions and events: ■ Sales: for cash, on credit, and prepaid ■ Purchases and other direct costs incurred:

for cash, on credit, and prepaid ■ Resources and obligations that impact more

than one accounting period (capex and depreciation, prepayments, accruals and deferred income)

■ Real estate transactions: purchases, sales, sales and leasebacks, rent and other incen-tives

■ Obligations that are uncertain in timing or





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amount (provisions) ■ Changes in the economic value of resourc-

es (writedowns of inventory and receiva-bles, revaluation of real estate and other assets)

■ Intangible assets and the special restric-tions on their recognition

■ Sales taxes and taxes on the entity’s own profit

■ Reconciling external confirmations to inter-nal records, e.g. bank statements

Preparing the period-end financial statements:

■ The income statement• Sales and direct expenses, leading to

gross profit• Other operating income and expense,

leading to operating profit• Finance income/expense, leading to

pretax profit• Taxation charge for the period, leading

to net income ■ The balance sheet (components, defini-

tions and layout)• Assets

■ Current ■ Noncurrent

• Liabilities ■ Current ■ Noncurrent

• Net assets• Shareholders’ equity

■ Share capital and premium ■ Retained earnings

■ The cash flow statement• Method of preparation

ӹDirect ӹ Indirect

• Structure ӹCash flow from operating activities ӹCash flow from investing activities ӹCash flow from financing activities

An introduction to elementary financial analysis ■ The uses and limitations of financial ratios:

developing simple metrics to track• Operating profitability (e.g. gross and

operating profit, return on sales)• Operating efficiency (asset turnover/

utilisation)• Overall profitability (e.g. return on capi-

tal employed, return on equity)• Liquid assets and liabilities: volume and

velocity of conversion/circulation)• Cash flow coverage of fixed charges• Solvency: leverage and gearing




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Financial Reporting Requirements in Investment Circulars


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Course Overview

From 1 July 2012, the Prospectus Rules are being updated and, amongst other changes, it will be possible for companies making rights issues and smaller companies on AIM and the Official List to reduce the financial disclosures they have to make in the public documents.

This course looks at the full and “proportionate” financial disclosures required in public documents. It examines the financial reporting requirements of the Prospectus Rules and ESMA/CESR’s recommendations for AIM and the Official List companies.

The course both covers the public reporting assignments on historical financial information, profit forecasts and pro forma financial information, and also looks at the situations where private reporting assignments and comfort letters are given.

The course should be attended by those involved in Reporting Accountants’ work on Investment Circulars and those responsible for preparing financial information for the circulars.

Changes in markets and regulation ■ Market development ■ The Official List, AIM and PLUS ■ Categories of Official List: Premium and

Standard ■ CESR/ESMA ■ SIRs

Prospectus/AIM Admission Document

■ Prospectus requirements ■ Financial information and Accountants’ Re-

ports ■ AIM and PLUS document requirements ■

Premium, Standard and AIM – Key financial issues ■ Superequivalent requirements ■ Eligibility for new listing ■ Class tests and Class 1 Circulars ■ Reverse takeovers ■ Related parties ■ Role of Sponsor and NOMAD ■ Comparison of financial reporting: Premi-

um, Standard and AIM ■ UK Standard Listing as alternative to AIM?

Accountants’ reports in Investment Circulars ■ Procedures for all engagements

• SIR 1000• Ethical Standard for Reporting Account-

ants and APB guidance ■ Historical financial information

• Full and proportionate disclosure• Full disclosure for prospectus/AIM admis-

sion document• Complex histories• GAAP required• Omissions • CESR recommendations• Companies and issues qualifying for propor-

tionate disclosure• Proportionate disclosure for pre-emptive

issues• Proportionate disclosure for SMEs and

Small Caps• AIM carve outs• SIR 2000 • Examples in prospectuses and AIM admis-

sion documents

■ Profit forecasts or estimates• When required• SIR 3000

■ Pro forma financial information• When required• SIR 4000

■ Other Investment Circulars• PLUS circulars• Class 1 circulars• Takeover documents•

Comfort letters in connection with investment circulars ■ Working capital ■ Capitalisation and indebtedness statement ■ Financial reporting procedures and consulta-

tion ■ Other financial information in circular ■ Significant changes and bring down ■ SAS 72 type comfort



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Hedge Accounting Training Course under IFRSIn-House or via Live Webinar

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Course Overview

The stated objective of the current IAS 39 hedge accounting regime was to neutralise the perverse outcomes of applying the standard’s basic provisions to the most widely used, commercially sound hedging strategies. But the experience of many practitioners is that IAS 39 hedge accounting has been at best only partially successful, and at worst has aggravated the problem. There is evidence that some companies are so anxious not to have to report the arbitrary fluctuations in earnings caused by the application of IAS 39, that they have ‘let the accounting tail wag the business dog’, and refrained from engaging in commercially prudent hedging activities.

The IAS 39 hedge accounting regime is ultimately based on broad principles but these are clouded by a plethora of specific rules - and in exceptions to them. The IAS 39 replacement standard, IFRS 9, will be mandatory for accounting periods commencing on or after 1st January 2018. Its hedge accounting regime will be both more principles-based and more pragmatic than the current IAS 39 regime. But many features of the new regime are without precedent and therefore untried, and some users will initially be taking advantage of the IFRS 9 option to retain the hedge accounting provisions of IAS 39, pending possible further developments.

