IFRS 16 – Leases

The new accounting standard, IFRS 16, Leases, is effective for accounting periods beginning on or after 1.1.2019. Early adoption is permitted, if IFRS 15, Revenue from Contracts with Customers, is also applied.

IFRS 16 will replace IAS 17 Leases. To recap,  IAS 17 creates a distinction between finance leases and operating leases in the books of the lessee. Operating leases are expensed on a straight line basis to the Statement of Profit or Loss, whereas finance leases are accounted for on the Statement of Financial Position, with the finance leased asset being capitalised and a corresponding finance lease liability being recognised.

However, commentators have long argued, that operating leases can amount to a form of off-balance sheet financing, as the reporting entity may be contracted to pay operating lease rentals for a fixed term into the future, but, per IAS 17, no liability is shown for the future operating lease rentals on the Statement of Financial Position. Therefore the financial statements of entities with a high volume of operating leases would not fairly report their level of future leasing commitments. This would be particularly relevant to the airline industry, where a lot of airlines would lease airplanes on operating leases.

It is from the above that IFRS 16 was born.  IFRS 16 was brought in to remedy the non-recognition of liabilities for assets held under operating leases.

For lessees, IFRS 16 removes the distinction between finance and operating leases which was a feature of IAS 17.

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Right to Control the use of an asset is dependent on

• D: Direction over how and for what purpose the asset is used is a right that the lessee has
• E: Economic benefits from use of the identified asset will flow to the lessee

A lessee does not control the use of an identified asset if the lessor can substitute the underlying asset for another asset during the lease term and would benefit economically from doing so.

Lessor accounting remains largely similar to the treatment set out under IAS 17, with the distinction between operating and finance leases remaining.

As a result of IFRS 16, the former chairperson of the International Accounting Standards Board, Sir David Tweedie, will finally get his wish, as the aircraft he flies in finally lands on the balance sheet of the airline that leases it.

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The next two months are key in terms of Financial Recruitment. As a recently qualified accountant, you need to gather as much information as you can in order to make the best possible choices for your future. This is your time to make all those hours of study and hard work count for you.

Over the weekend we asked Ed Heffernan, Managing Partner at Barden Ireland, what advice he had for you and he said:

“As a recently qualified accountant you have the world at your feet – you will never be as employable again, will never have the same variety of opportunity and never have access to the same volume of roles. Making informed career decisions at this key time is critical.”

Moreover, Ed and his team have created ‘The Newly Qualified Guide’ which we would like to share here with you.

https://barden.ie/publications/barden-focus-series-for-recently-qualified-accountants-in-2017/

We have been delighted to share in your journey to date and look forward to working with our current learners to bring them to the same successful outcome. So for now from us, with respect and appreciation: Seize Your Day.

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IFRS 15  – REVENUE FROM CONTRACTS WITH CUSTOMERS

The new accounting standard, IFRS 15, Revenue from Contracts with Customers, is effective for accounting periods beginning on or after 1.1.2018

It replaces IAS 18 Revenue.

IFRS 15 introduces a 5 step model for recognizing revenue. It can be remembered by using the memory aid “COPAR”

1. Contract Identification: Contract can be written, verbal or implied. A contract must exist in Substance

2. Separate Performance Obligations Identified: Where a good or service is sold separately or if it could be sold separately because it has a distinct function/profit margin, then this constitutes a separate performance obligation. Those promises are called performance obligations. Performance Obligations can be satisfied over time (using output and input methods) or at a point in time i.e. the point in time at which the customer obtains control of the promised asset.

3. Determine the Transaction Price: The transaction price is the amount of consideration a company expects to be entitled to from the customer in exchange for transferring goods or services. The transaction  price would reflect the company’s probability-weighted estimate of variable consideration, customers credit risk and time value of money (if material)

4. Allocation of transaction price to performance obligation: Where a contract contains more than one distinct performance obligation a company allocates the transaction price to all separate performance obligations in proportion to the stand-alone selling price of the good or service underlying each performance obligation.

If the good or service is not sold separately, the company would have to estimate its stand alone selling price.

Example: Allocating the Transaction Price to the Performance Obligations

A mobile phone company gives customers a free handset when they sign a two year contract for provision of network services. The handset has a stand alone price of $100 and the contract is for $20 per month.

