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Fundamentals of Accounting for Derivatives

Understand the basics of hedge accounting and the financial statement impacts.

How do entities manage the earnings volatility related to their hedging activities? The answer: hedge accounting. This course will provide a high-level overview of the main areas of hedge accounting. This material will discuss the benefits of hedge accounting, documentation requirements, effectiveness assessments, and hedge accounting strategies for entities seeking preferential accounting treatment.

Learning Objectives

  • You will be able to identify the basics of hedge accounting, and to describe broader financial statement impacts of hedge accounting
  • You will be able to identify the documentation required for hedge accounting
  • You will be able to recognize the basics of effectiveness testing
  • You will be able to recognize the basics of component and portfolio hedging

62 minutes
Course Exam
Certificate of Completion
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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

Basics of Hedge Accounting and Description of Broader Financial Statement Impacts of Hedge Accounting

  • Hedge Accounting Concepts - Cash Flow, Fair Value, and Net Investment
  • Hedge Accounting Impacts - Affected Balance Sheet and Income Statement Accounts
  • Hedge Accounting Benefits - Earnings Stability, Enhanced Operating Margin, Key Stakeholder Optics

Documentation Required for Hedge Accounting

  • Hedge Designation Memorandum and Addendums
  • Memorandum Sections - Risk Management Objective, Description of the Hedge Relationship, Methods for Assessing Effectiveness, and Financial Statement Impacts

Effectiveness Testing

  • Testing Approaches - Hypothetical Derivative, Change in Variable Cash Flows, Fair Value
  • Statistical Assessment Methods - Regression, Stress Testing, Value-At-Risk
  • Effective and Ineffective Results

Basics of Component and Portfolio Hedging

  • Component Hedging Concepts - Financial Contracts, Non-Financial Contracts
  • Portfolio Hedging Concepts - Pools of Assets, Expected Sales, Raw Material Purchases
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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Course

This course was last revised on May 12, 2022.

Call 1-866-352-9540 for further credit information.

  • CPE/NASBA - QAS Self Study 1.6 including Accounting 1.6
     
  • Lorman Education Services is registered with the National Association of State Boards of Accountancy (NASBA) as a QAS Self Study 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 web site: www.nasbaregistry.org. For more information regarding administrative policies such as complaint and refund, please contact our offices at 866-352-9539. CPE Credit: Maximum Credit Hours: 1.6 each session (based on a 50 minute credit hour). You must attend at least 50 minutes to obtain credit. Field of Study: Accounting for 1.6 hours. Prerequisite: . Level of Knowledge: Intermediate. Teaching Method: Seminar/Lecture. Advance Preparation: None. Delivery Method: QAS Self Study. Please refer to the information in this advertisement for outline, course content and objectives. Upon completion of this course, you will receive a certificate of attendance. Final approval of a course for CPE credit belongs with each state's regulatory board.
     

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This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Craig Haymaker, CPA

Craig Haymaker, CPA

HedgeStar

  • Managing Director of HedgeStar, where he oversees the risk management consulting, hedge accounting, and valuation groups
  • Subject matter expert in financial reporting and accounting for debt, equities, derivatives, and other financial instruments
  • Has over 11 years of audit, professional accounting, and risk management experience
  • Has held positions with top companies, including Deloitte & Touche LLP (Boston), Liberty Mutual Group (Boston), and U.S. Bank (Minneapolis), with a focus on treasury departments, capital markets, and risk functions
  • Events Committee Chair and Steering Committee member for the Professional Risk Managers’ International Association (PRMIA) in Minneapolis
  • B.B.A. degree in accounting, Stonehill College; CPA accreditation
  • Can be contacted at [email protected] or 952-208-5704
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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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Pay once and get a full year of unlimited training in any format, any time!

  • OnDemand Courses
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Additional benefits include:

  • State Specific Credit Tracker
  • All-Access Pass Course Concierge

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Product ID: 409616
Published 2022
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