The principal objectives of this course are to give participants a clear road-map through the maze of provisions and to give preparers and their managers a more informed basis for their hedge-accounting decisions, with a clear view of the costs and benefits of all the alternatives.

The course makes extensive use of real-life comparative case studies and of fully worked examples, carefully chosen in consultation with the client to maximise the relevance of the course to the client’s own requirement.

Hedge accounting under IAS 39

Rationale and rules

■ Objective of hedge accounting: to elimi-nate accounting distortions

■ Aligning hedge accounting with general risk management strategy

■ Hedging instruments and hedged items: eligibility criteria

■ Designing a hedge so as to minimise inef-fectiveness

■ Documentation requirements ■ Selecting the best technique for testing

hedge effectiveness ■ Pricing and revaluation of hedging instru-

ments (derivatives)

Accounting for fair value hedges ■ Typical scenarios for fair value hedge ac-

counting ■ Detailed accounting rules for fair value

hedge accounting ■ Typical problems: (a) portfolio hedging

and (b) hedging of non-financial items ■ Representative selection of worked exam-

ples, with alternatives ■ Case studies: interest rate and foreign

currency exposure hedging of assets and liabilities

Accounting for cash flow hedges, with special emphasis on ‘highly probable forecast transactions’

■ Typical scenarios for cash flow hedge ac-counting

■ Detailed accounting rules for cash flow hedge accounting

■ Typical problems: (a) ‘highly probable forecast transactions’, (b) the temptation to under-hedge, and (c) how to recycle hedging gains and losses through the in-come statement

■ Representative selection of worked exam-ples, with alternatives


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Accounting for net investment in a foreign operation

■ Managing a fluctuating and uncertain ex-posure

■ Countering the bias towards under-hedg-ing

■Hedge accounting under IAS 39: the principal changes in detail

■ Replacement of quantitative threshold with a requirement to demonstrate an econom-ic relationship between the hedged item and hedging instrument

■ Increased flexibility in criteria for hedged items and hedging instruments

■ Effectiveness testing requirements relaxed ■ Rebalancing of the hedge both permit-

ted and required ■ Prohibition of arbitrary de-designation of the

hedging relationship ■ More flexibility in hedging groups of dissimi-

lar items (including net exposures). ■ More user-friendly accounting for option pre-

miums and forex forward points ■ Radically revised and expanded disclosure

requirements


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IFRS 9: Accounting For Financial InstrumentsIn-House or via Live Webinar

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Course Overview

This course has been designed to provide both a strategic overview and technical insight into the new IFRS 9 regime for financial instruments, with special emphasis on how the radical changes from the existing IAS 39 regime will affect the work of investors, advisers, deal-doers and analysts.

After several years’ delay, the IASB published in July 2014 the final text of the comprehensive new standard IFRS 9 Financial Instruments. This combines revised versions of previously published sections (Classification and Measurement of Financial Assets and Liabilities, and Hedge Accounting) with the first publication of the final and most controversial section: Impairment.

Despite the deceptively long lead time for adoption of the new standard (it becomes mandatory only for accounting periods beginning on or after 1st January 2018), the transition process confronts preparers and users with operational and commercial challenges comparable only with those posed by the original adoption of IFRS in 2005.

Overall, the jury is firmly out, and will remain so for several years, on the key question: how will IFRS 9 affect the comparability of reporting institutions, across business types, across borders, and across time?

Course Themes ■ The systematic shift away from rules and towards principles radically increases the importance

of management intention (in entering into transactions), and the scope for management judge-ment (in estimating their accounting value and commercial impact).

■ The new regime calls for very substantial increase in disclosures, especially in the commercially and political sensitive area of impairament.

■ The IFRS 9 methods for measuring revenue, expense, gains and losses from financial instru-ments are broadly similar to IAS 39, but the criteria for employing each of them are radically different. This will cause major and unpredictable shifts in P&L recognition, both between the in-come statement and equity (via other comprehensive income), and between accounting periods.

■ The shift from an ‘incurred loss’ to an ‘expected loss’ model for impairment will result in earlier and higher provisioning, but its implementation will be both complex and subjective, and the outcome will still fall short of ‘through-the-cycle’ methodology espoused by the regulators in the wake of the global financial crisis.

■ The new regime for hedge accounting, while partially achieving its avowed objective of reflecting real-life risk management, might actually bring little if any additional transparency to the user’s perspective.

IFRS 9 Overview - 1: Some good news ■ More principle-based than the existing

rules-based IAS 39 regime ■ Fewer categories, fewer specific and con-

fusing rules for classification and reclassifi-cation

■ Accounting treatment to be determined by (i) business model and (ii) nature of cash flows

■ All-new impairment model based on indus-try-standard ‘expected loss’, not ‘incurred loss’

■ Hedge accounting more flexible and aligned to risk management policy and practice

IFRS 9 Overview - 2: Some not-so-good news ■ Criteria for basic accounting treatment:

vague and untried (either in IFRS or else-where)

■ Default treatment for financial assets: Fair Value through Profit or Loss (no longer AFS)

■ Accounting mismatches: still not eradicated ■ Disclosures of credit risk (impairment) and

hedge accounting: substantially more oner-ous

■ Still no hedge accounting for dynamic (port-folio-based) hedging operations

■ Still no IFRS standard for insurance activities ■ Resource implications are unclear, but some

areas (impairment) are clearly problematic Problem areas in classification and measurement of financial assets / liabilities ■ Applying the business model test: does it

reflect how the entity actually runs its busi-ness?

■ Applying the cash flow test: do all products fall readily into the ‘right’ category?

