Course detail

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Contents

• Introduction
• Prerequisites
  
• Course Level
  
• Topics
  
• Course Benefits
  
• Teaching Method
  
• Continuing Professional Education
  
• Venue
  
  

Introduction

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The International Accounting Standards Board (IASB) recently issued a new standard on Financial Instruments – IFRS 9, which will have a significant impact on entities dealing with financial instruments and exposed to market risk. Phase III of the IASB’s financial instruments project is still in progress and addresses the complex area of hedge accounting.

This comprehensive two-day course provides an in-depth review of the current IFRS accounting and reporting requirements for derivatives and hedging. Course delegates also receive up-to-date information on IFRS 9 and Phase III of the IASB’s project to replace IAS 39, as well as a brief comparison to US GAAP where applicable.

The requirements for derivatives and hedging are explained in clear, simple language and illustrated with corporate annual reports and other real-world examples. Valuations, hedge documentation processes, effectiveness testing, and journal entry outcomes are explained and illustrated by the expert instructor. Delegates are also invited to bring along their own examples to discuss during the course.

This program answers questions such as:

• What are the current and likely future requirements for hedge accounting?

• What is fair value?

• How can hedge engineering work to achieve better results?

• What are the hedge accounting documentation requirements?

• How is hedge effectiveness designed and tested?

• How can ‘hidden’ derivatives be identified?

• When do hybrid instruments need to be separated?

• What are the principal similarities and differences between US GAAP and IFRS in the area of derivatives and hedge accounting?

Prerequisites

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A basic understanding of IFRS (or US GAAP) accounting and reporting principles for corporate entities. No advance preparation is required for this course.

Course Level

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Intermediate

Topics

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• Derivatives
• Analysis and examples of common derivatives (including options, interest rate swaps, currency swaps, forwards and futures)
• Cash flows
• Variations of ‘standard’ derivative contracts
• Techniques for measuring fair values
• Accounting for derivatives (IAS 39 and IFRS 9)
• Embedded Derivatives
• Analysis and examples of embedded derivatives in debt host contracts, equity host contracts, and purchase/sale contracts
• Accounting for embedded derivatives
• Determining the separation conditions under IAS 39
• Allocating the initial carrying amount to embedded derivatives that are separated under IAS 39
• Determining how the embedded derivative affects the ‘cash flow characteristics’ test under IFRS 9
• Hedging
• Analysis and examples of common hedging relationships
• Hedged items
• Hedging instruments
• Definitions and mechanics of fair value, cash flow, and net investment hedges
• Hedge accounting (IAS 39)
• Hedge documentation
• Measuring and testing hedge effectiveness
• Measuring and accounting for hedge ineffectiveness
• Discontinuation of hedge accounting
• IFRS Update: Current Developments on IFRS 9 and Derivatives and Hedging
• Presentation and Disclosures (IFRS 7)

Course Benefits

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• Understand the reasons why companies hedge
• Construct a successful hedge and use hedge engineering to achieve better results
• Measure hedge effectiveness and ineffectiveness
• Identify and account for the following hedges: fair value hedges, cash flow hedges, net investment hedges and interest rate hedges
• Identify and analyse ‘hidden’ derivatives
• Determine the appropriate treatment of embedded derivatives under IAS 39 and IFRS 9
• Discuss the latest developments and emerging accounting issues

Teaching Method

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• Live group instruction
• Descriptions and explanations of accounting principles
• Analysis and mechanics of common derivative products and hedging relationships
• Practical illustrations using model journal entries, model financial statement disclosures, case studies, and real-world examples
• Discussion of emerging accounting issues and the project to replace IAS 39
• Interactive participation is encouraged
• All participants receive a comprehensive binder containing copies of the presentation slides, handouts and other course materials

Continuing Professional Education (CPE)

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16 hours

Venue

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All of our Toronto seminars take place in 4 star professional conference facilities, usually in city-centre downtown hotels like the Marriott, Sheraton or Hilton brands.

Detailed Joining Instructions are sent to all registered delegates by email approximately one month before the event. The Joining Instructions will confirm exact venue details and nearby (or onsite) hotel recommendations with bedroom rates where available.

Coffee and lunch will be provided.

Evening Courses: Our Tuesday and Thursday classes start promptly at 6pm and finish at 9pm, with a 30 minute break included. Evening class venues will be centrally located with exact details to be confirmed approximately one month before the start date.