Hedge Accounting

Hedge accounting standards under US GAAP and IFRS are nuanced. Since accounting standards are subject to significant interpretation and judgment, complying with the requirements takes knowledge and experience.

Since 2000, Chatham has assisted companies with navigating the complexities of ASC 815 and IAS 39/IFRS 9. We help properly align the accounting and economics of tens of thousands of transactions for over 500 clients annually. We customize hedge accounting solutions for each client and reduce complexity and administrative burdens through technical consulting, analysis, technology, education and key hedge accounting deliverables.

Strong team of in-house practitioners: Chatham leads the industry in hedge accounting. Our reputation is based on setting a high standard and attracting the very best accounting practitioners. Members of our team come from the Big Four, including national practice groups, and several worked at the FASB, including work on the hedge accounting standards. Our hedge accounting expertise has earned the respect of regulators, global standard setters, major accounting firms and industry experts.

Experienced practice: Given the complexity of applying hedge accounting rules, many companies can run into challenges. For example, creating hedge designations that are either too specific or too vague can result in a hedging relationship being treated differently than intended.

Chatham has worked with hundreds of companies and their audit teams, advising on tens of thousands of hedging transactions. Regardless of whether a company is hedging interest rate, foreign currency, or commodity exposures, Chatham possesses the know-how to structure optimal hedge designations.

Our transaction structuring experience is built-into the hedge accounting technology within our ChathamDirect platform. This enables us to consistently deliver the highest quality advice to all of our clients, whether they rely on Chatham to provide services or use ChathamDirect on their own.

Best-in-class CVA/DVA calculations: Global valuation accounting standards require companies to incorporate credit risk into the fair value measurement of derivatives. Companies must consider not only the counterparty’s credit risk, but also their own credit risk. Since these accounting standards are very specific, measurements must be performed in the same way as a market participant would.

Chatham makes this approach available to companies for a reasonable price. Although the accounting standards do not require specific approaches to use when measuring fair value, we use the best-in-class method, as deemed by auditors, regulators, and standard setters, called the Total Expected Exposure method. Automated through our technology platform, our team of quantitative experts is also available to answer any questions about our valuations.

Our competitors use more simplified calculation methods that tend to leave auditors pushing their clients to move towards more sophisticated methods. With Chatham, the preferred approach is used from the start.