■ Does the new regime eliminate existing ac-counting mismatches (e.g. between cash and derivative positions) – or does it create new ones?

Problem areas in Impairment ■ How does the entity estimate ‘12-month ex-

IFRS 9 Overview - 1: Some good news ■ More principle-based than the existing

rules-based IAS 39 regime ■ Fewer categories, fewer specific and con-

fusing rules for classification and reclassifi-cation

■ Accounting treatment to be determined by (i) business model and (ii) nature of cash flows

■ All-new impairment model based on indus-try-standard ‘expected loss’, not ‘incurred loss’

■ Hedge accounting more flexible and aligned to risk management policy and practice

IFRS 9 Overview - 2: Some not-so-good news ■ Criteria for basic accounting treatment:

vague and untried (either in IFRS or else-where)

■ Default treatment for financial assets: Fair Value through Profit or Loss (no longer AFS)


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pected credit losses’? (Stage 1) ■ How does the entity determine whether

credit risk has ‘increased significantly’? (Stage 2)

■ To what extent does the new regime result in earlier provisioning and lower published profits?

■ Does the new regime mitigate or aggra-vate the existing tensions between the accounting and regulatory numbers, and how will management reconcile them?

Hedge accounting ■ Taken as a whole, is the new regime more

or less friendly to how the entity does business?

■ How does the new regime affect the en-tity’s ability to support customer needs and manage its own interest rate, foreign currency and liquidity risk?

Presentation and disclosures ■ How does IFRS 9 redistribute the entity’s

results as between P&L and OCI? ■ How does IFRS 9 relate to the regulatory

regime?

And finally ■ How will IFRS9 affect the perceptions and

behaviours of shareholders and other stake-holders?





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IFRS Accounting for InvestmentsIn-House or via Live Webinar

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Course Overview

This course is intended as a detailed workshop on IFRS for participants who are already familiar with the basics of accounting for investment activities, and who need to deepen and reinforce their understanding of this particularly complex area of accounting, both at the strategic and at the technical level.

The course will primarily focus on the problems of applying general-purpose accounting standards to the special circumstances of the client’s own investment activities.

Training Methodology:This intensive programme is strongly focused on the application of the relevant provisions of IFRS to a wide variety of real-life situations. It is designed as a hands-on experience for the participants, with a minimum of ‘chalk-and-talk’ and a maximum of interaction among participants and between them and the trainer. Participants will be encouraged to bring their own experience – and problems – to bear on the topics covered by the programme.

The outline is to be taken as indicative only, and subject to detailed discussion of the client’s specific needs. For instance, it can readily be modified to accommodate sessions on IAS 20 (Government Grants) and IAS 24 (Related Parties) if these were to be of interest.

Day One:

Investment asset classification under IFRS ■ Financial investments, and the principal cri-

teria for distinguishing between:• Equity interests in subsidiaries• Equity interests in associates and joint

ventures• Financial instruments (i.e. portfolio invest-

ments) ■ Non-financial investments:

• Property (real estate)• Alternative investments

Financial instruments in detail - 1: the balance sheet ■ Detailed rules for;

• Recognition• Initial measurement• Subsequent remeasurement• Derecogntion

■ Difference between equity and debt ■ The Fair Value categories: Fair Value through

Profit and Loss, and Available for Sale ■ The amortised cost categories: Held To Ma-

turity, and Loans and Receivables ■ Permitted reclassifications ■ Making sense of the available alternatives:

why HTM is so unpopular and AFS is so pop-ular

■ Accounting for derivatives including embed-ded derivatives

■ Impairment

Financial instruments in detail - 2: the income statement ■ The amortised cost (effective interest rate)

model, and its detailed application to special cases such as;• Floating rate investments• Foreign currency investments• Prepayments and restructurings

Non-financial investments ■ Real estate: the cost model and the fair val-

ue model ■ Accounting for leases, both as lessor and

lessee

■ Impairment and impairment reversal ■ Special cases: unique (‘iconic’) buildings for

which no market price is available ■ Commodities and other alternative invest-

ments

Day Two:

Valuing listed and marketable equity investments ■ The fair value hierarchy:

• Mark to market• Mark to model (observable inputs only)• Mark to model (some unobservable inputs)

■ Problems associated with large (i.e. potential-ly unmarketable) holdings: when premiums and discounts should be applied

Valuing equity investments 2: Strategic and unlisted holdings ■ Basics of company valuation: the three fami-

lies of methods and their limitations;• Book value• Market multiples• Discounted cash flow

■ Theoretical and practical challenges associat-ed with each

Case studies

Hedging and hedge accounting ■ Rationale for hedge accounting, and compari-

son with Fair value Option ■ Mechanics of hedge accounting for ■ Fair value hedges ■ Cash flow hedges

Update on recent and impending developments ■ Progress report on those parts of IFRS 9 (re-

placement for IAS 39) so far published ■ Pending changes to the rules on:

• Amortised cost and impairment• Hedge accounting


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IFRS Accounting for Real EstateIn-House or via Live Webinar

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Course Overview

After a long period of stability, the IFRS regime for real estate assets and transactions is entering a period of rapid change and elevated uncertainty, with the imminent introduction of three major new financial reporting standards. IFRS 16 Leases, effective from 1st January 2019, substantially and controversially redraws the boundaries between operating and finance leases: IFRS 9 Financial Instruments, effective from 1st January 2018, brings all lease receivables into the scope of compulsory impairment provisioning based on expected credit losses; and IFRS 15 Revenue from Contracts with Customers, also effective from 1st January 2018, whilst retaining the basic IFRS principles for revenue recognition, calls for much more attention to be paid to the unbundling of the separate components in longer-term contracts.

