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overview
Key Learning Outcomes
- Covid-19 particular considerations on accounting & financial reporting
- In-depth Analyses of the 5-step model of recognising revenue for Shipping & Maritime sectors
- Accounting & reporting issues relating to ship management, shipbuilding and retrofits
- Issues relating to asset acquisition, divestitures and merger/acquisitions
- Accounting for Leasing and Sale-Leaseback Transactions
- Hedge accounting in shipping industry
- Deferred taxes and recognition of taxes in shipping industry
- Assessment of costs that can be capitalised
- Shipping Asset Depreciation and Residual Value
- Impairment of Non-Financial Assets
- Other amendments Relevant to the Shipping Industry – Effects, Exemptions and more
- Group Accounts Consolidation and Joint Arrangements
Case Studies and Discussions Include
- Key accounting & reporting issues during Covid-19 (financial covenant, impairment, going concern assessment etc)
- IFRS 15 Revenue from contracts with customers and related accounting treatments
- Lease standard (IFRS 16) and Financial instruments (IFRS 9) and impacts on shipping industry
About The Course
Heavily influenced by international trade environments, the shipping industry is capital-intensive; comprising a vast network of closely interconnected stakeholders ranging from leasing banks, shipowners, ship operators, major commodities traders to ship builders, equipment providers. Whilst capital expenditure, operating cost, earning and revenue are immensely sensitive to numerous factors such as economic recessions, Covid-19 disruptions on demands & logistics, trade risks, charter income, fuel prices; the financial & accounting professionals require informed judgements to answer a range of complex questions.
Hands-on and practical, this masterclass dwells in the most relevant challenges shipping players face in the current climate of uncertainty – including revenue recognitions, assessment of impairment indicators, liquidity & concentration risks, consolidation & joint arrangement, access to equity & debts, among many more; and most importantly, the impacts of Covid-19 on all aforementioned areas.
Course Director
Chetan Hans
Director – Financial Reporting Advisory Services
Grant Thornton (Singapore)
Testimonials
“Trainer provides sound recommendation and advice. New applications of IFRS are also very clearly communicated”
Finance Manager, Sealand Maersk Asia
“The topics covered were relevant, insightful and informative, speaker was quite knowledgeable and very precise in what communicated”
Chief Financial Officer, Womar Logistics Pte Ltd
“The trainer’s knowledge is excellent in all topics, sharing his know-hows clearly. Attendees are opened to sharing questions, concern and knowledge. Useful learning to share with my department, and to apply what has been learnt”
Financial Controller, Navig8 Asia
“Good refresher of IFRS, specific to Shipping, very timely and relevant to shipping”
Treasury Manager, AET Tankers Pte Ltd
Singapore MCF Grant
You may be eligible for the Singapore Maritime Cluster Fund (MCF) Grant for up to 50% of the total course fee. Please contact Sushil Kunwar on +65 6989 6614 or email [email protected] for more information and eligibility criteria.
Agenda
MODULE 1
Revenue Recognition
Understanding the 5-step model of recognising revenue
- Identify the contract(s) with customers (1)
- Contract combinations
- Contract modifications
- Identify the performance obligations in the contract (2)
- Determine the transaction price (3)
- Guidance on variable consideration
- Existence of significant financing component
- Consideration payable to customer
- Allocate the transaction price to the performance obligations (4)
- Recognise revenue when (or as) each performance obligation is satisfied
Impact on Shipping
- Charter income
- Voyage income
- Liquidated damages
- Demurrage income
- Principal or agent issues
- Identifying service components in a revenue contract
- Slot exchange arrangements
- Onerous contracts
- Covid-19 impacts on revenue recognitions
MODULE 2
Leasing
- Refreshers on recent IFRS updates
- Definition of lease
- Leassee’s accounting
- Leassor’s accounting
- Sale & leaseback transactions
- Identifying lease contracts
- Assessment of operating versus finance lease
- Accounting for finance leases
- Accounting for operating leases
- Impact of renewal / extension options
- Impact of contingent charter payments
- Impact of residual value guarantees
- Accounting for changes in estimates/circumstances/agreement after lease inception
- Accounting for sale and leaseback transactions
Impairment
- Determination of CGUs
- Assessment of impairment indicators
- Covid-19 implications
- Slowing/Low demand for shipping services
- Depressed charter rates
- Off-hire days
- Fuel prices
- Ships and vessels lay up
- Low new build prices or ship resale prices
- Increased operating expenses
- Declining vessel values
- Abnormally high scrapping fees
- Operating losses
- Significant physical damage to the vessel
- Scrubber retrofits
- Covid-19 implications
- Determination of FVLCTS
- Determination of VIU
- Differences between fair value and value in use
- Reversal of past impairments
- Part-completed new builds
- Disclosure under IAS 36
- Differences between fair value and value in use
MODULE 3
Key accounting & reporting issues during Covid-19
- Going concern assessment
- Charter/freight rate trends
- Fair value trends of vessels
- Fuel price trends debt covenant
- Drydocking, construction, retrofit delays
- Operating costs (e.g. crewing, maintenance, etc)
- Charterers’ payment of hire
- Financial covenant
- Loan to value covenant
- EBITDA covenants
- Vessel lay-up
- Material adverse clauses
- Covid-19 Impairment assessment – vessels and goodwill
- Liquidity risks
- Access to equity and debts
- Undrawn credit facilities
- Concentration risks
- Risk evaluation across segments
- Risks from payments of hire
- Credit quality monitoring
- Future contracts
Property, Plant & Equipment
- Assessment of costs that can be capitalised
- Pre-delivery instalments
- Borrowing costs
- Timing of capitalisation
- Eligible borrowing costs
- General borrowing costs
- Vessel government grant accounting
- Repairs and maintenance
- Dry-docking
- Cost allocation and componentization when a vessel is purchased
- Depreciation
- Useful life
- Residual value
- Depreciation method
MODULE 4
INCOTERMS 2020 and Related Accounting Treatments
Financial Instruments
- Classification and measurement: financial asset and financial liabilities
- Amortised cost
- Fair value through profit or loss
- Fair value through OCI
- Accounting for derivatives
- Expected credit loss model
- Commodity purchase and supply contracts
- Shipbuilding option agreements
- Embedded derivatives
- Hedge accounting in shipping
- Fair value hedge
- Cash flow hedge
- Accounting for debt modifications
- Financial instruments: Presentation
- Debt vs equity considerations
- Compound Financial Instruments
Consolidation and Joint Arrangement
- Understanding and applying IFRS 10 Consolidated Financial Statement
- Concept of de factor control, voting and other rights
- Joint arrangements under IFRS 11 Joint Arrangements
- Joint operations – parties involved with joint control have rights to the assets and obligations for the liabilities
- Joint ventures – parties involved with joint control have rights to the overall assets of the arrangement
- Shipping pools
- Full control over the pool – pool consolidation
- Joint operator of the pool – the company’s share of revenue, costs, assets and liabilities is recognised
- Ship chartering special purpose vehicles
- Accounting for joint arrangement
Taxation
- Tonnage tax classification
On-site & in-house training
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