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Hedge Accounting - Lagos

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Request a date - May 19 2017Lagos1 week₦ 262,500
Request a date - Sep 08 2017Lagos1 week₦ 262,500

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Course Overview

This course is intended to give professionals a sound understanding of hedge accounting and reporting standards contained in IFRS 9, and the implications for the design, management and reporting of hedging strategies.

IAS 39 has been replaced with a new standard IFRS 9, which removes the restrictions and accounting anomalies contained in IAS 39 improving the reporting standards and transparency.

The requirements for derivatives and hedging are explained in clear, simple language supported with practical examples, discussion sessions and case studies. The participation of delegates is encouraged and they are also invited to bring their own cases and discuss the issues they face in applying hedge accounting and the standards. 

Who should attend?

• Risk managers
• Auditors
• Budget and forecast officers
• Accountants and financial controllers
• Analysts
• CFO and Finance Directors
• Investment bankers
• Corporate bankers
• Tax directors
• Corporate finance function
• Fund managers and investors
• Derivative sales executives
• Tax Managers/Directors

Key benefits of attending

• Better understanding of hedge accounting requirements
• More cost effective hedging solutions
• Compliance with the hedge accounting requirements
• Enhanced processes and controls around hedge accounting

Introduction to hedge accounting

What is hedging?
What is hedge accounting?
Hedge accounting under IAS 39
Hedged items
Designation of groups of items as hedged items
Designation of financial items as hedged items
Designation of non-financial items as hedged items

Hedging instruments

Derivative financial instruments
Portions and proportion of a hedging instrument
Hedging more than one risk with a single instrument
Combination of derivative instruments
Options as hedging instruments
Dynamic hedging strategies
Internal hedging instruments
Offsetting internal hedging instruments

Accounting for hedging activities

IAS 39 Accounting implications for:
FX Forwards
Interest rate swaps
Cross currency swaps
Standard vanilla options
Derivatives – Difficulties of identifying whether certain transactions involve derivatives
Embedded derivatives

The hedge accounting models

Risk reduction and hedge accounting
Fair value hedges – Definition
Fair value hedge accounting
Adjustments to hedged items
Hedges of firm commitments
Discontinuing fair value hedge accounting
Case study/Work Group: Exercises and case studies for discussion and practical application

Cash flow hedges

Forecast transactions
Cash flow hedge accounting
Reclassifying gains and losses from equity
Discontinuing cash flow hedge accounting

Net investment hedges

Hedged items
Hedging instruments
Effectiveness testing
Recycling on disposal of foreign operation
Hedging with derivatives
Hedging in individual or separate financial statements

Criteria for obtaining hedge accounting

Documentation and designation
Documentation relating to forecast transaction
Example documentation

Hedge effectiveness

Requirements for assessing effectiveness
Assessment on a cumulative or a period-by-period basis
Counterparty credit risk
Entity credit risk
Transactions costs
Pre-payment risk

Methods used to assess hedge effectiveness

Dollar terms comparison
Hypothetical derivative method
The benchmark rate method
Sensitivity analysis method
Regression analysis
Comparison between regression analysis and dollar offset method
Case study/Work Group: Practical application of the methods and discussion of challenges and issues

Hedge ineffectiveness

Sources of hedge ineffectiveness
Minimising hedge ineffectiveness
Measuring hedge ineffectiveness
Change in fair value method
Hedging foreign exchange risk
Hedging a highly expected foreign sale with a forward
Hedging a highly expected foreign sale with a tunnel

Hedging foreign subsidiaries

Hedging intragroup foreign dividends
Net investment hedge using a forward
Net investment hedge using a cross-currency swap
Net investment hedge using foreign currency debt

Hedging interest rate risk

Hedging a floating-rate liability using an interest rate swap
Hedging a floating-rate liability using a zero-cost collar
Hedging a fixed-rate liability using an interest rate swap

Hedging foreign currency liabilities

Hedging using cross-currency swaps

Hedging commodity risk

Hedging commodity risk
Own-use versus IAS 39 commodity contracts
Hedging a commodity firm commitment with a forward
Hedging a commodity inventory with a futures
Hedging a highly expected purchase with futures
Case study/Work Group: Case studies/practical exercises on hedging different risks

Hedge accounting disclosures

Disclosure and presentation requirements under IFRS 7
Financial instruments risk disclosures:
Qualitative disclosures
Quantitative disclosures
Disclosures on transition to IFRS 9

E-Reader Not Included.


*Course fee is not inclusive of VAT

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