Experience Hedge Accounting Software live




Hedge accounting can be used to reconcile the economic and accounting perspectives and reduce profit and loss volatility (P&L volatility):

  • Economic perspective: Risk management looks at the hedged item and hedging instrument exclusively from an economic perspective. In a perfect hedge, the hedging instrument offsets the fluctuation of the hedged item by a simultaneous opposite change in value.
  • Balance sheet perspective without hedge accounting: For many underlying transactions, "normal" accounting prevents the presentation of the fluctuation in value on an accrual basis. For the hedging instrument, a presentation of the fluctuations in value affecting the income statement is generally required. This accounting mismatch causes undesirable P&L volatility.
  • Accounting perspective with hedge accounting: Provided that the requirements are met, hedge accounting allows the fluctuations in the value of the hedged item to be recognized on an accrual basis, which are offset by the opposite fluctuations in the value of the hedging instrument. The reconciliation of the economic and accounting perspectives minimizes P&L volatility.

The hedge accounting module of zeb.control enables the mapping of different hedge accounting types and local GAAP accounting and supports the process from the establishment of the hedge relationship to the determination of the accounting effect. The hedge engine covers the hedge accounting of interest rate risks according to IAS 39 and IFRS 9. The module supports both cash flow and fair value hedge accounting as well as the fair value option with control at the overall bank level. The multicurve capabilities of the hedge engine cover current audit requirements. The processes of controlling and treasury management, from setting up the hedge relationship and performing the effectiveness tests to determining the accounting effects and subsequent plausibility checks, are fully supported. Extensive simulation options, audit-proof documentation of the hedge process and the competence system with logging round off the functionalities.

In the new video on the hedge accounting module, you can experience the extensive functionalities of zeb.control live: