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Accounting of Financial Instrument & Derivatives

Program

This course will enable participants to understand how financial assets, liabilities, derivative instruments, equity instruments, debt instruments, hybrid instruments and complex products should be accounted.

It will bring out the areas where fair valuation is a must, where fair valuation is optional and where the accountant can continue with simple cost and/or amortized cost. The course will address accounting of derivative instruments and hedge accounting. It will cover various types of hedges and accounting nuances of each type.

BACKGROUND:
AS 30, 31 and 32 are complex standards which will govern accounting of financial instruments and derivatives for all corporate (regardless of whether IFRS applies to them or not) from April 2011. These standards require clarity of concepts on fair value, discounting and basic understanding of derivatives. In the context, a two days program on Accounting for Financial Instruments and Derivatives has been designed by the BSE Institute Ltd.

Day 1
  • Financial Instruments, Financial Assets and Financial Liabilities
  • Cost , Amortized Cost, Fair value
  • Definition of Derivatives, Accounting for Derivatives
  • Designation at Fair Value by Management
  • Hedge accounting, Types of Hedges
  • Rationale of each type of hedge, Hedge Effectiveness, Concept, Framework,
  • Risk Management Policy


    • Day 2
    Case Study 1: Accounting for an FX future contract entered by an Indian export firm

    Case Study 2: Accounting for a currency future contract by an import firm and accounting in special cases, popular in Indian conditions like
  • Utilization of a forward contract
  • Early delivery of a forward contract
  • Roll-over of a forward contract


    • Case Study 3: Accounting for NIFTY future contract entered by an institutional investor

    Case Study 4: Accounting for an interest rate future contract entered by a Primary Dealer

    Review of the new AS-30 regulations
  • Definition of Hedge Items and Hedging Instruments and designation rules
  • Hedge Accounting categories – Undesignated, Cash flow, Fair value and Net Investment Hedge
  • Concept of a hypothetical derivative
  • Hedge effectiveness tests – Critical terms, Dollar Offset, Regression, Variance Reduction
  • Hedge relation termination events
  • Case studies related to a Currency forward previously handled under the new standard
  • Future challenges and opportunities under the new standard


    • Case Study 5: An exporter hedging his foreign currency exposure using a plain vanilla option; here we look at the concept of intrinsic and time value accounting, how to perform effectiveness testing & corresponding accounting entries

    Case Study 6: A foreign currency borrowing hedged using an interest rate swap for offsetting the interest rate risk

    Future challenges and opportunities under the new standard

    Participants attending the entire course shall be eligible to receive Participation Certificate from the BSE Institute Ltd.

    Accounting professionals, Finance professionals, Treasury managers, Auditors, Consultants, Derivative operation practitioners, Officials from Banks, Importers & Exporters, CA’s

    2 days
    10.00 am to 5.30 pm

    Rs. 10,000.00 + Applicable Taxes per participant inclusive of tuition fees, reference material and (morning / evening) refreshments only.

    For further details regarding contents,
    E-mail: training@bseindia.com






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