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    new-changes-to-ifrs new-changes-to-ifrs Presentation Transcript

    • Treasury Hot Topic New changes to IFRS - The legacy of IAS 39 and now IFRS9 - Are you ready?
      www.pwc.com
      Kristof De Smedt, PwC
    • Agenda
      1/ Introduction
      2/ Hedge accounting
      3/ What new opportunities / challenges will this bring ?
      4/ Next steps
      February 2011
      2
    • Introduction
      3
      February 2011
    • Background to IFRS 9
      Replacing IAS 39
      February 2011
      4
      Overall timeline
      * Application is subject to EU endorsement
      ** This will be “re-exposed” via workshops or a partial ED or both
      Effective date should beginning on or after 1 January 2013, with earlier application permitted
    • Background to IFRS 9
      IASB Objectives
      versus
      Users Preparers
      February 2011
      5
    • Hedge accounting
      6
      February 2011
    • Hedge accounting - overview
      February 2011
      7
      Rebalancing/ Discontinuation
      Presentation/ Accounting mechanics
      Disclosures
      Qualification
      Hedging instrument
      Hedged item
    • Hedge accounting
      • 80 – 125 rule
      February 2011
      8
      • Risk components of non-financial items
    • Hedging of risk components
      9
      IAS 39 Hedgable Exposure
      Fixed element
      Variable element
      ED Hedge available
      Benchmark
      (e.g. commodity price)
      Benchmark
      (e.g. commodity price)
      Alignment of risk management with hedge accounting
    • Hedge accounting
      • 80 – 125 rule
      February 2011
      10
      • Risk components of non-financial items
      • Synthetic exposure
      • Options
      • Rebalancing
    • Rebalancing
      February 2011
      11
      One (continuing) risk management and hedge
      accounting relationship
    • Hedge accounting
      • 80 – 125 rule
      February 2011
      12
      • Risk components of non-financial items
      • Synthetic exposure
      • Options
      • Rebalancing
      • De-designation
      • CFH: basis adjustment
      • FVH: mechanics
    • FV hedge accounting
    • Hedge accounting
      • 80 – 125 rule
      February 2011
      14
      • Risk components of non-financial items
      • Synthetic exposure
      • Options
      • Rebalancing
      • De-designation
      • CFH: basis adjustment
      • FVH: mechanics
      • Disclosure
    • Hedge accounting
      • Gross group
      February 2011
      15
      • Net positions
      • P&L presentation
    • What next opportunities / challenges will this bring ?
      Increased risk management alignment
      versus
      increased transparency
      16
      February 2011
    • Hedging of risk components
      February 2011
      17
      Metal price = LME price + (floating) natural gas surcharge + producer’s fixed premium
    • Hedging with options
      February 2011
      18
      Transaction related
      vs.
      Time period related
    • Net position hedging
      Foreign currency sales of 100 and expenses of 80
      Forward contract for 20 taken out at a rate of 1.33
      Margin locked in at 15
      Spot rate at settlement of 1.25 resulting in loss on the forward of 1
      19
    • Disclosure
      February 2011
      20
    • Disclosure
      21
    • Next steps
      22
      February 2011
    • Next steps
      Raise awareness of proposals
      February 2011
      23
      Perform high level impact analysis
      Comment letter period ends on 9 March 2011
      Revisit your risk management strategies
    • Together we can move mountains…
      © 2011 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
      Pricewaterhousecoopers
      Woluwedal 18
      1932 St-Stevens-Woluwe
      Direct Phone +32 2710 9628
      Mobile +32 478 591664
      kristof.de.smedt@pwc.be
      www.pwc.be
      Kristof De Smedt
      Senior Manager
      Treasury Consulting