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Hedge Accounting

Hedge Accounting is intended to reflect the results of hedging activities, in the financial statements. One of the main goals of hedge accounting is to minimize the P&L volatility resulting from changes that affect the value of the hedging financial derivatives.

In "regular" accounting, the income and expenses associated with the hedged item and the hedging instrument are not measured in the same way. In theory, hedge accounting is designed to match the recognition of income and expenses between the hedged item and the hedging instrument.

Formulating a Hedge Accounting Strategy

  1. Assistance in determining whether or not to apply hedge accounting.

  2. Assistance in determining the correct hedging strategy

  3. Assistance in complying with the following regulations:

    • Sox 404
    • Sox 409

Applying Hedge Accounting

  1. Assistance in integrating the preferred hedge accounting strategy into CompuHedge software, giving our clients a competitive advantage in the following ways:

    • Full automation of the following processes:
      • Full text in accordance with Accounting Standards
      • Effectiveness tests in accordance with Accounting Standards

      • Optimization of all company transactions in order to maximize the use of hedge accounting

    • Applying computerized controls over processes
    • Retention of history and ability to generate historical reports
    • Proving that accounting documentation was produced in real time.
  2. Assistance in the decision for early adoption of IFRS No. 9: Financial Instruments, in order to expand the range of possibilities allowing application of hedge accounting while also reducing burdensome requirements currently associated with hedge accounting (for example, eliminating the need for retrospective effectiveness testing and elimination of the 80%-125% quantitative assessment of a hedge required by the existing Standard).