Public, Sponsored and In-house Financial Training

Accounting for Derivatives

PARIS
and other Financial
Instruments
Featuring:

 Practical impact of IAS 39 and FASB 133

on derivatives transactions
 Typical hedging challenges: what doesn't
work anymore?
 Transition adjustment: when should repair work
be done?
 Simple solutions that allow some P&L volatility
 Market and credit risk management techniques
 Practical examples from Parmalat, Freddie Mac
and Enron

The course includes

practical examples and
case studies carried out using
computer simulations.

Course Director: Cormac Butler

Date 1: 19–21 April 2010
Date 2: 27–29 October 2010
Venue: Paris, France

5 easy ways to register 1. Web

www.euromoneytraining.com/EUROPE
3. Telephone
+44 (0)207 779 8543
5. By post
Euromoney Training EMEA, Nestor
or to make an enquiry 2. Email 4. Facsimile House, Playhouse Yard, London
EC4V 5EX, UK
emea@euromoneytraining.com +44 (0)207 779 8140
 Accounting for Derivatives & other Financial Instruments –

Agenda
who should attend
 Derivative sales executives
Day 1 Day 2
 Risk managers

 Accountants

 Auditors
 Background and structure of company accounts  Development of accounting standards
 Senior operations managers

 Strategists and financial

planners
practical emphasis
The course is designed to deal
with specific questions about
FASB 133 and IAS 39 and
equip you with the practical
tools to analyse and
understand various
transactions. Euromoney
Training’s courses are very
interactive and provide a
forum in which delegates can
share their experiences. At the
end of the course you will
have a firm understanding of
the most popular financial
instruments and how they
impact on your risk strategies.
The programme relies on
practical examples and case
studies to ensure that by the
end of the course, you are
fully competent to understand
and implement hedging
strategies.
case studies
The course includes practical
examples and case studies
from Parmalat, Freddie Mac
and Enron. Most of the case
studies will be carried out
using computer simulations.
Delegates will have an
opportunity use Excel
spreadsheets to value various
derivative products as well as
prepare calculations for
journal entry and accounting
systems purposes.
– Overview of profit and loss account – FASB vs. International Accounting Standards
– Overview of balance sheet – Understanding the distinction between hedge and
– Cash flow statement trade accounting
– Disclosures – Learning how to apply marking to market principles
– Notes to the accounts Analysing the role of the Statement of Total Gains
and Realised Losses
 Overview of financial instrument accounting
 Fair value & cash glow hedge accounting
standards
– Identifying ineffectiveness
– Why were the standards devised? – Splitting a hedge between effectiveness and
– Off balance sheet abuse and their consequences ineffectiveness
– How FASB and IAS intend to cope with – Excluding spot forward differential
these abuses – Addressing documentation issues
– How do accounting standards contribute to hedging?
– Market and treasury vs. accounting risk
 Embedded derivatives and structured products
– Breaking down contracts between vanilla bonds
 Why financial instruments are necessary
and derivatives
– Cross currency swaps – Interest rate exposure
– Interest rate swaps – Regular ways vs. derivative transactions
– Swaptions – Guidance on when to break down structured
– Options instruments
– Bond futures
– Index swaps
 How traders price derivatives
– Using market data to price derivatives
 Accounting for future and forward contracts
– Learning the basics about spot and forward rates
– Initial and variation margin of interest
– Differentiate and understand the distinction between
– Present value and future value
futures and forwards contracts – Pricing derivatives on the basis of hedge costs
– Identify problems affiliated with using futures for hedging
– Tick points
– Basis risk  Dealing with structured products, exotic and
credit derivatives
– Development of market
– Marking to market products
– Hedge vs. trade accounting
– Use of the OCI/STRGL accounts

Course Background

By far the most complex and
controversial accounting standards
ever to be issued are IAS 39 and FASB
133. In the UK alone it is estimated
that listed companies will have to
spend up to £500m in order to comply
with the new accounting standards
coming into force across Europe in
2005. Companies with market
capitalisations of over £2bn will spend
at least £1m each to ensure their
treasury systems meet the requirements of the new rules on
derivatives and other financial instruments listed in IAS 39. IAS 39 and
its fair value treatment of hedging will mean that many hedges will no
longer be eligible for hedge accounting. Rather than allow hedges
where changes in fair value or cash flows of the hedged item have to
be between 80% to 125%, the IASB is now expected to limit hedge
accounting to a 95% to 105% range. Companies will be confronted
with the challenge of finding derivatives that exactly match this in terms
of amounts, tenure, and interest rates. The change from the 80% to
125% range, has removed an important degree of flexibility, making it
much more difficult for companies to allocate external derivatives
against external assets or liabilities for hedging purposes. Although
many companies and banks may find these standards difficult to
implement, it is nevertheless important that derivative practitioners
become fully conversant with their requirements, implementation and
more importantly, potential weaknesses with the standards. This
course is designed to give practitioners a good grounding on the
fundamentals of derivatives and other financial instruments, how they
are valued and more importantly, how they should appear on the
financial statements. Hedge accounting, including macro and micro
strategies will be discussed in detail.

