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New York Institute of Finance

Derivatives & Hedge Accounting

Aug 26—27
2 days
New York, New York, United States
USD 2459
USD 1229 per day

How it works

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Description

Understand derivatives and their uses as hedging instruments, specifically how to apply FAS 113 (ASC 815) and amendments to hedge accounting situations.

Prerequisite knowledge:

  • Familiarity of GAAP accounting principles
  • Understanding of time value of money concepts
  • Knowledge of commonly used derivatives for hedging - forwards, futures, swaps and options

CURRICULUM

Day 1

MODULE 1: INTRODUCTION TO DERIVATIVES

  • Nature and Purpose of Derivatives
  • Examples of Common Derivatives
  • Infamous Derivatives Scandals
  • Put and Call Options
  • Forwards and Futures Contracts
  • Interest Rate Swaps

MODULE 2: ACCOUNTING FOR DERIVATIVES

  • Advantages of Hedge Accounting
  • Qualifying for Hedge Accounting
  • Hedging Designations: Fair Value vs. Cash Flow Hedges
  • Firm Commitments vs. Anticipated Transactions
  • Assessing & Documenting Hedge Effectiveness
  • Accounting for Hedge Ineffectiveness

MODULE 3: FAIR VALUE HEDGES

  • Accounting for Fair Value Hedges
  • Impact on Current Period Earnings
  • Exposed Assets & Liabilities as Fair Value Hedges
  • Firm Commitments as Fair Value Hedges
  • Impact of a Discontinued Hedge
  • Documentation Requirements

MODULE 4: CASH FLOW HEDGES

  • Accounting for Cash Flow Hedges
  • Impact on Current Period Earnings
  • Exposed Assets & Liabilities as Cash Flow Hedges
  • Cash Flow Hedges of Forecasted Transactions
  • Impact of a Discontinued Hedge Documentation Requirements

MODULE 5: INTEREST RATE SWAPS

  • Economics of Interest Rate Swaps
  • Interest Rate Swaps as Fair Value
  • Hedges and Cash Flow Hedges
  • Testing for Hedge Effectiveness
  • Valuation Methods for Interest Rate Swaps

Day 2

MODULE 1: INTEREST RATE RISK

  • Interest Rate Futures and Options
  • Cash Flow Hedge of Anticipated Issuance of Debt
  • Cash Flow Hedge of Anticipated Purchase of Securities
  • Cash Flow Hedge of Interest Income using Floor Contract

MODULE 2: FOREIGN CURRENCY HEDGES

  • Foreign Currency Hedges
  • Cash Flow Hedges of Foreign Currency Receivables & Payables
  • Cash Flow Hedge of Foreign Currency Debt
  • Hedging Foreign Currency Debt using Currency Swaps
  • Fair Value Hedge of a Firm Purchase Commitment
  • Cash Flow Hedge of a Forecasted Transaction
  • Hedge of a Net Investment in Foreign Operations

MODULE 3: EMBEDDED DERIVATIVES

  • Identifying Embedded Derivatives
  • Valuing an Embedded Derivative
  • Accounting for Embedded Derivatives
  • Bifurcation Tests
  • Fair Value Option

MODULE 4: EXCEPTIONS & EXCLUSIONS

  • Normal Purchases & Normal Sales Scope Exclusion
  • Insurance Contracts
  • Financial Guarantees
  • Other Scope Exceptions

MODULE 5: CURRENT DEVELOPMENTS & TRENDS

  • Latest Guidance on FAS 133 (ASC 815) Implementations Issues
  • New and Proposed Accounting Standards affecting FAS 133 (ASC 815)
  • Comparisons with IFRS

WHAT YOU'LL LEARN

  • Identify the major types of derivatives used in hedging
  • Describe the basic rules of accounting for derivatives
  • Differentiate between speculation and hedging for accounting purposes
  • Design an effective hedge that qualifies for hedge accounting treatment
  • Explain the impact of derivatives on current period earnings and OCI
  • Describe how a company might assess hedge effectiveness
  • Describe the disclosure requirements for derivatives
  • Describe the nature and purpose of an interest rate swap
  • Account for derivatives used as hedges against interest rate risk
  • Explain the rules for accounting for foreign currency hedges
  • Account for a net investment in a foreign operation
  • Identify and account for embedded derivatives
  • Identify items that qualify for the scope exclusion
  • Discuss emerging issues and recent guidance
  • Describe methods for valuing interest rate swaps
  • Describe the valuation and accounting for a currency swap
  • Identify and account for fair value and cash flow hedges
  • Describe the major causes of recent derivatives scandals

Who should attend

  • Corporate accountants
  • analysts
  • regulators
  • auditors and financial engineers

Next dates

Aug 26—27
2 days
New York, New York, United States
USD 2459
USD 1229 per day

How it works

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