Accounting and IFRS for Shipping Industry

Accounting Basics 

• Terminology
• Types of Accounting
• Accounting Rules 
• Global Institutions
• IFRS / IAS
  
  

Key accounting and reporting issues

• Continuity assessment:
• Fair value assessment of ships:
• Dry dock costs, construction, and retrofit delays:
• Ship impairment assessment:
• Impairment assessment of goodwill
  
  

Treatment of TAX in shipping

• Types of TAX
• VAT in shipping calculations
• Practical case on tax report

Revenue recognition in shipping business in accordance with IFRS  15.

• Overview of International Financial Reporting Standard 15 (IFRS 15)
• Defining Revenue Recognition Methods: Review the basics to determine how companies recognize revenue in the shipping business according to the international standard.
• Evaluating the effects on the financial statements: Analyzing how this recognition affects the financial statements and how it can be addressed.
• Practical application: Practical case studies of companies applying this standard in the shipping sector.

Identification of contract with the appropriate customers/clients

• Customer selection procedures: Analyze the steps that must be taken to select appropriate customers and ensure compliance with shipping requirements.
• Contract content: Determine the necessary content to avoid confusion or vague interpretation of shipping terms.
• Risk Analysis: Evaluate potential risks related to the contract and develop strategies to deal with them.

dentification of shipping obligations with the contract

• Defining Obligations: Examine how specific shipping obligations in the contract are identified and documented.
• Compliance Verification: Ensure that shipping obligations comply with legal and industry regulations and standards.
• Change Management: Establish procedures to address any changes in shipping obligations during the contract period.

Determination of the shipping transaction price

• Costing Techniques: Review appropriate costing techniques to determine the price of a shipping transaction.
• Competitor evaluation: Studying competitors' prices to ensure price competitiveness.
• Price Negotiation: Develop negotiation skills to achieve the best possible price.

Allocation of the transaction price to the performance obligations

• Determine cost elements: Analyze the various factors that should be taken into consideration when allocating the transaction price.
• Clarifying the services included: Ensure that all services included in the deal and their impact on the cost are clarified.
• Performance follow-up: Establishing systems to monitor the company’s performance in achieving its obligations.
  
  

Recognition of shipping revenue when each performance obligation is completed.

• Monitoring Procedures: Develop procedures to monitor the fulfillment of performance obligations and determine when revenue should be recognized.
• Financial reporting: How to include these revenues in financial reports accurately according to specified standards.
• Commitment to Transparency: Enhancing the transparency of financial operations and ensuring that information is shared correctly and in a timely manner.

Accounting for Property Plant and Equipment (IAS 16) , Government Grants (IAS 20) , Investment Property (IAS 40)

Measurement of shipping assets at recognition, after recognition and derecognition

• Measuring Assets at Recognition: Detailing how the value of assets is measured during revenue recognition processes.
• Measuring assets after recognition: Talk about potential changes in the value of assets after revenue is recognized.
• Measuring assets upon derecognition: A review of the methods used to measure assets upon derecognition of revenue.

Revaluation of shipping assets

• Reasons for revaluation: Examine the reasons that may require revaluation of shipping assets.
• Impact of economic changes: How the economic context affects the revaluation of assets.
• Difference Accounting: Explaining how to address differences between book value and fair value.

Depreciation of shipping assets 

• Depreciation methods: Explain the different ways the value of assets is depreciated over time.
• The impact of accounting policies: Study how accounting policies can affect depreciation rates.
• Consumption monitoring: means of monitoring asset consumption and improving efficiency of use.

IFRS 13 - Fair Value Measurement

• The concept of fair value: Explaining the concept of fair value and how to measure it.
• Techniques used: Review of accounting techniques used to measure fair value.
• Impact on Financial Reporting: Analyze how fair value measurement affects financial reporting.

IFRS 9 - Financial Instruments (Hedge Accounting)

• IFRS 9
• Hedge accounting principles: Explanation of accounting principles related to financial instruments and hedge accounting.
• Hedging techniques: The study of techniques used to reduce financial risks.
• The impact of hedging on financial performance: Analyze how hedge accounting can affect the estimation of financial performance.

