Valuing Derivatives Under AASB 13 Fair Value Measurement February 17, 2015, Finance and Treasury Association: Australia By Andrew Brown, CFTP and Steve Castleton, CPA “AASB 13, Fair Value Measurement (“AASB 13”) was issued in 2011 and became effective January 1, 2013. Even though the standard has been effective for nearly 2 years, many companies are either still grappling with how to implement the standard with respect to derivative valuations or need to continue to refine their process based on feedback from auditors or an evolving derivative portfolio.” Download Complete Article

Read More...

Corporate Case Study: Tracking & Reporting for Hedges Our Client: A global musical instruments manufacturer and distributor who actively manages FX and interest rate risk exposures. Situation: The company was managing over 1,500 derivative instruments in Excel and was applying hedge accounting for more than half of their derivatives portfolio. They were applying a hedge accounting methodology that caused some earnings volatility and wanted to evaluate whether another approach, such as regression for effectiveness assessment and hypothetical derivative method for measurement, could produce better results. The period end process was taking longer than our client wanted, and, unfortunately, it was necessary to enter and maintain every derivative into multiple systems or spreadsheets. The company was seeking to implement a hedging, hedge accounting & derivative reporting solution that would: Ease the administrative burden of tracking and reporting derivative transactions Eliminate risk…

Read More...

Firm hits $1 trillion in notional and rolls out its first client-facing technology solution in debt management. Credit valuation adjustment models (CVAs) are developed in house for incorporation into clients’ valuations

Read More...

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…

Read More...

As a partner to financial sponsors, Chatham is often enlisted to work directly with in-house treasurers and CFOs. We have worked with hundreds of companies that need help with their hedge accounting program or an analysis of their current and future exposures. We can augment in-house resources of the organization with our team of hedge accounting practitioners or assure the timely and accurate execution of monthly journal entries, effectiveness testing, valuations and reporting. In all cases, we work with your team to provide the continuity, consistency and timely information your stakeholders demand.

Read More...

At-a-glance management to save time and costs As a real estate investor, managing debt terms, payments, covenants and other details can quickly become a job that a spreadsheet alone can’t handle. The Chatham Debt Management system helps clients ease the burdens of managing and reporting on their debt portfolio. This web-based system centralizes all debt information and performs tasks such as tracking covenants, building payment budgets, and managing critical event dates. The system serves to guide the workflow for debt management processes while organizing key documents. The system also provides powerful reporting, such as scenario analysis under hypothetical future interest rate environments, portfolio-level weighted average rates and maturities, and linked hedge and debt instruments. How Chatham provides management of client debt portfolios Chatham’s Debt Management system for commercial real estate covers both day-to-day operations as well as major events, such…

Read More...

The right hedge accounting can reduce volatility in your financials As a real estate company filing with the SEC or providing transparency to investors, you are responsible for financial reporting. If you’re hedging you have sensitivity to the resulting volatility in earnings, and you can benefit from hedge accounting that navigates standards from the FASB and IAS and aligns under US GAAP and IFRS. Chatham Financial pioneered the gold standard in hedge accounting for real estate companies when derivatives were first introduced. Our solutions are why most REITs applying hedge accounting use Chatham as their hedge accounting partner. How Chatham Hedge Accounting helps real estate companies We align optimal economic hedging and favorable hedge accounting: Our expertise in both structuring transactions and interpreting the nuances of the hedge accounting standards enable us to optimize accounting results. With a primary objective…

Read More...

A strong hedge accounting program can reduce or eliminate earnings volatility Investors who wish to avoid surprise risks or auditor scrutiny can depend on Chatham’s expertise in hedge accounting. Whether you have SEC filing obligations, need to provide transparency to investors, or wish to establish a consistent earnings track record, we can successfully navigate the complexities of ASC 815 or IAS 39, which are so critical. By timing the earnings recognition of the derivative with that of the hedged asset, liability, or forecasted transaction, we can significantly reduce or eliminate the earnings volatility that would otherwise be recognized in financial statements. Hedge Accounting solutions for private equity sponsors and their portfolio companies Chatham’s comprehensive hedge accounting solutions are customized for each client to reduce complexity and administrative burdens. We provide technical consulting, analysis, technology, education, and key hedge-accounting deliverables on…

Read More...

Optimal management of large and complex debt and derivative portfolios As infrastructure portfolios grow, so do the challenges of managing them. In recent years, such challenges are compounded by more diversified debt terms and increased regulatory requirements, including trade reporting and portfolio reconciliation. In addition, derivatives have a heightened reputation for risk. The resulting increased investor and regulatory scrutiny require even more robust transaction recording, valuation, and monitoring. How Chatham supports your risk management needs Chatham’s advisory services combined with accounting-compliant debt and derivative valuations technology are specifically built around equity sponsor requirements. This approach is unique from the majority of advisory-only firms and pure technology providers. And, it forms the basis of a range of services, which may be tailored to these requirements: Central repository of debt and derivative economics and documentation Derivatives valuations, including accounting-compliant CVAs Derivatives accounting…

Read More...

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…

Read More...