At the same time, continued dissatisfaction with IFRS-based numbers, specifically as a basis for cross-border intercompany comparisons, underlines the importance of the industry-specific non-GAAP performance measures developed by EPRA.

This course has four principal objectives. It is intended: ■ to give preparers and users alike a comprehensive and tailored overview of the forthcoming changes to the

IFRS regime as it impacts entities exposed to the real estate sector, as investors, owner-occupiers, lessors or lessees

■ to give preparers of accounts a firm basis for planning the practical implementation of the IFRS and EPRA reporting regimes

■ to enable senior managers of entities exposed to the real estate sector (in whatever capacity) to modify their decision-making processes to take account of the new accounting environment, especially in those areas where the standards permit or require the exercise of significant judgement

■ to equip investors and analysts with the necessary new knowledge and skills to make informed judgements about the financial performance, condition and prospects of entities exposed to the real estate sector

The course is essentially forward-looking and is accordingly based on IFRS accounting standards as published, regardless of their EU-endorsement status or their effective dates for mandatory adoption.

At every stage, the course will pinpoint the areas of continuing uncertainty and difficulty in the new standards, whether in their interpretation, application or implementation by preparers, or in their analysis by external users.

The course makes extensive use of real-life comparative case studies and of fully worked examples.

Owned property: refresher on the (largely unchanged) accounting requirements:IAS 16, IAS 23 and IAS 40 ■ Choosing between cost model and fair value

model ■ Cost model: how to determine

• Initial cost including borrowing costs and appropriate depreciation schedule

• Identification and allocation of cost to separable elements

• Identifying relevant indicators for impair-ment review

• Estimating recoverable amount: ‘Value in use’ versus ‘Fair value less costs to sell’

■ Fair value model:• Estimating fair values (a) of unique as-

sets and (b) in illiquid markets• Setting valuation assumptions• Trading and development properties

The shifting boundary between ownership and leasing IAS 17 and IFRS 16Overview of the key differences between IAS 17 and IFRS 16

• ‘Right-of-use’ asset defined• Identifying a lease• Allocating consideration to lease and non-

lease (service) components of a contract• Interaction between IFRS 16 and IFRS 15• Measuring a lease• Leases with variable payments• Lease modifications and options (exten-

sions, terminations)• Subleases• Sale and leaseback transactions• Available options and how/when to use

them ■ Detailed examination (from perspective of all

parties) of typical transactions whose classifi-cation will change after transition to IFRS 16

■ Financial impacts• Impact of IFRS 15 and 16 on published financial statements• Impact of the IFRS 9 expected loss impairment regime for all lease receivables• Impact on bank covenants and on modification of financings

Other continuing issues (examples only) ■ Rent-free periods and other incentives ■ Tenants’ improvements ■ Step-up rents ■ Disclosures, especially regarding management

judgements, impairment and revaluations ■ EPRA performance measures, and the EPRA-

to-IFRS reconciliation



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IFRS Accounting for Transactions in Corporate Control (M&A)


Course Overview

This intensive course is designed to give a comprehensive insight into the principles and practice of IFRS accounting and reporting for the full range of transactions under the general umbrella of M&A. In addition to transactions where there is a full change of control, it also considers transactions involving joint control and ‘significant influence’ (i.e. associate status) and transfers among each of these categories. Transactions are considered from the perspectives of all participants (i.e. selling and target entities as well as buyer).

The course will reflect the latest state of the following recently introduced or amended accounting standards and of emerging practice with regard to each of them:

■ IFRS 3 - Business Combinations ■ IFRS 10 - Consolidated Financial Statements ■ IFRS 11- Joint arrangements ■ IFRS 12 - Disclosure of Interests in Other Entities ■ IFRS 13 - Fair Value Measurement ■ IAS 27 - Separate Financial Statements ■ IAS 28 - Investments in Associates and Joint Ventures

The course will also offer a preview of the principal relevant changes resulting from the impending replacement of IAS 39 Financial Instruments: Recognition and Measurement by IFRS 9 Financial Instruments, as well as an insight into the main differences between IFRS as published by the IASB (‘full IFRS’) and the UK’s recently introduced FRS 102 and associated regulations (so-called ‘IFRS-lite’).

The course is interactive in approach and participants are encouraged to bring their own experience (and problems) to bear on group discussions and on the many (almost exclusively real-world) case studies and exercises with which the course is illustrated - and enlivened.

The concept of control ■ Parent and subsidiary undertakings ■ Special purpose entities and arrangements ■ Quasi-subsidiaries

Review of key concepts for business combinations and associated transactions: principles and applications ■ ‘Control’ ■ ‘Significant influence’ ■ ‘Joint control’ ■ ‘A business’

Accounting for acquisition and disposal of full control ■ Deciding whether the subject is a business

or a collection of assets: pros and cons of each

■ Identifying the acquirer, the seller and the date of acquisition

■ Identifying all assets and liabilities (including previously unrecognised intangibles)

■ Establishing fair values ■ Treatment of transaction costs ■ Calculating goodwill (also negative goodwill) ■ Acquiring control in stages ■ Treatment of deferred and contingent con-

sideration ■ Provisional and final valuations ■ Relinquishing control in stages ■ Transitions to and from associate or JV sta-

tus ■ Accounting for acquisition in standalone ac-

counts of parent ■ Consolidation procedures

• Adjustment to parent company accounting policies

• Adjustment to fair values• Elimination of intercompany items• Non-controlling interests: share of net as-

sets or ‘full goodwill’ basis?• Allocation of goodwill across CGUs for fu-

ture impairment reviews• Treatment of foreign currency translation

gains and losses• Special cases – 1: Parent and subsidiary

with different functional currencies• Special cases – 2: Exemption for consoli-

dation for assets held for resale• Special cases – 3: SPVs – consolidate or

not? Does accounting treatment necessari-ly follow regulatory treatment?

