FINCAD solutions enable better investment and risk decisions, improve workflow efficiency and reduce operational risk.

Hedge Accounting Insight

Everything From Fair Value Insight Plus More

Hedge Accounting Insight provides all the functionality of Fair Value Insight as well as comprehensive hedge effectiveness test reports for compliance with IFRS hedge accounting standards, full pass/fail hedge testing transparency, and greater visibility into your hedging portfolio performance. Hedge Accounting Insight supports valuation and effectiveness testing for FX, rate, commodity, and fair value hedges. Of the four hedge types, the FINCAD valuation engine has coverage to value and test a wide variety of instruments.

Integration of Treasury, Finance, and Audit

Hedge Accounting Insight seamlessly bridges the gap between prudent derivative risk management strategies for Treasury, accurate financial reporting for Finance, and the necessary accounting disclosures for Audit while remaining low cost, providing sharing and collaboration, and maintaining control on operational risk.

Hedge Effectiveness Testing

With additional hedge effectiveness testing functionality, you get detailed prospective and retrospective hedge effectiveness test reports, providing you with information on exactly how results were produced. Retrospective and prospective testing is available with the Dollar Offset Method, Regression Analysis Method, and CVA. Hedge Accounting Insight delivers affordable valuation, risk, and hedge accounting with full transparency, reduced lag time, and a rapid time to market.

Hedge Accounting Insight supports both retrospective and prospective tests

Hedge Effectiveness Tests Report

Dollar Offset Method

The dollar offset method refers to the ratio of the change in value of the hedged item, compared to the change in value of the derivative being used to hedge. Both dollar offset periodic and dollar offset cumulative methods are supported by Hedge Accounting Insight.

Regression Analysis

Widely accepted as the preferred method, regression analysis is used by most companies as it is more accurate in determining effectiveness. Regression also simplifies the process as it can often satisfy requirements for both prospective and retrospective tests. The system not only calculates the regression results, it also provides all the data used for the two sets of variables.

Credit Value Adjustment (CVA)

Determining the impact of counterparty credit exposure on your portfolio is fast becoming a key factor in the accurate reporting of earnings. As regulations and auditors are pushing to have CVA included in valuations, understanding your portfolio’s value given your overall exposure is becoming essential. With Hedge Accounting Insight you can select whether or not to include the credit valuation adjustment in your hedge testing calculations, giving you the flexibility to indicate on which part of the calculation it should be applied.

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Product Literature

Hedge Accounting Insight

Hedge accounting made easy.