Accounting for derivatives

Juan Ramirez

Publisher: Wiley Finance

Price: £65

ISBN: 978047051579

What this book doesn’t tell you about hedge accounting you probably don’t want to know, says Rod Davies

If you are one of those poor lost souls who lies awake at night worrying about the effects of International Financial Reporting Standards (IFRS) on the accounting treatment of financial derivatives, this book is for you. That’s not to say that it will send you to sleep although, given the subject matter, this could be a risk.

It’s more that this is a comprehensive review of accounting for financial assets and liabilities under the new standards, particularly IAS 39. Each form of hedge is covered by a chapter, with full case studies even setting out the required journal entries. The various strategies for mitigating each risk are set out and explained in clear language – given a reasonable understanding of accounting terminology.

However, having set out how and why to do it throughout the book, it is only in the last chapter that the risks of adopting hedge accounting itself are examined. But no techniques for hedging against these risks are put forward!

The book is a very thorough guide to hedge accounting. Anything that isn’t mentioned is probably immoral or illegal – or possibly both.

Rod Davies is an FMAAT and a member in practice