■ Disclosures:• Initial disclosure of the transaction itself• Subsequent disclosures, e.g. related party

transactions

Accounting for equity method investments ■ Applying the ‘significant influence’ and ‘joint

control’ criteria in practice: some ‘counter-in-tuitive’ cases

■ Equity accounting for associates in consoli-dated financial statements• Establishing the initial share of net assets• Goodwill (initial and after subsequent re-

view)• Changes in value of share of net assets:


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distributions• Elimination of proportion of intercompa-

ny profits and losses ■ Special considerations for accounting for

joint arrangements:• Joint operations or joint venture?• Equity accounting for joint venture (no

more ‘proportional consolidation’) ■ Transitions to and from associate/JV status

Some special topics ■ Secondary impact of transactions on eps,

banking covenants, investor ratios and public perceptions

■ Impact of IFRS 13 Fair Value Measurement on initial accounting and on subsequent impairment and impairment reversal re-views

■ Hedging / hedge accounting for M&A trans-actions (under IAS 39 and IFRFS 9)

■ Hedging / hedge accounting for ongoing net investment in foreign undertaking (un-der IAS 39 and IFRS 9)

■ Overview of principal changes in IFRS 9 as regards accounting for ‘portfolio’ equity instruments:• introduction of new ‘Fair Value through

OCI’ category• new enhanced disclosure requirements

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The Latest Basel III Regulatory RequirementsIn-House or via Live Webnar

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Course Overview

Basel III is a global regulatory framework on bank capital adequacy, stress testing, and market liquidity risk. It was developed in response to the deficiencies in financial regulation revealed by the financial crisis of 2007–08. Basel III, which is currently implemented until 2019, is intended to strengthen bank capital requirements across the world and avoid another systemic banking crisis.

This session provides participants with a detailed tour and review of the Basel accords issued by the BIS and the ever-evolving regulation stemming from Basel II and Basel III proposals and the Capital Requirements Directive IV (CRD IV) in Europe. Through a mix of lecture and case studies, the workshop will equip participants to achieve a detailed understanding of Basel guidelines, specifically on the following technical topics:

■ Components of Tier I and Tier II instruments; ■ Computation of Risk Weighted Assets (credit risk, market risk and operational risk); ■ The ever-evolving minimum capital ratios; ■ The impact of TLAC and MREL; ■ Leverage, LCR and NSFR ratios.

Participants will be required to bring a laptop to the course.

Session 1 - Introduction

■ Overview of the regulatory banking frame-work

■ Global rules for local implementation ■ From Basel I to Basel III ■ Capital Requirements Directive IV (CRD

IV) ■ The 3 Pillar approach ■ Stress testing of European banks ■ Vickers’ report in the UK

Session 2 – Available Capital

■ From accounting equity to common equity Tier 1

■ Overview of key accounting adjustments• Goodwill and intangibles• Non-controlling interests• Significant stakes in other financial in-

stitutions• Deferred taxes

■ Hybrid securities: preference shares, sub-ordinated debt, mandatory and contingent convertibles

■ Criteria for Tier 1 classification: impact of Basel III on the design of qualifying hy-brids

■ Tier II instruments ■

Case Study: participants will reconcile an

IFRS book equity of a European bank to compute Tier I and Tier II capital

Session 3 – Required Capital and Risk Weighted Assets

■ Overview of credit, market, counterparty and operational risks

■ Definition of Risk Weighted Assets (RWAs) ■ Credit risk weighted assets

• Basel I / II approaches • Basel III - standardised to foundation

and advanced approach• Understanding PD, EAD, and LGD

■ Counterparty risk weighted assets• Expected Positive Exposure (EPE)• Credit valuation adjustment (CVA)

■ Market risk weighted assets• Normal distribution and Value at Risk

(VaR)• Basel 2.5 and stressed VaR

■ Operational risk weighted assets• Standardised to advanced approach

Case Study: participants will calculate the unexpected losses of a simple portfolio of a European bank

Case Study: participants will assess the VaR of a single and two-assets portfolio

Case Study: participants will reconcile


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the operational RWAs to its historical net banking income

Session 4 – Minimum Capital Ratios

■ Minimum capital ratios: from Basel II to Basel III

■ Tier 1 and total capital ratios ■ Minimum and buffers above minimum:

conservation and countercyclical buff-ers and buffer for systemically important banks

■ Impact of Basel III: phasing in of Basel III requirements

■ Total Loss Absorbency Capital (TLAC) ■ Minimum Requirement for own funds and

Eligible Liabilities (MREL)

Session 5 – Leverage and Liquidity Ratios

■ Back-stop leverage ratio ■ Liquidity coverage ratios (LCR) ■ Net stable funding ratios (NSFR)

Case Study: participants will calculate and comment on those 3 ratios for a European bank


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Understanding Financial Statements - BasicIn-House or via Live Webinar

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Course Overview

Training methodology

Any course of this nature will require an unavoidable minimum of theoretical content, but all sessions will be as practical as possible and will invite active participant contributions and discussion.