Under IFRS 15, revenue must be allocated to the handset because delivery of the handset constitutes a performance obligation. This will be calculated as follows

As the total receipts are $480 ($20*12 months * 2 years), this is the amount which must be allocated to the separate performance obligations. Revenue will be recognised as follows

5. Recognise Revenue: The entity satisfies a performance obligation by transferring control of a promised good or service to the customer. A performance obligation can be satisfied at a point in time, such as when goods are delivered to the customer, or over time.

The amount of revenue recognised is the amount allocated to that performance obligation in Step 4.

An entity must be able to reasonably measure the outcome of a performance obligation before the related revenue can be recognised.

In some circumstances, such as in the early stages of a contract, it may not be possible to reasonably measure the outcome of a performance obligation, but the entity expects to recover the costs incurred. In these circumstances, revenue is recognised only to the extent of costs incurred.

IFRS 15 will provide more clarity for preparers of financial statements, however additional guidance will likely be required to keep pace with the ever evolving sales generating models, adopted by reporting entities.

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Benefits for body and mind- get disciplined and consistent

We all know about the benefits of exercise and how important it is to be physically active.

Doing sports regularly and being consistent in your exercise routine will not only bring you health benefits but also help you build up your discipline, become consistent, methodical and diligent.

Those attributes can be easily translated into many other aspects of your life. Studying is one of them.

Incorporating physical activity into your routine will not only help you with your ability to organize time for your study but also teach you to make the most out of the time you are dedicating to this very action of study.

Clear your mind

Exercise gives you time to clear your mind and gain perspective- in your daily life, this sometimes becomes extremely important as it is the moment when you find the motivation to keep going and continue on with your educational and professional goals.

“Physical exercise can reduce muscular armoring. When coupled with cognitive focus, you’re aligning your brain and your body toward a singular focus.”Sukie Baxter In Forbes Article on “What Everyone Gets Wrong About Building Confidence”.

Learn about Teamwork

On top of that if you are playing team sports or are a member of a sports club you are practicing your teamwork and collaboration skills. It is this much harder to skip your training if you know your teammates are counting on you. This is completely transferable to your working environment. Learn to work well with your team on a football pitch and you will gain valuable team leading and teamwork experience you can use at work.
So what are you still waiting for? Get off that phone, tablet or laptop and go for a walk, a quick cycle or a run!  The feeling of reaching the finish line is great! You will not regret it.

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Here is what you need to do to get started with ACCA Diploma in Accounting and Business:

Touch base with ACCA

Before you commit to any tuition it is always recommended to contact the ACCA directly. This is especially important if you have some previous qualification and you think you may be eligible for exemptions. Contacting ACCA is a great way of finding out what stage you should start at.

Register as an ACCA student

Purchasing your tuition is not the only step on the journey you will have. ACCA will require you to register with them as a student member. (Don’t worry, this is a standard procedure with most accounting bodies). Make sure you will familiarise yourself with ACCA’s registration and membership fees.

If you are planning to dive straight into your studies and do your first exams as soon as possible, you should start your registration with ACCA as early as you can.  ACCA registration may take a few weeks to be processed so please make sure you will have your ACCA student number before planning to book exams.

Tuition with StudyOnline.ie

Our courses run on a continuous intake basis. This means you can enrol with us at any time. So, the best plan of action is to:

1. Contact ACCA and confirm what level you are ready to start at
2. Apply to become an ACCA student member
3. Enrol on our website to start studying for your exam

While you are waiting for your ACCA number you can use this time to study. Whether you are a sprinter who wants to quickly go through the first stages of ACCA or if you’d like to take your time, we offer a variety of enrollment options to suit every type of student.

Our ACCA Unlimited option provides you with access to all our ACCA courses at the same time. Access to the courses will be open to you for as long as you decide to maintain your monthly payments. It is an ideal option for those of you who are aiming to sit the exams as quickly as possible and need to manage cash flow. Monthly payments will also add some extra motivation to keep you going. Think about it: the quicker you prepare for the exam- the less you spend and the more money you save.

