- 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
Understanding and implementing
Target audience
- Accountants
- Consolidators
- Chartered accountants, Statutory Auditors
- Finance, consolidation and accounting managers
- Treasurers
1 day
Prerequisites
A good knowledge of common derivative instruments and the principles of hedge accounting is required. It is recommended to have taken the "Derivatives and hedging under IFRS - Level 1" course [FHIFDC], of which this course is an extension.
Derivatives and hedging under IFRS - Level 1 [FHIFDC].
Mastering a complex environment
Objectives
◗ Exploring the functioning of certain complex derivatives (compound or barrier instruments in particular) and the issues involved in using them for hedge accounting.
◗ Applying hedge accounting under IFRS 9
◗ Analyze the impact of these transactions on the financial statements, including the notes to the financial statements
Training program
◗ Hedge accounting constraints and requirements
- IFRS9 hedging relationships (Cash Flow Hedge, Fair Value Hedge and Net Investment Hedge)
Net Investment Hedge)
- Four pillars of a valid hedging relationship: hedged item, instrument,
documentation, effectiveness
- Mandatory documentation at initial designation
- Risk management objective and demonstrable prospective effectiveness
- Possibility of rebalancing without disruption if the objective remains unchanged
✔ UNDERSTANDING | Illustration: "critical terms match" diagram and IAS39/IFRS9 comparison
✔ APPLY | Case study: hedging a foreign currency debt ($ debt + CCS)
◗ Accounting treatment of NIH coverage
- Definition: hedge of a net investment in a foreign subsidiary
- Accounting treatment similar to CFH, with no recycling of income except in the event of disposal
- Special case often confused with NIH: long-term intra-group loans treated as quasi-equity
to quasi-equity
✔ UNDERSTANDING | Illustration: parent/subsidiary diagram and treatment of intercos loans
✔ APPLY | Case study: NIH hedging with an FX forward - Treatment of swap points
swap points
◗ Break in hedging relationship
- Causes of termination: instrument maturity, ineffectiveness, change in hedged item
- Consequences: fixed revaluation in FVH, gradual recycling (or not) in CFH
- Historical effectiveness maintained in all cases
✔ UNDERSTANDING | Comparative table of the effects of de-qualifying coverage
in FVH and CFH
✔ APPLY | Case study: analyzing the impact of the end of a hedging relationship
on earnings
◗ Pre-hedge implementation
- Definition: hedge entered into before recognition of the hedged item
(e.g. hedging the interest-rate risk of a debt to be issued).
- Instruments used: swaps, swaptions, combined options
✔ UNDERSTAND | Illustration: chronology of a pre-hedging relationship
✔ APPLY | Case study: pre-hedging a debt to be issued
Why choose this course?
This training course provides an in-depth understanding of hedge accounting under IFRS 9, as applied to frequent transactions with specific treatments (pre-hedging, breaking the hedge, etc.), as well as the handling of complex instruments (collars, compound or barrier instruments).
Teaching and assessment methods
Before: self-assessment quiz
During the session: technical developments accompanied by illustrations drawn from real-life situations and numerous practical case studies ensure the acquisition of knowledge. Training adapted to participants' specific needs.
Afterwards: documentation.
The trainer is available to answer any questions relating to the training.
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Price
1,295€ EXCL. TAX
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