Treatment of borrowing costs 

• Borrowing cost analysis: studying the components of borrowing costs and methods for calculating them.
• Interest effect: How the interest rate affects borrowing costs and planning.
• Borrowing cost management: Develop strategies to examine and improve the management of borrowing costs.
• Vessel government grant accounting
• Accounting Requirements: Review how government grants to support shipping activities are processed.
• Estimating value: How to estimate the financial value of grants and their impact on financial reports.
• Compliance with standards: Verifying that accounting is carried out in accordance with international standards.

Treatment of dry docking

• Maintenance Costs: Determine costs and manage ship dry dock operations.
• Impact of temporary closure: How does drydock closure affect the financial statements.
• Improving Efficiency: Develop strategies to improve the efficiency of dry dock operations and achieve maximum financial benefit.

Expected credit loss model

• Understanding Credit Loss: Explaining how to estimate and account for expected loss on debt.
• Influencing factors: Analysis of the factors that affect the credit loss estimate.
• Impact on Financial Reporting: How credit loss estimation affects shipping companies' financial reporting.

Hedge accounting in shipping (fair value hedge and cash flow hedge)

• The concept of hedging: Explain the concept of hedging and its importance in the context of shipping.
• Fair value hedging: How companies hedge to protect themselves from fluctuations in the value of assets and liabilities.
• Cash Flow Hedging: Review how cash flows are hedged to address financial risks.

Accounting for debt modification

• Debt modification interpretation: How to identify and account for any debt modifications.
• Impact of Interest Spreads: Examining how adjustments in interest rates affect financial reporting.
• Compliance with standards: Ensuring that accounting conforms to recognized international standards.

Accounting for complex financial instruments.

• Definition of complex financial instruments: Understand what complex financial instruments mean and how they are accounted for.
• Evaluation techniques: Study of the methods used to evaluate the value of these instruments.
• Impact on Financial Reporting: Analyze how the valuation of complex financial instruments impacts shipping companies' financial reporting

Determination of control 

• Definition of Control: Explain the concept of control in the context of the shipping business.
• Defining control: How to define and achieve control over assets and activities.
• Reporting on control: How to report control-related information in financial reports.

Consolidation procedures

• Legal and Financial Procedures: How to legally and financially integrate a shipping business.
• Stages of merging: Detailing the steps and stages of merging and how to implement it.
• Effect of consolidation on reporting: How does consolidation affect the income statement, balance sheet, and cash flow statement.

Preparation of consolidated Income Statement

• Key Components: Explain the key components that should be included in a consolidated income statement.
• Breaking down revenues and costs: How to effectively distribute revenues and shipping costs on the income statement.
• Related Financial Reporting: Analysis of how the income statement affects other financial reports.

Preparation of consolidated SOFP

• Consolidated SOFP Concept: Explain the concept and importance of preparing a consolidated balance sheet.
• Consolidating Assets and Liabilities: How to consolidate assets and liabilities in the balance sheet.
• Impact of Standardization on Reporting: How a standardized SOFP setting affects company reporting.

Preparation of consolidated Statement of Cash Flows

• Cash Flow Analysis: Explain how to analyze and present a cash flow statement in a shipping context.
• Consolidate cash flows: How to consolidate cash flows from various shipping activities.
• Impact on financial reporting: How does the consolidated statement of cash flows affect financial reporting

Treatment of Non-controlling interests in shipping business

• Non-controlling interests:
• How to deal with interests that shipping does not control:
• How does the presence of non-controlling interests affect shipping operations and related activities

Treatment of Goodwill in shipping business

• Understanding the concept of goodwill: Explain the concept and importance of goodwill treatment in the context of the shipping business.
• Estimating the value of goodwill: How to estimate the value of goodwill and its impact on financial reports.
• Affected Financial Reporting: Analyze how the goodwill transaction affects financial reporting.

Treatment of intra-group items and unrealized profits

• Understanding inter-group items: Explain how inter-group items are treated in freight calculations.
• Recording unrealized profits: How to record profits that have not yet been realized in financial reports.
• Final Financial Reports: Analyze how line items and unrealized gains affect final reports.