Hedge Accounting & MtM Valuations
Hedge Accounting services
Comprehensive solutions from AU$1,500 per month
Hedge Accounting & MtM Valuations
Rochford’s 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.
Why it works
Outsourcing your hedge accounting requirements to a trusted specialist has some clear benefits, including:
1. A CFO must own the company results reported to key stakeholders and adhere to the latest accounting standards. We give them peace of mind that optimal accounting results will be obtained, and hedging strategies are implemented with confidence.
2. Hedge accounting is an area often scrutinised by the auditors and financial instrument disclosures requirements are exhaustive. We provide invaluable assistance at audit time for hedging related queries.
3. In an environment when CFOs are asked to do more with less, outsourcing can reduce the fixed costs vs hiring internally, and minimise key-man risks.
4. If time is of the essence, outsourcing removes the difficulty in recruiting for this niche skillset and having to start from ground zero.
5. We have the systems and market data in-house and therefore remove the need for budget allocation in these areas, which can be expensive.
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 provides detailed analysis, hedge effectiveness testing, documentation, 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.
Systems, 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 positions us to advise on software to suit your particular needs. We project manage, test, implement and drive the go-live process.
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