Hedge Accounting

Hedge Accounting

Disclosure requirements on financial instruments under IFRS and many local GAAP result in the obligation for companies to report hedging instruments (derivatives) on their balance sheet. Hedge accounting avoids unwanted swings in the Profit & Loss statements due to market value changes in the hedges.

There are three types of hedge accounting:

  • fair value hedges;
  • cash flow hedges; and
  • hedges of net investment in a foreign operation.

Zanders can provide support in the hedge accounting process in the following ways:

  • setting up hedge relationships;
  • preparing hedge accounting documentation, prospective and retrospective hedge effectiveness testing;
  • calculation of the market values of the underlying risks and the hedging instruments and
  • helping on the accounting treatment of the results.

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