Treasury / Hedge Accounting
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Timely, accurate, insightful, treasury accounting advice
Treasury / Hedge Accounting
Rochford’s treasury / hedge accounting advice enables clients to implement hedging strategies with confidence. We deliver expert advice so that the accounting impact will be minimised and true underlying performance is not distorted. Quality insights, interpretation and disclosures are provided in accordance with relevant accounting standards.
Advice covers the following*:
Why: Derivatives used to hedge underlying exposures to market risk (interest rate, foreign exchange, commodity price) are valued at FVTPL. The volatility of derivatives can cause adverse movements in fair values and cash-flows which can severely impact reported earnings. In extreme circumstances they can cause entities to breach loan covenants and financial ratios that can have disastrous consequences for the entity
What: Hedge Accounting reduces profit and loss volatility and protects balance sheet valuations. It enables key stakeholders to better understand the true performance of an entity, by minimising the accounting impact of derivatives on the financial statements
How: Leveraging our skill set in financial risk, we structure solutions to align both the commercial hedging strategy with the appropriate accounting standards so that financial performance, particularly profit and loss volatility, is not adversely affected. Rochford provide detailed analysis, hedge effectiveness testing, insights and required disclosures in accordance with IFRS 9 / IAS 39 / IFRS 7
Why: The scrutiny around derivatives, particularly their valuations since 2008, has left companies in no doubt of the importance of ensuring derivatives are valued and accounted for correctly on a timely basis
What: Appropriate accounting treatment for financial instruments together with the fair value measurement of derivatives in accordance with IFRS 13 ‘FV Measurement’ to incorporate counter-party credit risk adjustments (CVA) into mark-to-market valuations
How: Accounting standard interpretation and guidance together with financial modelling for CVA, whilst staying abreast of regulatory changes. Rochford help to navigate clients through this complex landscape
Process & Policy
Why: In a competitive environment where treasury teams are being asked to do ‘more with less’, its paramount that processes and systems are as efficient as possible. Catalysts for change include finance transformation projects, regulatory requirements, MBO’s, de-mergers, M&A’s, international expansion, cash management centralisation or advancements in technology
What: Improvements in systems and reporting to reduce manual error and reliance on complex spreadsheets that manifest into key-man risk to an organisation. Creating bespoke dashboards to improve visibility of performance for decision making purposes
How: We undertake gap analysis on your treasury function focussing on a detailed review of processes, human capital capacity and capability gaps to optimise operating procedures, security, governance and control. Our comprehensive knowledge of treasury management systems position us to advise on software to suit your particular needs. We project manage, test, implement and drive the go-live process
* We provide a number of other accounting services, please contact us today for further details.
IFRS 9 Hedge Accounting
Download your FREE checklist NOW! Find out what the main discussion points are and how they affect your business
Who is this checklist for?
- You’re a finance professional at a company that will be exposed to market risks due to underlying exposures to interest risk, foreign exchange risk and commodity price risk
- You’re the guardian of the company balance sheet and protect the valuation of the business
- You’re required to explain P&L volatility to the board and want to reduce adverse movements which hit earnings and distort true performance
- You’re interested to learn more about the new accounting standard (IFRS 9) and how your business could benefit