ACCA  Premium is our inclusive package which grants you access to a single course for a duration of a calendar year. Also, BPP or Kaplan textbooks and study kits are included (except Taxation). This is a perfect option for those of you who would like to take their time with the study and especially convenient if you are being funded by your employer.

Time for an exam!

Once you will watch all the lectures, go through the revision material and attempt a mock exam. Improve with our feedback and then you are ready to sit your exam!

The first levels of ACCA (F1-F4) are assessed by a Computer Based Exam (CBE). They are available to book on demand – this means you can contact your local approved exam centre and arrange an exam whenever it suits you. Our exam centres in Naas and Limerick run ACCA CBE’s weekly. This flexibility with exam sessions timings and locations is very advantageous. Check out the blog post we prepared explaining ACCA exams in more detail.

Finally,  if you feel you have questions on this or any other ACCA topic, please feel free to contact us; You can email us on ask@studyonline.ie or call us on 019012016 to say hello. We will be happy to help you!

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Displaying clear symptoms of being born to be an accountant:

– Do you secretly smile on the inside when you get a bank reconciliation to balance??
– Do you “fist pump” when the balance on your Payables Control Account agrees to the Payables listing you printed from Sage earlier that morning…
– Do you secretly enjoy wearing chinos and deck shoes because it makes you feel like the walking embodiment of an IFRS ??
– Do you show off to your fellow trainee’s in the office by crunching numbers into your calculator, without having to look down at the keypad?

If so, you are displaying clear symptoms of being an accountant. Your black and white view of the world, where a reconciliation statement reconciles or doesn’t will serve you well in your accountancy studies (but maybe ease off on it in real life though ☺)

The enjoyment you get from getting an arithmetical and accounting control to work (i.e. a reconciliation) is a sign that your talents have found their home in the world of accountancy.
Sure, your friends will slag you for not being creative…but, ask them when was the last time they “high fived” a work colleague, because of the 10 invoices selected, all have the stamp “paid” on them….(just a little test of control on payables and purchases that you and your audit team colleague carried out successfully. )

And of course, let’s not forget your wizardry with all things Excel….you can talk for Ireland about the finer details of a vlook up, pivot tables and conditional formatting, not to mention the Excel formula concatenate….(one of my personal favourites).

So, wear your best chinos and deck shoes combination, because accountants make “accrual” world, a better place through peace, love and reconciliation!

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ACCA is a fantastic qualification providing students from any background with options to progress and enhance their careers.

Diploma in Accounting and Business

Students looking to change their career without any previous accounting experience are welcome to join our ACCA Diploma in Accounting and Business online programme which consists of 3 modules.

• F1 Accountant in Business
• F2 Management Accounting
• F3 Financial Accounting

After completing the exams from these 3 modules plus a short “Foundations in Professionalism” module (this can be done on the ACCA website) you will be awarded the ACCA Diploma in Accounting and Business. This will provide you with a solid base to enter the world of accounting and finance. ACCA is a well-known accounting body and holding this diploma will boost your CV in the eyes of an employer.

People who earn the Diploma in Accounting and Business can apply for entry level financial assistant’s positions, financial reporting or financial decision support roles within an accounting department. They can also apply for an accounting technician role in a commercial organisation.

Those who learnt on the job and are now backing up their years of experience with Diploma in Accounting and Business can apply for supervisory or management roles in accounts payables and/or receivables. You can also look for a financial position in fixed asset accounting or a financial shared service centre.

Advanced Diploma in Accounting and Business

Earning the Advanced Diploma in Accounting and Business means you have most of your ACCA journey behind you with all the Fundamental level exams F1-F9 passed.

At this point in your journey, you can apply for positions such as Part Qualified Accountant or Assistant Accountant. You can also find a job as a Financial Analyst, Reporting Analyst, Reporting Accountant or Semi-senior Auditor.

Professional Level

The Professional Level consists of P1-P7 (3 Mandatory Modules and 2 Options). Once you have conquered this you really are at the peak. Completing all your ACCA exams coupled with your 36 months of relevant work experience means you are now a fully qualified ACCA professional accountant. This is the academic equivalent of achieving a Masters degree. This also means a significant pay rise as salaries of qualified accountants are between €45.000-€65.000.

