Derivatives and hedging under IFRS - Level 1 [FHIFDC].
  • Financial statements and appendices - Balance sheet, income statement, cash flow statement, statement of changes in equity, ICOs, appendices
  • Financial instruments and hedging tools - Learn about financial instruments and hedging tools (fair value hedge / cash flow hedge, hedging, credit derivatives, hybrid debt).
  • IFRS - International Financial Reporting Standards (IFRS)
  • Financial risks: counterparty, liquidity, interest rate, foreign exchange, equity - Analysis, valuation, risk mapping and hedging strategy: - Counterparty risk: financial analysis and mastering rating practices (internal, external) - Liquidity risk: ALM and group cash flow forecasts - Interest-rate risk: TF and TV loans, bond issues - Foreign exchange risk: exports, imports, hedging - Equity risk: dividends, share acquisitions and disposals, dealing room) - Project & (dis)investment risk Master the identification and valuation of financial and non-financial risks
  • Securities and financial markets - Notions of cost of money, liquidity, inflation, capitalization, discounting, interest calculations, actuarial calculations

Mastering a complex environment

Target audience

- Bankers / Account managers
- Accountants
- Consolidators
- Chartered accountants
- Finance, consolidation and accounting managers

1 day

Prerequisites

No prior knowledge is required.

Objectives

◗ Decode how the main derivative financial instruments used in business operate and how they are used (forwards, swaps, options, etc.).

◗ Know the principles of their valuation

◗ Applying IFRS9 to simple hedging transactions

◗ Record these transactions in the financial statements

Training program

◗ Introduction to derivatives

- Definition: financial instruments linked to an underlying asset (interest rate, currency, index, etc.).
- Characteristics: no significant initial investment, future settlement
- IFRS treatment: recognized at fair value through profit or loss (excluding hedging)

✔ UNDERSTANDING | Illustration: diagram of the 3 IFRS criteria for a derivative
✔ APPLY | Quiz: identifying the nature and accounting treatment of derivatives

◗ The forward sale or purchase of currencies (FX forward)

- Firm commitment at a fixed price for a forward currency purchase/sale,
for hedging purposes
- Deferral or swap points
- FX forward valuation

✔ UNDERSTANDING | Illustration: how an FX forward works
✔ APPLY | Case study: valuation of a forward
✔ APPLY | Case study: accounting treatment of a forward cancellation

◗ Interest rate swap

- Exchanging future cash flows between fixed and variable rates
- Main use: transformation of variable-rate debt into fixed-rate debt
- Discounted cash flow valuation based on the yield curve

✔ UNDERSTANDING | Diagram of an IRS and contractual example
✔ APPLY | Case study: valuing a swap with a yield curve

◗ Options and associated strategies

- Asymmetrical contract: call/put right for buyer, obligation for seller
- Valuation: sum of intrinsic value and time value
- Complex strategies: collars, out-of-the-money options, partial hedging

✔ UNDERSTANDING | Graphical representation of gain profiles
✔ APPLYING | Case study: implementing a hedge with option

◗ The three IFRS hedge types

- Fair value hedge (FVH), cash flow hedge (CFH), net investment hedge (NIH)
- Conditions to be met: documentation, effectiveness, link to an identified risk
- Accounting consequences: profit or loss or OCI depending on type of hedge

✔ UNDERSTANDING | FVH/CFH/NIH comparison and firm commitment scheme
✔ UNDERSTAND | NIH applied to a foreign subsidiary
✔ APPLY | Case study: implementing a CFH hedge on an interest-rate swap

Why choose this course?

This course begins with an economic overview of derivatives: how they work and what they cover. It then looks at how they are accounted for.

This intensive practical training course provides the keys to understanding the hedges set up within a company and the practical application of IFRS 9. It will enable you to establish an effective dialogue between Accounting/Consolidation and Treasury.

Teaching and assessment methods

Before: self-assessment quiz

During the session: technical developments accompanied by illustrations drawn from real-life situations. Numerous case studies (many of which are carried out on spreadsheets during the session) and interactive quizzes help to validate the acquisition of knowledge.

Afterwards: documentation
The trainer is available to answer any questions relating to the training.

General training | FinHarmony Conseil & Formation

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Price

1,295€ EXCL. TAX

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