We pride ourselves on using exercises and case studies drawn from real life, so that participants fully appreciate the commercial relevance of what they are learning

A comprehensive workbook will be provided to each participant as a ‘resource bank’ for the programme and as a continuing point of reference in their subsequent work.

Course Objectives ■ To equip participants with a comprehensive technical toolkit for the analysis of financial state-

ments, and ■ To impart to participants a deeper insight into the strengths and the limitations of financial anal-

ysis within the broader evaluation of an enterprise’s strategies and competitive market position ■ To enhance the participants’ existing powers of financial analysis with a critical understanding of

how different enterprises apply and adapt the requirements of external accounting and report-ing standards to the specifics of their own industries

■ To impart to the participants a real enthusiasm to uncover the business realities that lie ‘behind the figures’ (of the financial statements) and ‘between the lines’ (of the accompanying manage-ment reports)

Day One: Morning

Financial statements: scope, objectives and limitations

■ Introduction to a major theme of the programme: how to make meaningful comparisons between companies whose financial statements have been drawn up on different bases

■ What we can – and cannot – expect finan-cial statements to do: to give an insight into the financial position, performance and adaptability of an enterprise

■ The central challenge of financial report-ing: how to give an account of the past that will help people make decisions for the future

■ The context of financial statements in management’s non-financial narrative re-ports : tips for how to get the best out of both

■ The ongoing controversy about historic cost versus current value: implications for analysis

Day One: Afternoon

Financial Position: The Balance Sheet

■ Understanding the Balance Sheet not as a mechanical exercise in double-entry but as a dynamic statement of (a) resources con-trolled (assets), (b) obligations to transfer resources (liabilities), and (c) the residual economic interest (equity)

■ How the requirement for ‘reliable meas-urement’ distorts the balance sheets of different industries in different ways, both in how the items are measured and in whether they are included at all

■ Focus on some special cases: assets used in more than one accounting period, in-tangible assets (whether to recognise, and if so on what basis?), financial assets and liabilities, long-term provisions e.g. de-commissioning costs

■ What can the Balance Sheet really tell us about financial strategy, strength, liquidity and solvency? Special issues of non-com-parability such as leasing

■ How useful is the Balance Sheet as a guide to enterprise value?


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Day Two: Morning

Financial Performance: The Income Statement ■ Issues in revenue recognition: special cas-

es including revenue and expense match-ing in long-term contracts (energy and commodity supply, software support) and retail customer incentive programmes

■ Issues in expense recognition: spotlight on accounting for pensions

■ How useful to the analyst is the conven-tional distinction between ‘operating’ and ‘financing’? Spotlight on retail, where sup-pliers are a major source of finance

■ Other Comprehensive Income: does it have a rationale, or is it a dustbin for items that do not belong anywhere else? How does it help or hinder financial anal-ysis? How do we accommodate it in a framework of ratios?

■ What can the Income Statement really tell us about business strategy and operating profitability?

■

Day Two: Afternoon

Financial Adaptability: The Cash Flow Statement

■ Distinction between cash flows from operat-ing, investing and financing activities

■ What can the Cash Flow Statement tell us about an enterprise’s ability to generate sufficient cash to cover present obligations, to adapt to changing circumstances, and to finance future plans?

■ Ratio analysis• The uses, abuses and limitations of con-

ventional ratio analysis• Ratios as a toolkit for formulating harder

questions to ask management rather than for delivering ready-made conclusions about a business

• How can we know what to expect when we calculate ratios? Ratios as a comple-ment to, not a substitute for, knowledge of the business environment


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Understanding Financial Statements - IntermediateIn-House or via Live Webinar

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Course Overview

The course begins with an overview of the fundamental accounting principles which, individually or in combination with each other, account for most problems of financial analysis. The course then discards the ‘logical’ order of a conventional accounting course in favour of a practice-driven approach, in which the commonly used valuation metrics and performance measures (EBITDA, RoE, RoCE, RoNA, asset turnover, working capital and cash flow ratios etc) are used as ‘pegs’ on which to hang a more searching examination of the problems and uncertainties lurking behind the accounting figures.

The course is based primarily on IFRS as in force at the time that the course is delivered, but reference to significant national GAAP is made as and when this sheds useful light on the topic under discussion.

The overall objective of the course is to help participants to develop the technical skills and the judgment to use accounting information appropriately according to the context and the purpose of their analysis.

The course takes its cue from the clear statement in the IASB’s 2010 revised conceptual framework document:

General purpose financial reports are not designed to show the value of a reporting entity; but they provide information to help existing and potential investors, lenders and other creditors to estimate the value of the reporting entity.

