White Papers

The Financial Accounting Standards Board (FASB) issued Statement Number 157 (FAS 157) in 2008. Now called Topic 820, at its heart, Topic 820 redefines the "fair value" accounting of financial instruments as, ". . . the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." If your organization is involved in these types of transactions and are required to complete a Topic 820 valuation, this white paper will outline the methodology used to adjust the market value for non-performance risk as well as explain how asset classifications (level 1, 2 or 3) are used to determine value.

DOWNLOAD GASB 53 WHITE PAPER

The Government Accounting Standards Board (GASB) issued Statement Number 53 (GASB 53) that is now a requirement for all governmental entities that hold derivatives in their portfolio. Governments often enter into derivative instruments as hedges of identified financial risks associated with specific assets or liabilities, or expected transactions (hedgeable items). Many of these hedges are intended to effectively offset changes in interest rates or commodity prices. If your organization is involved in these types of transactions, this GASB 53 white paper will provide you with the basics of derivative valuations used to meet GASB 53 requirements.

DOWNLOAD TOPIC 820-10-35 WHITE PAPER UPDATE

Variable Rate Demand Bonds (VRDBs) are typically structured as long term bonds, with an investor put and are credit enhanced by a highly rated financial institution that provides credit support and liquidity. The issuer pays a fee to the credit enhancer and the credit enhancer is obligated to purchase, from the investor, any bonds that cannot be successfully remarketed by the remarketing agent or any bonds where the put on the bonds is exercised by the investor and those bonds cannot be remarketed. Based on this fact set, Topic 820-10-35 presents a valuation challenge for valuing bonds with resetting coupons that are credit enhanced because the value of a bond at any point in time is a function of the coupon and the yield. This Topic 820-10-35 White Paper Update will provide you with the basics of VRDB valuation under Topic 820.

DOWNLOAD HEDGING FOREIGN EXCHANGE RISK WHITE PAPER

Foreign exchange rate risk affects nearly every company or person that conducts business across international boundaries. Constantly fluctuating currency exchange rates create risk anytime goods or services are bought or sold in a foreign currency and time lapses before the currency is exchanged between parties. Since goods or services can potentially lose or gain value due to changes in currency exchange rates, corporations can utilize foreign exchange hedges to preserve value. This white paper examines the different types of hedges available for firms to use and illustrates how each hedge reduces risk.

The Financial Accounting Standards Board (FASB) released Statement 133 (renamed Accounting Standards Codification (ASC) 815) in June 1998, which established new accounting standards for derivatives and other hedging activities. ASC 815 has had frequent updates and amendments since its inception. This white paper describes what entities use hedge accounting, methods for determining hedge effectiveness, various methods for calculating hedge effectiveness, and how to prepare a hedge designation memo.

The equity derivatives market has grown over the past few years as hedge funds, asset managers, and commodity traders have started to use them to limit their exposure to the risks inherent in a volatile market. The underlying instrument of an equity derivative is a stock or stock index and they are traded on futures or options exchanges and over-the-counter. This white paper describes some of the common types of equity derivatives used in today’s market, gives examples of certain structures, and explains how they are used to hedge risk.