DipIFR - examiner approach

For December 2019 and June 2020 sessions

The ACCA Diploma in International Financial Reporting (DipIFR) is primarily intended for professional accountants working in practice and industry. Many professionals who are qualified in accordance with national accounting standards now need to develop technical awareness of International Financial Reporting Standards® (IFRS Standards) because of the increasing global use of IFRS Standards, for example by listed entities in the European Union in their consolidated financial statements.

The DipIFR bridges the knowledge gap that currently may exist regarding IFRS Standards by providing an understanding of the following areas:

  • international sources of authority
  • elements of financial statements and associated accounting treatments
  • presentation of consolidated financial statements and additional disclosure requirements
  • preparation of external reports for combined entities, associates and joint arrangements.

The DipIFR can be attempted by:

  • holders of a nationally recognised accounting qualification or
  • those who have a relevant degree plus two-years’ accounting work experience or
  • those who hold an ACCA Certificate in International Financial Reporting plus two-years' work experience or
  • anyone with three-years’ accounting work experience.

The underlying approach

The exam will assess:

i. The technical preparation of consolidated financial statements.

ii. The identification  and explanation of the appropriate financial reporting treatments for a range of specific accounting issues.

The three-hour 15-minute exam is paper-based.

The level of difficulty lies between ACCA Qualification Papers Financial Reporting (FR) and Strategic Business Reporting (SBR). The paper contains four compulsory questions all worth 25 marks. This is a change from previous papers where question 1 was worth 40 marks and the remaining three questions were worth 20 marks each. Care should therefore be taken when using past papers as part of the preparation for future examinations.

The change in format has occurred because of the past tendency for some candidates to apparently focus their studies almost exclusively on the preparation of consolidated financial statements. Under the previous format there were a number of instances where candidates produced near perfect answers to question one and then very unsatisfactory answers to questions two, three and four. Such candidates often achieved a pass performance based on their score in question one. The examiner believes that   successful candidates should have acquired and demonstrated the breadth and depth of knowledge, and the ability to apply their knowledge of IFRS Standards that the qualification demands. It is hoped that the change in format will ensure successful candidates will be those who can demonstrate and articulate a deeper and wider knowledge of a range of IFRS Standards in all four questions. The level of technical difficulty in each question is unchanged.

Question 1 will require candidates to prepare the consolidated statement of financial position or the consolidated statement of comprehensive income and may occasionally include the consolidated statement of changes in equity. Questions involving the preparation of the consolidated statement of cash flows will not be set. A key purpose of this question is to assess technical consolidation skills. However, the question may also require candidates to adjust for transactions that have been incorrectly or incompletely accounted for in the financial statements of group entities (usually the parent entity). In order to make these adjustments candidates will need to apply the provisions of relevant IFRS Standards. In Question 1 the emphasis will be on application rather than explanation.

In questions 2, 3 and 4 there will be more emphasis on identification and explanation of financial reporting issues rather than of financial statements preparation. Practicing these questions from the past exam papers is very good exam preparation as generally candidates find the narrative style questions more challenging than the numerical style of question 1. These past papers continue to be relevant but candidates should bear in mind the new format may present an additional query, for instance, or require explanation of an additional IFRS Standard, so that the question contains 25 marks worth of content rather than the historic 20 marks.

Question 2 will often present candidates with two or three reasonably complex issues and require them to prepare a narrative answer that shows the appropriate financial reporting of those issues. This question will usually involve a little more computational work than Questions 3 and 4 and the requirements will normally be presented as ‘explain and show’ which means the answer should describe the required financial reporting treatment but also give workings for the actual figures to be recognised or disclosed.  Examples of issues that could be examined in this question include, but are not restricted to, accounting for retirement benefit schemes or share-based payment schemes, impairment calculations for a cash-generating unit, computation of the cost of a constructed item of property, plant and equipment, and accounting for a decommissioning provision relating to an asset such as a nuclear power station.

Question 3 will usually deal with one or two particular IFRS Standards in some detail. Such a question would require candidates to describe key features of the IFRS Standard and apply it to two or more situations that the question describes. In contrast with Question 1, there will be a limited number of marks available for technical preparation of financial statements extracts and the majority of marks are available for identifying and quantifying the appropriate adjustments. However it is expected that candidates can explain how these adjustments will affect line items in the financial statements.

Question 4 will often present candidates with a scenario or a range of scenarios for which the correct financial reporting treatment is complex or uncertain. Often the question will place the candidate in a ‘real-life’ role, for example chief accountant reporting to the chief executive officer or senior accountant supervising an assistant. The question frequently requires candidates to address a series of questions that have been posed by the other party in the scenario. The question will often ask candidates to present a reply or report that deals with the appropriate financial reporting of the issues raised in the scenario. The primary skill in this question is identifying and describing the issues, rather than the detailed computation of numbers. 

Written by a member of the DipIFR examining team