Introduction ■ The mixed-valuation model and its prob-

lems:• Evolution from a backward-looking ex-

ercise in stewardship towards a support tool for forward-looking economic deci-sion making;

• Why this makes life inherently and unavoidably difficult for analysts and investors

■ Some core qualities of financial state-ments, with easily understood illustrations from real life:• Relevance and materiality (example:

why inventory valuation is more critical in low margin businesses)

• Comparability (example: closely com-parable competitors in an apparently homogeneous industry, but with differ-ent histories of organic growth versus external acquisition, leading to different bases of accounting for intangibles)

• Understand ability (example: pharma-ceuticals, hi-tech generally)

• Reliable measurement (example: intan-gible assets in knowledge-based sup-port industries)

• Fair value, time value of money, and discounted present values

• Management discretion: the exercise of judgement, and the use of estimation

techniques ■ Introducing the three principal financial

statements: their objectives, rationale and limitations

■ The five elements of financial statements: assets, liabilities, equity, income and ex-pense

■ Accounting as a record of flows and stocks, of resources (assets) and obliga-tions (liabilities)

Focus on earnings-based metrics: unpacking EBITDA ■ Revision of basic calculation, and any tech-

nical problems arising ■ Questions about ‘Earnings’:

• The Big Question: how comparable are operating earnings (i) over time and (ii) vis-a-vis the competition? Specifically:

• Are the company’s accounting policies for revenue and expense recognition appropriately selected, clearly de-scribed, and consistently applied? (ex-ample: Vodafone’s use of proportionate consolidation for JVs)

• How significant are figures for capi-talised expense, relative to operating profit?

• Does the company also use a non-GAAP earnings measure, and if so what is its stated (and real) purpose? What are its merits and demerits? (many examples,


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but interesting to compare the non-GAAP measures within an industry, e.g. like-for-like in food retailing)

• Are stated earnings ‘normal’ - or have they been ‘normalised’ by the exercise of management discretion? What about income/expense booked through OCI?

• Are ‘exceptional’ income and expense separately identified, and are they real-ly exceptional? (example: in the years 2007-2011, Misys plc reported excep-tional income or expense every year, with an average absolute value of 40% of earnings before exceptionals)

• Do earnings include non-operating items such as gains/losses on non-cur-rent assets or on discontinued opera-tions?

• Are there financing elements in some operating items, such as in the payment terms of trade suppliers? (example: supermarkets turning over inventory in 15 days, paying suppliers on 45 days, using the permanent float to finance a whole year’s capex)

• Does a relatively smooth development at consolidated level mask significant (if mutually compensating) swings be-tween operating segments?

■ Questions about ‘Interest’:• If this is the net figure, what are the

gross figures for income and expense, and are there one-off factors in either of them, e.g. interest received on tempo-rary reinvestment of disposal proceeds? (Example: Boots 2006)

• What do the figures contain, other than interest on conventional debt and financial investments, e.g. in relation to unwinding of discounts on provisions, pension plans?

■ Questions about ‘Taxes’:• Does the overall tax charge, or the

current/deferred split, vary significantly from year to year, and if so why? (ex-ample: Deutsche Telekom)

■ Questions about ‘Depreciation and Amorti-sation’:• Does the total include impairment

charges (or reversals) or other indica-tions of possible impending problems for future years’ EBITDA?

■ What does EBITDA not tell us about cash generation?• Working capital management• Capex requirements – for maintenance

and expansionFocus on balance sheet metrics (‘Return on . . .’)

■ Key principles revisited:• Valuation basis: historic cost or Fair Value• Reliable measurement

■ Specific problem areas, creating very differ-ent balance sheets for economically identical businesses:• Organic growth versus external acquisi-

tion. Does it make sense to omit assets altogether just because their value cannot be reliably measured? (example: internal-ly developed intangibles such as football-ers brought up through the academy)

• Differences in accounting for development expenditure (example: Misys, Temenos, Amadeus)

• Differences in accounting for historic mergers (example: substantial difference between Diageo’s IFRS and US GAAP balance sheets, arising from different accounting bases for GrandMet/Guinness merger – but with no corresponding dif-ferences in the other two financial state-ments)

• What is the basis for Fair Value? Market value or value in use? And how is it meas-ured?

• Leased assets: how the use of sale and leaseback change the operating ratios, even though they are a financing rather than an operating activity (example: dif-fering levels of leasehold versus freehold estate among UK supermarket groups)

• Financial assets: introduction to main problem areas

• Different policies for depreciation, amorti-sation and impairment

■ Accounting for liabilities:• Current and non-current• Provisions and contingent liabilities: prob-

lems of classification and measurement• Financial liabilities

Bringing it all together in Financial Analysis ■ How to use the other sections of the annual

report: chairman’s and CEO’s letters: busi-ness and financial reviews

■ Uses and abuses of financial ratio analysis:• The key drivers of profitability• The key drivers of cash generation• Trends in profitability• Management of working capital, liquidity

and solvency• The identification and management of

financial and other risks and uncertainties ■ The importance of knowing what to expect

and knowing the industry


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Transfer PricingIn-House or via Live Webinar

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Course Overview

This course is intended for those who need to understand transfer pricing. The course is particularly relevant for companies that have branches or companies in different countries that trade with each other. Even if there is no intention to use an international structure to avoid tax, transfer pricing is still a relevant factor to ensure compliance with regulations.

The course is set in the context of current international tax agreements with regards to reporting and compliance with anti-avoidance provisions.

Various forms of transfer pricing are considered, including thin capitalisation and similar financial arrangements. We look at reporting requirements, obtaining agreements with HMRC and how to appeal against a decision.

