Revised FASB Guidance
The FASB has released proposed updates to hedge accounting guidance. Understanding the opportunities and challenges that this presents is critical for companies with hedging activities.
A Strong Hedge Accounting Program Can Reduce or Eliminate Earnings Volatility
Corporations that take advantage of derivatives for managing interest rate, currency, or commodity risk should also consider the impact of accounting for those financial instruments. Most companies seek to reflect both the economic impact from derivatives and the related hedged exposures in the financial statements during the same period—which is often no easy task.
The underlying accounting guidance for derivatives and hedge accounting in US GAAP and IFRS is nuanced and very challenging to apply properly. Many companies have misapplied the guidance, resulting in unexpected financial statement corrections.
Successfully navigating the complexities of ASC 815 or IAS 39/IFRS 9 is critical for companies seeking to avoid earnings surprises and scrutiny from investors, auditors, and regulators.
Benefits of Chatham’s Hedge Accounting Solutions
Chatham’s comprehensive hedge accounting solutions are customized for each client to reduce complexity and administrative burden. We provide technical consulting, analysis, technology, education, and key hedge-accounting deliverables on multiple fronts.
- Align economic hedging and favorable hedge accounting with long term objectives: Chatham’s deep expertise in both structuring transactions and interpreting the nuances of hedge accounting standards enables us to optimize accounting results.
- Efficient delivery of hedge accounting results: Chatham’s comprehensive hedge accounting solutions provide everything needed to comply with hedge accounting, including hedging policies, hedge designation memos, valuations, journal entries, effectiveness tests, disclosures, and related reports.
- Robust derivative valuations: Chatham calculates derivative valuations using methodologies similar to those of the most sophisticated global financial institutions to satisfy the requirements provided in ASC 820 and IFRS 13.
- Education and support to address questions: Chatham’s hedge accounting experts support key stakeholders. We can, for example, educate senior management on the impact of hedge accounting or support your team in answering questions raised by auditors or regulators.
- Comprehensive program: Chatham’s team delivers excellence through proper application of the global hedge accounting standards, giving clients the confidence that their hedging program is in good hands.
How companies work with Chatham
Chatham delivers completely customized solutions that meet the specific hedge accounting needs of each company. Solutions range from fully outsourced engagements, in which the Chatham team performs the required hedge accounting work, to technology-based solutions delivered via our ChathamDirect application.