Accounting for Financial Instruments and Derivatives

Financial Reporting Courses

Aims and Objectives

The aim of this course is for participants to receive a thorough grounding in the principles of accounting for various different financial instruments and derivatives.

By the end of this course, participants will be able to:

• Describe the current environment as regards accounting standards
• Account for a variety of different derivative instruments
• Describe and implement a variety of different accounting standards such as IAS 32, IAS 39 and IFRS 7.

Methodology

To the fullest extent possible within the overall time constraints of the programme, delivery will be interactive, with a strong emphasis on learning by doing, through exercises, group discussions and presentations.

Case Studies

Case studies will be used selectively, to give a strong practical support to the theoretical learning objectives of the programme.

Wherever it is appropriate, examples will be drawn from the client's own business.

Day One

Session 1 - Risk Management
• Outline of a Treasury Function
• Treasury and Liquidity Management
• Risk versus Return
• Types of risk
• Controlling Risk and Hedging
• Financial versus Business Risk
• The importance of Internal Control and Audit

Session 2 - Accounting Standards - The Current Environment
• Overview of International Accounting Standards
• Russian Accounting Standards
• IAS 32, IAS 39 and IFRS 7
• Disclosure Requirements both in IFRS and Russian GAAP
• Recognition of Profit and Loss
• Hedge Accounting

Session 3 - Derivatives - The Cash Flow Approach
• Forward Rate Agreements (FRAs)
• Futures Exchanges and Contracts
• Interest Rate and Currency Swaps
• Options
• Exchange Traded
• Over-The-Counter
• Strategies
• Swaptions
• Pricing and Valuation
• Accounting

Session 4 - Forward Foreign Exchange
• Product Overview
• Types of Market
• Pricing and Valuation
• Trading Perspectives
• Hedging Perspectives
• Accounting

Day Two

Session 1 - Forward Rate Agreements (FRAs) & Future Contracts
• Product Overview
• Types of Market
• Pricing and Valuation
• Trading Perspectives
• Hedging Perspectives
• Accounting

Session 2 - Interest Rate and Currency Swaps
• Product Overview
• Types of Market
• Pricing and Valuation
• Trading Perspectives
• Hedging Perspectives
• Accounting

Session 3 - Interest Rate and Currency Options
• Product Overview
• Types of Market
• Pricing and Valuation
• Trading Perspectives
• Hedging Perspectives
• Accounting

Session 4 - IAS 39 - Recognition and Measurement
• Background to the standards
• Scope of the standard and exclusions
• Definitions (including derivatives)
• Classification criteria (including derivatives)
• Measurement

Day Three

Session 1 - IAS 39 - Hedge Accounting
• Hedge Criteria
• Fair Value Hedges
• Cash Flow Hedges
• Net Investment Hedges

Session 2 - IAS 39 - Recognition and De-recognition
• Recognition
• De-recognition
• Embedded Derivatives

Session 3 - IAS 32 Presentations and Disclosure
• Presentation as debt or equity
• Differences to current Indian accounting practice in this area
• Treatment of interest and dividends

Session 4 - IFRS 7 Disclosures
• A summary of the requirements of IFRS 7

Course Summary and Evaluation