Introduction and brief history ■ General principle of transfer pricing ■ Current government and international policy ■ Scope of transfer pricing ■ General legal principles ■ Application in relation to securities, loans and

guarantees

UK transfer pricing rules ■ Who is within the scope of the rules? ■ Definition of small and medium-sized compa-

nies ■ Scope of exemption for small and medi-

um-sized entities ■ Issues of residence and non-qualifying territo-

ries ■ Transactions within the scope of the rules ■ Nature of control, including linked enterprises

and indirect control ■ Provisions for partnerships and joint ventures ■ Control in relation to financing transactions ■ Thin capitalisation

General rules for transfer pricing ■ Compensating relief ■ Balancing payments ■ Matching loans and derivative instruments ■ Interaction with capital allowances ■ Application to interest-free loans

Self-assessment aspects ■ Keeping adequate records ■ Reporting transfer pricing

■ Justification of transfer prices ■ HMRC enquiries ■ Advance pricing agreements, with examples ■ Advance thin capitalisation agreements

Other aspects ■ Anti-avoidance provisions generally ■ Deduction and receipt schemes ■ Tax arbitrage ■ Appeals


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Directors - The Good, The Bad and The Ugly


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Course Overview

This one-day course in two sessions is aimed at those wishing to develop an understanding of all aspects of being a private company director, from the positives to the warning signs and consequences of difficulties. It will be particularly useful for corporate and litigation lawyers, company secretaries advising directors and directors themselves. The day uses a realistic case study and recent case law examples (such as Dickinson v NAL (2017)) to explore how directors should run private companies and what happens when they get it wrong.

Uniquely, the sessions are run by two different experts to give delegates the benefit of differing perspectives.

Participants will: ■ Be introduced to the Directors duties and how the duties should be considered when making

decisions ■ Have explained to them how to make decisions when a company is in financial difficulty ■ Get to grips with the range of other responsibilities attaching to directors ■ Be introduced to what constitutes “ Unfit” conduct ■ Get an overview of the new Compensation Order regime ■ Have explained to them the new Insolvency Practitioner reporting on directors requirements

and what this means for directors

AM: How should directors make decisions?

This session includes:

■ Board meeting best practice ■ Directors duties:

• the statutory duties explained• other non-statutory duties• transactional vs situational conflicts• how the duties should be considered

when making decisions ■ Active and passive directors’ responsibilities ■ Transactions with directors:

• Substantial property transactions• Loans• Service contracts

■ Dealing with conflicts ■ The range of other responsibilities attaching

to directors, for example:• company accounts• health & safety• employment law• competition law• fraud• bribery

■ What shareholders can do to hold directors to account

■ Possible reliefs and protections for directors

PM: What happens when directors get it wrong?

The most likely outcome is disqualification for ‘unfitness’ in the context of corporate insolvency.

This session explores what unfitness means: who can seek a disqualification order and how directors are prosecuted. In addition, other areas of potential liability for the errant director are considered, notably wrongful trading and misfeasance. We shall also look at proactive steps that can be taken to avoid potential action. The session will include:

■ An analysis of what constitutes “ Unfit” conduct

■ Practice and Procedure in the disqualifica-tion arena:• likely length of disqualification• exceptions• the Insolvency Service approach to en-

forcement ■ Consequences of Disqualification Orders or


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■ Undertakings ■ The new Compensation Order regime:

• what does this mean• difficulties

■ Wrongful trading: • what needs to be proven• recent case law

■ Misfeasance and other breaches of duty ■ Recent case law developments ■ Tips and tactics on how to prevent liability ■ The new Insolvency Practitioner reporting

on directors requirements and what this means for directors.

These areas are particularly topical given recent changes in the whole field of insolvency law (pursuant to the Small Business Enterprise and Employment Act 2015 implementing legislation).


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Share Capital

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Course Overview

As the title suggests, the course is a practical and interactive “How to” guide covering share capital procedures such as allotting shares or implementing buybacks (see full list below) as well as how to declare a dividend.

Throughout the course the trainer also poses the important question of whether and how defects in procedure can be fixed, recognising that often professionals are called in to advise when the legal procedures have not been adhered to. How to reduce the risk of director liability is also discussed in the context of recent case law.

This half-day course is designed for directors, company secretaries, lawyers, accountants or another business professionals working for or advising a company. It is suitable for all levels of experience as either an introduction or a refresher.

Participants will: ■ Be introduced to what is share capital and what is a share. ■ Get an overview of the concept of authorised share capital under the 1985 Companies Act and

the effect of its abolition ■ Have explained to them recent case law and what these cases tell us about directors’ liabilities

in relation to share capital procedures ■ Gain an understanding of which defective procedures can be ratified and which are void

■ What is share capital and what is a share ■ What is a share class ■ Common share classes (including preference

shares, growth shares, alphabet shares) ■ The concept of authorised share capital un-

der the 1985 Companies Act and the effect of its abolition

■ How to allot shares ■ Authority to allot and pre-emption rights on

allotment ■ The Doctrine of Maintenance of Share Capi-

tal and its effect on share capital procedures ■ An overview of how to alter share capital ■ Reduction of share capital ■ Redemption of shares ■ Purchase of own shares/ buybacks ■ Declaring a dividend:

• What is a dividend• The difference between final and interim

dividends• An analysis of what should go into board

minutes declaring a dividend ■ Which defective procedures can be ratified

and which are void ■ Recent case law and what these cases tell us

about directors’ liabilities in relation to share capital procedures

■ Subject to interest, some issues specific to

companies trading on UK stock exchanges.

The course materials include:

■ A full glossary of share capital terminology ■ Course Notes ■ Example shareholder resolutions relating to

share capital ■ Example minutes for an interim dividend ■ A schedule explaining the procedure for

share transfers (due to time constraints, share transfers are not discussed in any detail during this half-day course)

Note: this course does not cover the detailed tax or accounting aspects of share capital.


https://redcliffetraining.com/training/advanced-accounting/share-capital/

http://redcliffetraining.com/training/advanced-accounting/share-capital/

business valuation courses accounting & ifrs courses

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