Where do I start?

The simple answer to this question is to get in touch with us today to find out more about ACCA and why StudyOnline.ie is the best choice for your ACCA tuition.

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In addition to this knowledge, a P7 candidate is expected to be able to succinctly provide an answer to audit risk scenarios.

It is the ability to accurately put your point across and explain what is your suggested audit risk- that will differentiate you from other students and may be the key between a pass and a fail mark.

The main 3 pieces of advice when answering an audit risk question are as follows:

1. Be clear on what it is you are being asked to do 

Audit risk is the risk that, you, as the external auditor, will provide an incorrect audit opinion on the accounts as audited. The most common way this could occur is where the auditor concludes that the accounts give a true and fair view, when in fact, undetected material misstatements remain. In the March 2017 P7 paper Q1 (a), candidates were required to “evaluate the risks of material misstatement to be considered in planning the Group Audit”. Therefore, successful candidates would firstly “identify” from the case study, issues which could give rise to material misstatements in the draft accounts being audited and secondly, explain how the issue identified could manifest itself as a material misstatement….what could be overstated/understated?? Could it be that certain disclosures as required by accounting standards and/or company law would be omitted??

2. Learn to speak Auditing

In many ways, auditing is like learning a new language. Try to use of phrases such as:

• “consider the reasonableness of the assumptions made”;
• “Inspect/Reperform/Enquire”,
• “completeness of payables and existence of tangible non-current assets”

are all examples of the auditing “speak”. This “language” is widely used among auditors and within auditing materials. Therefore, the sooner you’ll learn how to use this more formal way of expression the better.

So, for example instead of saying “the auditor should check the invoice to see if the name of the audit client is present on the invoice“, a better response is “the auditor is to Inspect the invoice to verify that the name of the client  is present on the invoice, so as to verify that the audit client has the right of control of the asset“.

The best way of increasing your ability to use auditing “speak” in exam answers is to learn and apply the various mnemonics provided such as “OAR ICE I” for 7 ways of gathering audit evidence.

The 7 ways of gathering audit evidence are:

1. Observe
2. Analytically review
3. Reperform/recalculate
4. Inspect documents
5. Confirm
6. Enquire and Inspect assets

It is highly advised to begin an audit procedure with one of these 7 verbs, as opposed to saying “check the asset”, or “ask the management”.

3. Practice past exam papers

In addition, practice past exam questions under timed conditions, and then when reviewing your answer against the ACCA solution, highlight the use of auditing “speak” terms in the model ACCA answer, and then see if your answer contains such terms….the more of these terms you begin to use, the better your chances of success.

Quite often the use of auditing “speak” is also beneficial to shorten what we meant to say. It will allow a student to concisely express a point in one or two sentences, which may otherwise take a weaker student 4/5 sentences to express, and hence use up less of the allotted time in the exam.

You can watch a video Colm prepared on this below:

The post Do you speak Audit?- How to pass ACCA P7 exam appeared first on StudyOnline.ie.

1) Be familiar with all the material you are planning to bring to the exam!

The concept of an open book exam can be best explained with the following scenario: Imagine you are like the practicing accountant…a client walks into your office, you listen to the issues they have, and using your own expertise and referring to the books on the shelf behind you, you develop a plan for this client.

This is to say: the material you are bringing with you to the exam is not to be used to transcribe whole sections of accounting standards and therefore wasting precious exam time.

The purpose of having the material with you in the exam is not that you can simply read it on the day of the exam and you develop an answer. It is that using your high level of technical knowledge, you can quickly verify your understanding of an issue, and then apply your own judgement to “develop” a suggested answer. As Paul Heaney, Director of Education at CPA Ireland,  states in his Article about Open Book Examinations: ”Marks are awarded for application, analysis, synthesis and evaluation, not for transcription.”

2) Organise your material way before the exam.

Make sure you have the material organised in a way that helps you to quickly access material if required. I used “Numbered Dividers” at the front of my A4 folders.

Also, to add to this point, a much more experienced tutor than me remarked one time, in jest, that if a student is spending lots of time, in an open book exam reading the material they have brought with them, then they should bring the material for the next exam with them too; at least this way they can get some study done for the next exam too. This confirms the point made above about being familiar with the material you are bringing to the exam and highlights the importance of organising them.

