Understand derivatives and their uses as hedging instruments, specifically how to apply FAS 113 (ASC 815) and amendments to hedge accounting situations.
Prerequisite knowledge:
Familiarity of GAAP accounting principles
Understanding of time value of money concepts
Knowledge of commonly used derivatives for hedging - forwards, futures, swaps and options
Hedging Designations: Fair Value vs. Cash Flow Hedges
Firm Commitments vs. Anticipated Transactions
Assessing & Documenting Hedge Effectiveness
Accounting for Hedge Ineffectiveness
Module 3: Fair Value Hedges
Accounting for Fair Value Hedges
Impact on Current Period Earnings
Exposed Assets & Liabilities as Fair Value Hedges
Firm Commitments as Fair Value Hedges
Impact of a Discontinued Hedge
Documentation Requirements
Module 4: Cash Flow Hedges
Accounting for Cash Flow Hedges
Impact on Current Period Earnings
Exposed Assets & Liabilities as Cash Flow Hedges
Cash Flow Hedges of Forecasted Transactions
Impact of a Discontinued Hedge Documentation Requirements
Module 5: Interest Rate Swaps
Economics of Interest Rate Swaps
Interest Rate Swaps as Fair Value
Hedges and Cash Flow Hedges
Testing for Hedge Effectiveness
Valuation Methods for Interest Rate Swaps
Module 1: Interest Rate Risk
Interest Rate Futures and Options
Cash Flow Hedge of Anticipated Issuance of Debt
Cash Flow Hedge of Anticipated Purchase of Securities
Cash Flow Hedge of Interest Income using Floor Contract
Module 2: Foreign Currency Hedges
Foreign Currency Hedges
Cash Flow Hedges of Foreign Currency Receivables & Payables
Cash Flow Hedge of Foreign Currency Debt
Hedging Foreign Currency Debt using Currency Swaps
Fair Value Hedge of a Firm Purchase Commitment
Cash Flow Hedge of a Forecasted Transaction
Hedge of a Net Investment in Foreign Operations
Module 3: Embedded Derivatives
Identifying Embedded Derivatives
Valuing an Embedded Derivative
Accounting for Embedded Derivatives
Bifurcation Tests
Fair Value Option
Module 4: Exceptions & Exclusions
Normal Purchases & Normal Sales Scope Exclusion
Insurance Contracts
Financial Guarantees
Other Scope Exceptions
Module 5: Current Developments & Trends
Latest Guidance on FAS 133 (ASC 815) Implementations Issues
New and Proposed Accounting Standards affecting FAS 133 (ASC 815)
Comparisons with IFRS
Real world examples and journal entries for common and complex hedge accounting treatments
Identify the major types of derivatives used in hedging
Describe the basic rules of accounting for derivatives
Differentiate between speculation and hedging for accounting purposes
Design an effective hedge that qualifies for hedge accounting treatment
Explain the impact of derivatives on current period earnings and OCI
Describe how a company might assess hedge effectiveness
Describe the disclosure requirements for derivatives
Describe the nature and purpose of an interest rate swap
Account for derivatives used as hedges against interest rate risk
Explain the rules for accounting for foreign currency hedges
Account for a net investment in a foreign operation
Identify and account for embedded derivatives
Identify items that qualify for the scope exclusion
Discuss emerging issues and recent guidance
Describe methods for valuing interest rate swaps
Describe the valuation and accounting for a currency swap
Identify and account for fair value and cash flow hedges
Describe the major causes of recent derivatives scandals
Corporate accountants, analysts, regulators, auditors and financial engineers
Jack Farmer
Jack is currently the Curriculum Director for the New York Institute of Finance. Farmer also acts as an outside adviser for portfolio managers at significant global investment funds. These funds included emerging markets equity funds and global macro hedge funds. Jack serves a variety of functions for the funds he advises, including the development of options strategies, quantitative strategies, and hedging strategies. Additionally, Jack specializes in capitalizing on systemic and macroeconomic imbalances in equity and fixed income markets throughout the world.
Jack specializes in training and consulting solutions for portfolio risk management, FX and interest rate derivatives and trading, equity index and volatility trading, equity derivatives and structured equity products, financial statement analysis and hedge accounting.
Education
BS in Engineering from Tulane University MBA in Finance and Accounting from Tulane University Ph.D. in Finance (ABD) from the University of Texas at Austin
Joseph Iraci is currently the VP of Enterprise Risk Management and Internal Audit at Robinhood Markets, Inc. He is also an adjunct professor at the New Jersey City University’s School of Business and an instructor for the Advanced Risk Management Program that is co-sponsored by the Wharton School of Business and RMA. He is very active in various councils and committees within the financial services industry.
