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  • CapellaFX Software Spotlight: Back-To-Back Compensating Trades

    In a back-to-back transaction, the parent company executes the trade with the outside counterparty, but a subsidiary has the underlying FX exposure. With the increased use of this trading structure, we would like to highlight that CapellaFX can compensate/close these back-to-back trades. It is very simple; with one click you can compensate a back-to-back trade […]

  • FASB: Momentum for Hedge Accounting Change Continues

    Momentum for changes to hedge accounting continued in last week’s FASB meeting. The board discussed aspects of net investment hedging, cash flow hedging and fair value hedging. Tentative decisions were reached as follows: Time value may continue to be excluded from effectiveness for Cash Flow and Net Investment hedges. For Cash Flow hedges, the gain/loss excluded […]

  • Getting You to the Top: Part III. Exposure Centralization

    This is the third in a series of posts designed to give a top-line overview of the steps to establishing a balance sheet hedge program. Today, we’ll focus on centralizing exposures. You can see past entries at gtreasury.com/blog, or speak to us directly at AFP 2015 this October. The communicative properties of math allow currency […]

  • CapellaFX Software Spotlight: Creating Next Year’s Calendar

    Plan for the new fiscal year by creating its calendar with CapellaFX. Please note that you can enter exposures for a future fiscal year before the calendar is set up, but you will not be able enter any trades or run the Period Close until the calendar has been set up.

  • Hedge Specificity Memo: EURO Exposure Risk

    Is the hedge designation language specific enough for a third party to know if a specific invoice is a hedged invoice when it’s recognized in the financial statements? The purpose of the specification is two-fold: 1) to be able to clearly identify which, if any, derivative is hedging the transaction when it is incurred/recorded, and […]

  • Getting You To The Top: Part II. Exposure Validation

    This is the second in a series of posts designed to give a top-line overview of the steps to establishing a balance sheet hedge program. In part two, we’ll focus on exposure validation. You can see past entries above or speak to us directly at AFP 2015 this October. Many finance professionals assume that their […]

  • Getting You To The Top: Part I. Exposure Collection

    Part I. Exposure Collection Whether you’re using software, tapping into your ERP, having subsidiaries capture and submit exposures or all of the above, exposure collection is a critical piece of the hedge program startup puzzle. The hardest part of an effective hedging program is creating a process for quality data collection; doing this right will […]

  • Materiality in Derivative Disclosures?

    Watch the FASB video here to learn about the project to improve the effectiveness of disclosures in notes to the financial statements. Fair Value Measurement is one of four areas under review.

  • U.S. Unlikely to Move to IFRS

    In an article published on August 10, 2015, FASB Chairman Russell Golden stated that “… it has become increasingly clear that the United States is unlikely to adopt IFRS.” While the FASB has not given up on the concept of global standards, there is little to no support from U.S. constituents, who are concerned about […]

  • Diversity in practice eliminated on Contingent Put and Call Options in Debt

    This exposure draft was issued August 6, 2015 to clarify the process for determining whether or not contingent put and call options must be bifurcated from their debt hosts. GAAP provides specific guidance for assessing whether these options that can accelerate the repayment of principal on a debt instrument meet the definition of clearly and […]

  • Application of NPNS: Scope Exception to Certain Electricity Contracts within Nodal Energy Market

    The FASB issued an Accounting Standards Update, effective August 10, 2015, that specifically deals with the ability of entities to elect the normal purchase normal sales (NPNS) scope exception when the contract for the purchase or sale of electricity on a forward basis is  delivered to a nodal energy market or transmitted through a nodal energy market. The NPNS scope exception allows […]

  • Capella Software Spotlight: Sorting Trades

    Did you know you can easily sort trades in the Trigger and Release window of Period Close? Simply double click on the Expected Date, HP End Date or Value Date columns to sort by these dates and easily identify trades that potentially need to be triggered in the period.

  • Don’t Let Derivative Accounting Hold You Back

    Derivative accounting – or “hedge accounting,” if you prefer – is hard. There are no two ways about it; accounting for derivative instruments and hedging activities is a highly specialized skillset possessed by only a small minority of accountants. While that may be the case, however, a lack of derivative accounting resources should not hold […]

  • Should Derivative Contract Novation Mean Hedge Accounting Dedesignation?

    A new exposure draft issued yesterday by the FASB clarifies that a novation of a derivative from one counterparty to another is NOT necessarily an automatic dedesignation. This is great news for Corporates that have been faced with counterparties withdrawing from the marketplace or monetizing their current positions. The FASB is asking several questions during the […]

  • FASB Board Moves EITFs 15-D and 15-E to a 60-Day Public Comment Period

    On July 9, the FASB Board elected to submit for a 60-day public comment period two EITFs: 1) The “Effect of Derivative Contract Novation on Existing Hedge Accounting Relationships” and