Framework-Based Teaching of IFRS: The Case of Deutsche Bank

Abstract

This case applies the teaching approach ‘from objective to concepts to principles and rules’ in analyzing the provisions of IFRS 1:First-time Adoption of International Financial Reporting Standards. The case of Deutsche Bank was chosen because banks were at the centre of the recent global financial crisis. Topics addressed in this paper are accounting issues emerging from the crisis. Some accounting standards in place during the crisis have been amended or replaced; others are currently subject to significant revisions by the standard setters. Students analyze accounting standards and proposed improvements to applicable standards in response to these events. The case reveals how adopting IFRS provides an unambiguous opportunity for companies to provide more transparent and relevant financial reporting. In terms of relative transparency, students examine the reconciling items of greatest consequence in Deutsche Bank's transition from US GAAP to IFRS, including key provisions related to consolidation policy and accounting for financial instruments. The important role of professional judgment is emphasized as students evaluate choices regarding selection and application of accounting principles under IFRS.

Keywords:

• Conceptual framework
• Deutsche Bank
• financial instruments
• IFRS
• judgment
• special purpose entities
• transparency

Acknowledgements

The authors acknowledge the input of ideas and comments received from the editor, associate editor, two anonymous referees and participants of the 2009 Annual Meeting of the American Accounting Association in New York, New York. The authors also thank Mr Aram Gupta for assistance in preparing the manuscript.