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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This comprehensive two-day course provides an overview of the most important accounting and reporting requirements for derivatives and hedging activities in accordance with US GAAP and IFRS.

The course includes a review of significant accounting policies and necessary disclosures, in accordance with the pronouncements of:

• The Financial Accounting Standards Board (FASB)

• The Securities Exchange Commission (SEC)

• The Emerging Issues Task Force (EITF)

• The International Accounting Standards Board (IASB)

These requirements are explained in clear, simple language and illustrated with model journal entries, corporate annual reports, and other real-world examples. Application of the various standards is illustrated through the use of short case studies.

In addition to a review of current US GAAP and IFRS developments, course participants receive information on likely future pronouncements and the probable impact of their adoption.

This programme answers questions such as:

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

• What is fair value?

• How is a successful hedge constructed?

• What are the key issues surrounding hedge accounting?

• How is hedge effectiveness designed and tested?

• When are hybrid instruments bifurcated?

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

• Where can up-to-date information about current developments be obtained?

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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• Introduction
• Rising popularity of derivatives
• Key players in the industry
• Financial instruments used in hedging
• Dangers of misusing derivatives
• Importance of internal controls
• Designing an Effective Hedge
• Identifying the hedged risk
• Selecting the hedging instrument
• Assessment of hedge effectiveness
• Documentation and disclosure
• Testing Hedge Effectiveness
• Critical terms analysis
• Statistical methods
• Cumulative dollar offset method
• Short-cut method
• Hedge Accounting
• Purpose of hedge accounting
• Qualifying for hedge accounting
• Benefits and costs
• Alternatives to hedge accounting
• Hedge Classification
• Fair value hedges
• Existing asset or liability
• Firm commitments
• Cash flow hedges
• Existing asset or liability
• Forecasted transaction
• Applying Hedge Accounting
• Fair value hedge of an investment
• Fair value hedge of inventory
• Fair value hedge of a firm commitment
• Cash flow hedge of a forecasted transaction
• Accounting for hedge ineffectiveness
• Accounting for a discontinued hedge
• Interest Rate Swaps
• Economics of interest rate swaps
• Floating to fixed rate swaps
• Fixed to floating rate swaps
• Qualifying for the short-cut method
• Basis swaps
• Hedging Interest Rate Risk
• Role of duration in hedging
• Interest rate futures and options
• Cash flow hedges of anticipated transactions
• Assessing hedge effectiveness
• Interest rate hedging strategies
• Foreign Exchange Hedges
• Fair value hedges of assets and liabilities
• Cash flow hedges of assets and liabilities
• Accounting for hedge ineffectiveness
• Foreign exchange hedging strategies
• Net investment hedges of foreign operations
• IFRIC 16 Hedges of a Net Investment in a Foreign Operation
• Embedded Derivatives
• What are embedded derivatives
• Identifying and valuing hybrid instruments
• 'Clearly-and-Closely Related' criteria
• Determining if separation of an embedded derivative is necessary
• 'Dominant Economic Component' tests
• Amendment to IAS 39 and IFRIC 9: Assessment of Embedded Derivatives on Reclassification (March 2009, effective June 2009)
• Financial Statement Disclosure Requirements
• What are the disclosure requirements under IFRS 7 and FAS 161
• Key elements to consider
• Current applications of the standards
• Latest Developments
• Amendments to IFRS 7: Improving Disclosures about Financial Instruments (March 2009)
• Fair Value Option (IAS 39 and FAS 159)
• Amendment to IAS 39: Eligible Hedged Items
• Fair Value Measurement (IASB Exposure Draft (May 2009) and FAS 157)
• FAS 133: Implementation Issues
• FAS 161: Disclosures about Derivative Instruments and Hedging Activities - an Amendment of FAS 133
• FSP FAS 154 157-4: Determining Fair Value When the Volume and Level of Activity for the Asset or Liability have Significantly Decreased and Identifying Transactions that are Not Orderly
• FASB Exposure Draft (June 2008): Accounting for Hedging Activities - an Amendment of FAS 133
• IASB Exposure Draft (March 2009): Proposed amendments to IAS 39 and IFRS 7 regarding derecognition
• Replacement of IAS 39: Timetable for Joint Project with FASB (April 2009)
• Other emerging issues

Course Benefits

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• Understand the reasons why companies hedge
• Learn how to construct a successful hedge
• Apply various methods for assessing hedge effectiveness
• Identify and account for the following hedges: fair value hedges, cash flow hedges, interest rate hedges (including swaps), and foreign currency hedges
• Determine the appropriate treatment of hybrid instruments and embedded derivatives
• Compare financial instrument accounting treatments under US GAAP and IFRS
• Comply with fair value measurement requirements and understand how to apply the fair value option
• Discuss the latest developments and emerging accounting issues

Teaching Method

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• Live group instruction
• Descriptions and explanations of accounting principles
• Practical illustrations using model journal entries, model financial statement disclosures, case studies, and real-world examples
• Discussion of emerging accounting issues
• 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 Dubai 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.