Series of seven white papers explains the basics of hedge accounting and hedge effectiveness testing
FINCAD, the market leader for innovative over-the-counter (OTC) derivatives solutions, today announced it is working with KPMG LLP, the Canadian member firm of KPMG International and one of the top accounting firms in the world, to produce a whitepaper series on the basics of hedge accounting for corporate treasuries. Titled The Basics of Hedge Accounting, this educational series outlines the principles of hedge accounting under current and expected International and U.S. accounting standards, including some of the practical challenges typically faced by organizations.
Topics addressed in this series include:
1. Basics of Accounting for Derivatives and Hedge Accounting
2. Basics of Assessing Effectiveness and Measuring Ineffectiveness
3. Basics of Credit Value Adjustment and Implications for the Assessment of Hedge Effectiveness
4. Upcoming Changes to Hedge Accounting under International and U.S. Accounting Standards
5. Hedging Portfolios of Fixed Rate Instruments under International Financial Reporting Standards
6. Use of Overnight Index Swap (OIS) Rate when Valuing Derivatives and Assessing Effectiveness
7. Separation of Embedded Derivatives within Convertible Debt Instruments.
Developed to help more organizations to better manage their income statement volatility, this educational series introduces Treasurers to the key principles of hedge accounting. When applied appropriately, hedge accounting allows Treasurers and organizations to align financial reporting with the economics of their hedge relationships and also manage income statement volatility. In addition, the series includes an article on Convertible Debt Instruments and some of the associated challenges from a valuation and accounting perspective.
To complement this educational series, FINCAD is hosting a webinar titled How to Overcome the Hedge Accounting Challenges Corporations Face Today – Insights from an Auditor. With insights from Dilshad Hassen, partner, Risk Consulting at KPMG LLP, this webinar reviews a number of practical approaches to applying hedge accounting, and what an auditor might typically look for when auditing an organization’s hedge accounting process and relationships.
“Hedge accounting is a useful and sometimes necessary election under current accounting principles in order to best align financial reporting with the economic purpose of a transaction, including those involving many of today’s derivative transactions,” says Dilshad Hassen, partner, Risk Consulting at KPMG LLP. “Hedge accounting need not be as daunting or insurmountable as some might perceive. While it is a complex area, with a good understanding of the principles and the criteria one needs to follow, application of hedge accounting helps promote stewardship in financial reporting. This educational series hosted by FINCAD aims to help demystify hedge accounting.”
“We’re very pleased to be working with KPMG on this educational series,” says Bob Park, President and ceo, FINCAD. “KPMG has a complete understanding of the challenges corporations are facing when applying hedge accounting and know how these can be overcome. We hope that, with this series, more organizations will be able to take advantage of the benefits hedge accounting provides.”