5 easy ways to register 1. Web

www.euromoneytraining.com/EUROPE
3. Telephone
+44 (0)207 779 8543
5. By post
Euromoney Training EMEA, Nestor
or to make an enquiry 2. Email 4. Facsimile House, Playhouse Yard, London
EC4V 5EX, UK
emea@euromoneytraining.com +44 (0)207 779 8140
 Paris, France

about us
Euromoney Training EMEA is a
Day 3 division of Euromoney Institutional
Investor Plc, a leading provider of
Business-to-Business financial
information worldwide.
We deliver over 500 financial
 Market and credit risk management techniques  FASB and securitisation training courses publicly in Europe,
Middle East & Africa. Please visit
– Measuring market risk and credit risk on a – Benefits of securitisation our website for the latest
portfolio basis – Determining the difficulty from hedging with plain vanilla information on these:
www.euromoneytraining.com/europ
– Volatility - as measured by Value at Risk swaps e
– Hedging exposures as opposed to hedging assets – Understanding the use of tailor made amortising swaps
and liabilities – Constructing amortisation swaps from plain vanilla swaps customer service
If you would like to enquire about a
– Portfolio risk hedging vs. accounting risk hedging - – Present value basis point calculations course or you are not sure which
understanding the issues training course is best for your level
of experience and current job
 Dealing with credit risk requirements please contact our
 Documentation processes that qualify for – Measuring credit risk customer services adviser on
hedge accounting – Basel committee on methods to measure credit risk Tel: +44 207 779 8543

– Effective hedging – Credit derivatives customised financial

– Total return swaps and credit default swaps training for you
– Matters to appear in documentation If you cannot find the training you
– Regression analysis – How the accounting standards deal with credit derivatives
require at a suitable time or place,
– Testing for effectiveness - 80% / 125% rule we can also provide you with the
Course summary and close opportunity to:
• co-host a public course in your
country - choose the subject,
location, level and the timing
• have a course delivered in-house
that is customised to the
requirements of your staff &
clients at a location of your
choice.
If you would like to discuss the
possibility of co-hosting a public
course in your country or having an
in-house course delivered for your
staff, please contact:
Anna Jakimova
Director
Tel: +44 207 779 8085
E: emea@euromoneytraining.com

hotel booking
If you require assistance with
booking accommodation for one of
our courses, please contact our
logistics team on:
+44 207 779 8543 or email
emea@euromoneytraining.com
indicating the course you will be
attending.

Biography
Cormac Butler
Cormac Butler is currently an active equity and options trader and a
former consultant with Lombard Risk Systems, London. Prior to this he
worked with Peat Marwick and Coopers & Lybrand. He has
considerable international experience as a training consultant in
Derivative Accounting, Corporate Finance and Derivative
Mathematics, working with major banks including Salomon Brothers,
Robert Fleming and Banque Paribas.
He has recently conducted in-house courses for Salomons, Morgan
Stanley Dean Witter (London), PriceWaterhouseCoopers (Holland),
Investec (South Africa) and ABB (Switzerland). Cormac graduated
from the University of Limerick, Ireland with a degree in Finance.
He has recently published Mastering Value at Risk (Financial Times
Pitman) which is currently on the best sellers list for Risk Management
books with Amazon.com, Gloriamundi.org and Financial World
Bookshop (London).

5 easy ways to register 1. Web

www.euromoneytraining.com/EUROPE
3. Telephone
+44 (0)207 779 8543
5. By post
Euromoney Training EMEA, Nestor
or to make an enquiry 2. Email 4. Facsimile House, Playhouse Yard, London
EC4V 5EX, UK
emea@euromoneytraining.com +44 (0)207 779 8140
 Public, Sponsored and In-house Financial Training

Accounting for Derivatives and

other Financial Instruments
19–21 April 2010
Paris, France

Featuring:

 Practical impact of IAS 39 and FASB 133 on derivatives transactions  Simple solutions that allow some P&L volatility
 Typical hedging challenges: what doesn't work anymore?  Market and credit risk management techniques
 Transition adjustment: when should repair work be done?  Practical examples from Parmalat, Freddie Mac and Enron

Course Director: Cormac Butler

5 easy ways to register 1. Web

www.euromoneytraining.com/EUROPE
3. Telephone
+44 (0)207 779 8543
5. By post
Euromoney Training EMEA, Nestor
or to make an enquiry 2. Email 4. Facsimile
House, Playhouse Yard, London
EC4V 5EX, UK
emea@euromoneytraining.com +44 (0)207 779 8140

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Customer Information
Fees include all the tuition, full
course documentation, lunches and
refreshments for the duration of the
programme.
Incidental expenses:
Euromoney Training EMEA is NOT
responsible for covering airfare or
other travel costs incurred by
registrants. Delegates will be
responsible for their own
accommodation.
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course start.
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right to change or cancel any part of
its published programme due to
unforeseen circumstances.
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at time of print but may be subject
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A full refund less an administration **Group booking Discounts
fee of £100 will be given for
cancellation requests received up to  2 delegates - 5% discount
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writing (letter or fax) and reach this
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deadline. Delegates who cancel less
than 20 working days before the  5 delegates - 15% discount
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to pay the full course fee and no
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