Introduction
Accounting for derivatives often poses considerable challenges to practicing accountants. A derivative contract often has an initial value of zero and subsequently it changes value from positive (asset) to negative (liability) and vice versa.
A derivative contract is the basic building block for hedging activities in managing exposure to volatilities in business environments, such as exposure to financial risks that comprise of credit risk, liquidity risk, interest rates risk, foreign exchange fluctuation risks etc. Hedge accounting is an accounting procedure to account for a derivative contract that is designated as a hedging instrument to hedge against a particular risk exposure of an entity.
The double entries can sometime be complex depending on the type of risks being hedged and the intention of the hedging activities. There are predominantly three hedge accounting methodologies namely fair value hedge, cash flow hedge and net investment hedge
Programme Objective
This is an introductory seminar for derivative accounting including the valuation of commonly used derivatives. The seminar also covers the accounting requirements for various hedging activities.
The objectives of this seminar are:
1. Using easy to understand illustrations to explain the basic double entries for derivative contracts
2. To provide an understanding of the mathematics used in valuing derivatives
3. To provide practical guidance for set up accounting systems to record the double entries for derivatives contracts
4. To provide a step-by-step guide on setting up the accounting system for various hedging activities
5. After attending this seminar delegates should have the technical confident to handle the accounting for derivative contracts, set up hedge accounting process for various hedging activities, and an understanding of the mathematics involved
Programme Outline
Contents
Accounting for derivative contracts
- Set up derivative accounting procedures for foreign currency contracts and interest rate contracts
Accounting for hedging activities
- Understanding basic hedging requirements
- Preparing hedge documentations
- What derivative contracts qualify for hedging
- Understanding the rules of hedge accounting
- Types of hedge accounting procedures:
- Fair value hedge
- Cash flow hedge
- Net investment hedge
- Interaction between cash flow hedge and fair value hedge
The accounting process for specific business activities
- Managing currency fluctuation of receivables and payables
- Using non-derivative currency contract for net-investment hedge
- Managing interest rates fluctuation with a SWAP contract
- Managing commitment contracts using derivative
- Accounting for hedging activities to manage purchase order contracts for non-financial assets such as proper, plant and equipment
- How to use basis adjustment under cash flow hedge
Training Methodology
Lecture style, with practical illustrations, technical flow-charts, conceptual “mind maps” and interactive discussions.
Closing Date for Registration
1 week before programme or until full enrolment
Intended For
This programme is suitable for all Finance Professionals, Audit Professionals, Members of Audit Committee, Finance Directors and Regulators. Those who are keen on attending a practical course that examines the accounting for derivatives and hedging methodologies are welcome to attend.
Competency Mapping
Category 1 = 7.00 Hours
Schedule & Fees
Date & Time
08 May 2019 (9:00 AM - 5:00 PM)
Registration is closed
Programme Facilitator(s)
Danny Tan
Date & Time
16 May 2018 (9:00 AM - 5:00 PM)
Registration is closed
Programme Facilitator(s)
Danny Tan
Date & Time
07 Mar 2017 (9:00 AM - 5:00 PM)
Registration is closed
Programme Facilitator(s)
Danny Tan
Testimonial
Funding
No funding Available!
Programme Facilitator(s)
Danny Tan
Danny has over 30 years of experience in public practice, commerce and industry. He was trained with a firm of Chartered Accountants in London where he worked for over 10 years in the audit and consultancy. He also held the positions of business development and business operation manager with two UK multinational companies based in London for 5 years. Danny specialises in International Financial Reporting Standards (IFRSs) and in the last 15 years he is a partner of a firm providing training and consulting in the areas of preparing and presenting financial statements in accordance with IFRSs.
Danny holds an Honours Degree in Economics (major in finance and investment) from Manchester Metropolitan University (UK), MBA from Heriot-Watt University (UK) and Master in Advance Business Practice from University of South Australia. He is a fellow member of Chartered Instituted of Management Accountants, a fellow member of Association of Chartered Certified Accountants, a member of Malaysian Institute of Accountants and an associate member of Chartered Tax Institute of Malaysia.
Introduction
Accounting for derivatives often poses considerable challenges to practicing accountants. A derivative contract often has an initial value of zero and subsequently it changes value from positive (asset) to negative (liability) and vice versa.
A derivative contract is the basic building block for hedging activities in managing exposure to volatilities in business environments, such as exposure to financial risks that comprise of credit risk, liquidity risk, interest rates risk, foreign exchange fluctuation risks etc. Hedge accounting is an accounting procedure to account for a derivative contract that is designated as a hedging instrument to hedge against a particular risk exposure of an entity.
The double entries can sometime be complex depending on the type of risks being hedged and the intention of the hedging activities. There are predominantly three hedge accounting methodologies namely fair value hedge, cash flow hedge and net investment hedge
Programme Objective
This is an introductory seminar for derivative accounting including the valuation of commonly used derivatives. The seminar also covers the accounting requirements for various hedging activities.
The objectives of this seminar are:
1. Using easy to understand illustrations to explain the basic double entries for derivative contracts
2. To provide an understanding of the mathematics used in valuing derivatives
3. To provide practical guidance for set up accounting systems to record the double entries for derivatives contracts
4. To provide a step-by-step guide on setting up the accounting system for various hedging activities
5. After attending this seminar delegates should have the technical confident to handle the accounting for derivative contracts, set up hedge accounting process for various hedging activities, and an understanding of the mathematics involved
Programme Outline
Contents
Accounting for derivative contracts
- Set up derivative accounting procedures for foreign currency contracts and interest rate contracts
Accounting for hedging activities
- Understanding basic hedging requirements
- Preparing hedge documentations
- What derivative contracts qualify for hedging
- Understanding the rules of hedge accounting
- Types of hedge accounting procedures:
- Fair value hedge
- Cash flow hedge
- Net investment hedge
- Interaction between cash flow hedge and fair value hedge
The accounting process for specific business activities
- Managing currency fluctuation of receivables and payables
- Using non-derivative currency contract for net-investment hedge
- Managing interest rates fluctuation with a SWAP contract
- Managing commitment contracts using derivative
- Accounting for hedging activities to manage purchase order contracts for non-financial assets such as proper, plant and equipment
- How to use basis adjustment under cash flow hedge
Training Methodology
Lecture style, with practical illustrations, technical flow-charts, conceptual “mind maps” and interactive discussions.
Closing Date for Registration
1 week before programme or until full enrolment
Intended For
This programme is suitable for all Finance Professionals, Audit Professionals, Members of Audit Committee, Finance Directors and Regulators. Those who are keen on attending a practical course that examines the accounting for derivatives and hedging methodologies are welcome to attend.
Competency Mapping
Category 1 = 7.00 Hours
Programme Facilitator(s)
Danny Tan
Danny has over 30 years of experience in public practice, commerce and industry. He was trained with a firm of Chartered Accountants in London where he worked for over 10 years in the audit and consultancy. He also held the positions of business development and business operation manager with two UK multinational companies based in London for 5 years. Danny specialises in International Financial Reporting Standards (IFRSs) and in the last 15 years he is a partner of a firm providing training and consulting in the areas of preparing and presenting financial statements in accordance with IFRSs.
Danny holds an Honours Degree in Economics (major in finance and investment) from Manchester Metropolitan University (UK), MBA from Heriot-Watt University (UK) and Master in Advance Business Practice from University of South Australia. He is a fellow member of Chartered Instituted of Management Accountants, a fellow member of Association of Chartered Certified Accountants, a member of Malaysian Institute of Accountants and an associate member of Chartered Tax Institute of Malaysia.