3) Summarise your content

Any material you feel may be useful can be brought into the exam.  You should be familiar with the content. And make sure you remember what points you thought you may find useful when you were preparing it.

One page summary sheets for topics are useful for that. This could be something like a spider diagram, with the topic in the middle of the page and various “legs” reminding the student of key concepts in the topic. Having such a summary page at the front of a particular topic will be useful to you in an Open Book Exam as it will allow you to quickly navigate between the content of what you brought to the exam.

4) You still must know your material inside out.

Finally, remember that when studying for an open book exam, you are still aiming to be as comfortable with the material, as if it were a closed book exam. The key to achieving this level of competence is to practice past exam questions, practice, practice, practice, practice…!!

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After a decade or more of traditional systems and tedious routines, are you seriously considering spending a small fortune returning to a classroom environment?

The Best Accounting Courses are Online

Internationally recognised accounting courses accredited by ACCA and CPA Ireland are available to study online. There you have it—the best accounting and finance courses are online which means you can firmly cast aside any fears you may have about returning to education.

Today, thousands of business professionals conveniently register, learn, and qualify in the most reputable accounting and finance courses available. So, there’s no need to take an employment break, or even sacrifice evenings or weekends to commute long distances to attend classes.

If you want to develop or add to your business skills, StudyOnline.ie qualifications are an increasingly popular option in today’s job market. This is because of the high demand for qualified accountants and finance professionals, and the flexibility to learn while you work.

Modern, flexible, convenient, and adaptable, online courses are designed to suit student preferences and maximise learning outcomes.

It makes perfect sense considering the increasingly busy schedules and modern-day living demands. Just like attending the gym, not everyone wants to go after a long day at work. Some people are naturally early risers which could prove an ideal time to focus on education.

Tailor your Learning

Online learning is a cost effective option in a variety of ways. No long commutes, no fuel costs, no threat of the clamper. StudyOnline.ie students enrol and pay online to access lecture material and support. All you need is the internet, a computer, tablet or smart phone.

As well as the flexibility online learning offers, it’s time-efficient. Lectures are recorded by topic so you can focus on what you need. Students of all levels from those starting out in their career to seasoned professionals have complete freedom to tailor their learning. This is ideal especially for those who are resitting subjects. It allows you to focus on your weaknesses.

Benefits of Online Learning

If you’ve wondered how courses are structured, they’re efficiently delivered by high-quality HD videos and study manuals which are divided into clear and concise topics. Through a mobile responsive site, students have continuous access to course materials which can be viewed as many times and as often as desired. This is particularly useful for concepts that may prove challenging to the student.

Another notable benefit of online learning is that lecturers are on hand to answer questions. StudyOnline.ie has unrivalled personal support to ensure you have all that you need to get your exams. 

Your Career Ambitions Accessible

One common misconception about online learning is that it is inferior to the classroom. However, this is just a myth. Evidence from CPA Ireland shows online students having higher pass rates than traditional classroom learners. Anecdotally, this is because students can learn at times convenient to them ensuring high retention of information. Lecturer support is also key in particular feedback given on mock exams and exam technique. StudyOnline.ie allows users to comment on videos and see other students questions and answers. This inclusive communication is definitely a key part to successful online learning.  It’s all about making the experience accessible, interactive, and worthwhile for every individual.

Significantly, online learning ensures each student gets value for money—StudyOnline.ie has no campus to maintain. So this saving is passed on to the student with competitive prices to make your career ambitions accessible.

Stress- Free Option

If you’re looking to kick-start your career or enhance it and you’re still unsure about whether you should study accounting and finance online, consider it a comfortable, stress-free option.

No anti-social long evening classes, no tiring commutes, and all the resources you’ll ever need at your fingertips. When learning is flexible and convenient it doesn’t need to be a burden!

If you’d like to gain a new qualification in Accounting or Finance, StudyOnline.ie offers a range of ACCA and CPA Ireland courses for all levels. Talk to one of our course advisers today.

• • Access classes 24/7
  • Study Anytime, Anywhere.
  • Learn from Highly Qualified Lecturers 
  • Get Support when you need it

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