This comprehensive two-day course provides an in-depth review of the current IFRS accounting and reporting requirements for derivatives and hedging. 

The use of derivatives and hedge accounting in IFRS 9 has a significant impact on the financial statements of financial and non-financial organisations, it is therefore important for organisations to understand the hedge accounting principles in IFRS 9. Though IFRS 9 has replaced IAS 39, organisations can elect to continue with IAS 39 hedge accounting until the IASB’s separate project on macro hedging is completed. Therefore, the course covers the key differences between IFRS 9 and IAS 39 hedge accounting. 

This course explains the requirements for derivatives and hedging in clear, simple language using illustrations from corporate annual reports and other real-world examples, including popular hedging activities during rising/high interest rate environments and foreign exchange volatility. The specialist instructor provides explanations and illustrations on valuations, hedge documentation processes, effectiveness testing and journal entry. 

This program answers questions such as: 

• How does the classification of financial instruments affect the decision to use hedge accounting? 

• What is fair value? 

• What are the requirements for hedge accounting, including hedge documentation? 

• How is hedge effectiveness designed and tested? 

• How can hedge engineering work to achieve better results? 

• How are embedded derivatives identified and accounted for? 

• What are the quantitative and qualitative disclosure requirements for derivatives and hedge accounting in IFRS 9? 

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

• Classification and measurement 

• Effective interest method 
  
  

• 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 
  
  

• Analysis and examples of embedded derivatives in debt host contracts, equity host contracts and purchase/sale contracts 

• Accounting for embedded derivatives 

• Determining how embedded derivatives affect the ‘cash flow characteristics’ test under IFRS 9 

• Determining the separation conditions 

• Allocating the initial carrying amount to embedded derivatives that are separated 
  
  

• Analysis and examples of common hedging relationships 

• Hedged items 

• Hedging instruments 

• Definition and mechanics of fair value, cash flow and net investment hedges 

• Examples (commodity contracts, interest rate and foreign exchange risk exposures) 
  
  

• Overview of the hedge accounting framework 

• Alignment with risk management policies 

• Hedge documentation 

• Hedged items 

• Hedging instruments 

• Effectiveness assessment and rebalancing 

• Recording hedge effectiveness 

• Group and net positions 

• Key differences from IAS 39 hedge accounting 

• Discontinuation of hedge accounting 

• Transitional issues and disclosures 
  
  

• Update on macro hedge accounting standard. 

• Group live instruction, cases, examples, group work and open discussions 

• 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 

• Analysis of IFRS 9 hedge accounting, including the key differences from IAS 39 and the impact of transition 

• Interactive participation is encouraged 

• At VantagePoint, we have a policy to avoid unnecessary printing. All course materials will be provided in soft copy. The only printed materials will be those necessary for exercises in class. 

This course provides you with 16 hours of CPE/CPD credits.

VantagePoint is currently in the process of registering with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.