A review of the key concepts and principles of International Financial Reporting Reporting Standards (IAS 8) Accounting Policies, Changes in Accounting Estimates and Errors.
The course includes theoretical principle lectures including a Standard on a page (SOAP) summary. These principles are then illustrated practically in class examples that focus on journalising the recognition and measurements principles contained in the standard.
You will need to download the lecture slides and work through the lecture videos and the class examples.
The course is structured to assist three categories of delegates who require knowledge of International Financial Reporting Interpretations (IFRIC):
The Tabaldi approach is practical and our lecturers focus on making the sometimes complex principles of financial reporting simple and practical.
You will need to engage with the lecturer with pen in one hand and calculator in the other, mental application and a proactive approach will ensure that you master this topic under financial reporting and accounting.
A theoretical lecture video describing the principles of IAS 8 including a standard on a page (SOAP) for IAS 8.
This standard cannot be studied in isolation as accounting policies, estimates and errors affect just about every line item in the financial statements with multiple standards giving guidance as to accounting policies and application of changes thereto as well as specific details for different changes in estimates.
The core principles in this standard are highly important and must be part of you working knowledge when dealing with specific issues within other standards.
This video assists you in understanding the theory behind:
What do you have to disclose to financial statement users regarding changes in accounting policies?
This video guides you through a list of disclosures as well as introduces you to the reconciliation that you will need to disclose. Remember that in the reconciliation for retrospective restatement, you will need to disclose the financial position effect of the current year as well as the 2 previous years and the opening effect on retained earnings at the beginning of the second prior year.
For the financial performance (profit or loss and other comprehensive income) you will only need to disclose the current year and the 1 prior year.
We cannot cover an example for every possible change in accounting policy, but a common policy change is relating to inventory valuation.
In this example the entity changes its inventory valuation policy from weighted average to first-in-first-out (FIFO).
We take a journals based approach for the underlying inventory and cost of sales effects, as well as including the calculations and journals for the taxation effect (current and deferred). Finally we finish off with the disclosures as the outputs in the financial statements.
Part B continues from the previous video, but now includes the workings and journals for the deferred and current tax effects arising from the change in accounting policy for inventory valuation.
Part C of the class example culminates in the final output - the disclosures in the notes to the financial statements. The note can be a bit tricky so work through this carefully once you have mastered all the accounting journal entries in Part A and B.
Does financial reporting require estimates? Definitely yes! Accounting and financial reporting is full of estimates that are necessary to arrive at figures to be recognised and disclosed in the financial statements.
These estimates are based on the best information available at the time, but will probably have to be updated once new information comes to light or is updated.
The key principle is that the effects of changes in estimates are recognised and disclosed PROSPECTIVELY (unlike changes in accounting policies and errors which are done retrospectively).
Can you differentiate between changes in accounting policies versus changes in estimates.
This class example will test whether you understand the underlying principles.
What are material prior period errors and how should you account for them? The definition of an error is an omission or mis-statement in financial statements and may relate to one or more periods.
Remember that if the error is found in the current years bookkeeping records you will correct the error before finalising the financial report so the current years financial statements will not require disclosures.
Very important though, if the error is in the prior period and it is material - you will need to restate the figures RETROSPECTIVELY!
Can you identify scenarios or transactions that result in prior period errors? This class example is a brief exercise to test your knowledge and the application thereof with regards to prior period errors.
What do you need to disclose in the notes to the financial statements relating to material prior period errors?
This video will guide you through the required disclosures, and will cover a very important principle, namely that you do not need to disclose the effect of any errors on the current year in the notes because the figures for the current year are amended before you finalise (authorise) the current year financial statements.
A comprehensive class example dealing with a prior period error, being that the accountant did not recognise the profit or loss effect of a prepaid expense when the expense becomes due.
You must attempt to work through the example by yourself from the journals all the way through to the final disclosures, then watch the video and learn from your mistakes.
Tabaldi Education is an organisation that specialises in Accounting and Financial Reporting training and consulting.
Our lecturing team at Tabaldi consists of a group of highly qualified Chartered Accountants who have lectured at undergraduate and postgraduate level, as well as having presented professional accounting training around the world.
Richard Starkey one of Tabaldi's leading lecturers has had years of experience lecturing and consulting for large international corporates, including the big four audit firms within South Africa. Listed companies in Europe, Africa and the Middle East. Richard is passionate about helping people master the basic principles of financial reporting, and takes an interactive journal driven approach to his lectures.