There are diverse accounting practices among companies in the
worldwide extractive industry. The IASB has commissioned a research
project to review accounting practices for extractive activities.
To provide some guidance and a transition for entities in the extractive
industry that are adopting IFRS, the IASB issued IFRS 6 Exploration for
and Evaluation of Mineral Resources, in December 2004. The Standard
applies to expenditures incurred in connection with the exploration and
evaluation of mineral resources.
This course summarises the accounting and disclosure requirements of
IFRS 6 and discusses the current status of the IASB’s work on accounting
for extractive activities. Key accounting standards that affect the
industry are also given in-depth coverage, such as IFRS rules on
impairment of assets, recognition and measurement of assets,
revaluations of certain qualifying assets, decommissioning and site
restoration costs, accounting for reserves, disclosures, and hedge
accounting. The program also provides guidance on accounting issues
relating to joint ventures and production sharing agreements and
includes an overview of the interpretation IFRIC 20 “Stripping Costs in
the Production Phase of a Surface Mine”.

• The course answers questions such as:
  • What are the accounting and disclosure requirements of IFRS 6
  Exploration for and Evaluation of Mineral Resources?
  • What are the different accounting requirements for production and
  exploration assets?
  • How does the diversity in accounting practices in the extractive
  industry affect financial reporting and what is the IASB’s response?
  • How does IFRS 1 First-time Adoption of International Financial
  Reporting Standards, apply to extractive industries, what are the
  first-time adoption rules, and how will this affect your transition?
  • How does IFRS relate to asset retirement and costs associated with
  decommissioning mines as well as restoration / rehabilitation?
  • What are the critical compliance issues relating to hedge accounting?
  • When are options available for valuing tangible assets (property, plant
  and equipment) and what are the optional treatments?
  • When are options available for valuing intangible assets and what are the optional treatments?
  • How are the recognition and measurement rules for impairment
  applied?
  • What are some of the issues specific to mining sector business
  combinations?
  • In what manner are joint ventures structured in the minerals and
  mining sector?
  • How are stripping costs in the production phase of a surface mine
  accounted for?

• Learning Objectives
  • Understand and apply the accounting and disclosure requirements of IFRS 6 Exploration for
  and Evaluation of Mineral Resources
  • Appreciate the diversity in accounting practices in the extractive industry and the IASB’s
  project to review those practices
  • Apply hedge accounting
  • Understand the options available for valuing tangible assets
  • Interpret the complex rules on evaluating assets for impairment
  • Complete a smooth transition to IFRS
  • Understand the nature and structure of joint ventures in the minerals and mining industry
  • Learn the external financial reporting requirements for joint ventures
  • Comprehend the mechanisms of financing and reporting the operations of joint ventures
  • Appreciate the issues regarding intra-partner relationships, including cost allocation and audits
  • Become familiar with IFRS 11 “Joint Arrangements” and its impact on the accounting treatment
  of joint ventures and other joint arrangements
  • Understand the rules of the interpretation IFRIC 20 “Stripping Costs in the Production Phase of
  a Surface Mine”

Features of the Minerals and Mining Industry
• Non-renewable reserves
• Scale of capital investment
• Pattern of cash flows
• Risks
• Variety of business structures
Accounting Issues in the Minerals and Mining Industry
• Challenge of representing the mining industry in a context
of historical cost accounting
• Disparity between cost and value
• Exploration: capitalization vs. expense
• Full cost vs. successful efforts
• Fixed assets
• Capitalized costs
• Impairment
• Reserves and other disclosures
Resources and reserve statements and other disclosures
• Reserve definitions and disclosures
• Use of reserves in accounting
• Other disclosures
• Examples of published disclosures
IASB’s project on Extractive Activities
• Objectives
• Recommendations
• Role of the IASB Framework for the Preparation and
Presentation of Financial Statements
Exploration for and Evaluation of Mineral Resources (IFRS 6)
• Recognition and measurement
• Reclassification
• Impairment
• Disclosures
• Full cost accounting
• Successful efforts accounting
Development (IAS 16 and IAS 38)
• Asset categories
• Directly capitalized vs. transfer from exploration and
evaluation
• Depreciation, depletion and amortization
• Capitalization of borrowing costs – IAS 23
• Cost model vs. revaluation model
Impairment (IAS 36)
• Why is impairment an issue for the minerals and mining
industry?
• General rules for impairment testing
• Cash generating units
• Recognition and measurement of impairment losses
• Reversal of impairment losses
Decommissioning Costs and Site Restoration (IAS 37)
• Recognition of liability
• Changes to decommissioning liabilities – IFRIC 1
• Worked example
• Disclosures

Production
• Commissioning and production
• Depreciation (IAS 16, IAS 38)
• Stripping costs in the production phase of a mine (IFRIC 20)
• Revenue (IFRS 15)
• Taxes (IAS 12)
• Leases (IFRS 16)
Financial instruments (IFRS 9)
• Summary of the principles in IAS 39 and IFRS 9
• Expected credit losses
• Risk management in the minerals and mining industry
• Hedge accounting
• Practical issues
• Disclosures
Group accounting and consolidation
• Business combinations (IFRS 3)
• Control and consolidation of subsidiaries (IFRS 10 and IAS
27)
• Significant influence and equity accounting of associates
(IAS 28)
• Joint control and equity accounting of joint
ventures/proportionate consolidation of joint operations
(IFRS 11)
• Step acquisitions
• Step disposals
• Other common group and consolidation issues in the
mining industry
• Disclosures (IFRS 12)

3 Day Training

TBC

Group discounts available on request.

Hybrid Session
Live and In-class

• • CFO’s new to the minerals and mining industry
    • CFO’s of mineral and mining companies in the process of adopting IFRS
    • Financial and management accountants in the minerals and mining industry
    • Internal and external auditors of minerals and mining companies reporting under IFRS
    • Financial analysts seeking to improve their understanding of the accounting by minerals and
    mining companies
• Prerequisites
  Knowledge of basic accounting under any national standards. No advance preparation is required
  for this course.