CPE SESSION 11 - Wednesday, 8:00 AM - 12:00 PM

Accounting for Derivatives in Financial Statements

Description/Objectives:
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS No. 133). The FASB's primary objective in adopting FAS No. 133 was to provide a consistent and complete accounting model for derivatives that ensure that the effects of all derivatives are transparent in firms' financial statements. This new accounting model significantly limits firms' abilities to use derivatives to manage the timing and amount of earnings recognized from risk management activities-a practice that prior to FAS No. 133 was more common than is generally realized. The impact of FAS No. 133 is anticipated to have a significant effect on firms' financial statements and already has caused corporate treasurers and derivatives dealers to rethink their risk management and business strategies. This workshop provides an overview of FAS No. 133 and related follow-on implementation guidance. Participants will be provided presentation materials suitable for classroom use. Topics include the following:

1. Common types of derivatives
2. Risk management activities
3. Overview of new accounting model
4. Hedge accounting: Qualifying criteria
5. Hedge termination/hedged item impairment
6. Required disclosures
7. Illustrative cases

Format/Structure:
The workshop will be conducted as an interactive seminar.

Intended Audience:
Individuals who have teaching and research interests in Financial Accounting and Reporting.

Presenter:
Thomas Linsmeier, Michigan State University

Sponsor:
Financial Accounting and Reporting Section