In order to mitigate foreign currency gains and losses, companies routinely hedge away currency risk associated with balance sheet exposures. Companies need to identify all monetary accounts on the balance sheet and aggregate the foreign amounts in those accounts.
Balance Sheet Exposures Balance sheet exposures are the drivers of the FX Gains and Losses that impact earnings every month. They are monetary accounts like cash, accounts receivable, accounts payable, inter-company balances and more that are denominated in foreign currencies, so their values fluctuate and they are reported as gains/losses on a company’s financials. The […]
A majority of corporations identify and hedge balance sheet exposures. In fact, they are the most commonly hedged exposures by far. In order to do so, one must understand why balance sheet exposures pose a risk in the first place and how to identify which types of balances qualify as “balance sheet” exposures. Definition A […]
Currency movements affect internationally operating companies in many different ways. For example, when a U.S.-based firm sells goods and services in a foreign currency, their USD cash results fluctuate in relation to that foreign currency. When they consolidate foreign subsidiaries’ financials for reporting purposes, currency changes again impact their USD results. And when forward looking […]
As the London Inter-bank Offered Rate (LIBOR) begins to phase out, many corporate treasurers have been flooded by a wave of uncertainty. Our advice has been to proactively start planning alternatives by looking out for the guidance and term structures released by accounting regulatory bodies.
This course covers the basic principles of hedge accounting for commodity price risk under ASC 815. [button2 link=”https://httrainings.webex.com/httrainings/onstage/g.php?MTID=e06d085e9ab18c956d4bbfff39bb465de” target=”_blank”]Register to Attend[/button2] [line2] [accordion_title] Click Here for Event Details [/accordion_title] [accordion_content] Course Description: Participants will be prepared to: Focus on the general requirements required to achieve hedge accounting under ASC 815 Learn the benefits of hedge accounting […]
Motivational speaker Brian Tracy said: “Incorrect assumptions lie at the root of every failure. Have the courage to test your assumption”. Testing your assumptions is exactly what we plan to do.
At this point, LIBOR’s phasing out by Britain’s Financial Conduct Authority (FCA) may be old news. Although the topic has been a constant presence in headlines, there’s still lingering questions about what this means and what organizations should do in its wake.
In August 2017, the Financial Accounting Standards Board released ASU No. 2017-12, accounting guidance designed to better align a hedge program with an organization’s risk management objectives as reflected on financial statements. While the goal of these changes was to make hedging a more attractive option for corporations and financial institutions, stakeholders have brought up […]
Reuters – “Canadian, Brazilian oil producers lock in revenues as prices rally: sources”
The uncertainty of Brexit accompanied by the phasing out of LIBOR has turned the financial services industry in Europe on its head. As organizations take precautions amidst the uncertainty, it has become evident that the number one financial hub in the world has begun to fall from its pedestal. Until concrete decisions are finalized, the […]
Bloomberg Tax – “LIBOR’S Looming End Leaves Hedgers, Lenders in a Bind” Nicola M. White, Reporter “This is really so pervasive, it’s going to affect literally every company out there,’ said Ernie de Lachica, senior director at BDO USA LLP. Any business that has a loan likely has an interest rate tied to LIBOR, and banks making […]
Bloomberg Opinion – “How Do You Replace the Most Important Number in the World?” Satyajit Das, writing for Bloomberg “A further issue relates to hedging interest rate risk. The nascent derivative markets in new benchmarks don’t currently approach the quality, depth and liquidity of established Libor-based instruments.
Visual Capitalist “The Top Global Risks in 2019” “91% of respondents to the Global Risks Perception Survey indicated that economic confrontation/frictions between major powers were an expected risk increase in 2019.”
Global Finance “Fear and Loathing On The Road to Libor’s Demise”