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Glossary/Hedge documentation

What is Hedge documentation?

In short

Hedge accounting requires formal documentation at the inception of the hedge: the risk management objective and strategy, the hedging instrument, the hedged item, the risk being hedged and how effectiveness will be assessed.

Key takeaways

  • Without documentation at inception, hedge accounting can't be applied retroactively.
  • Private companies have extra time to complete some of the documentation.
  • Changes in the hedging strategy require new documentation.

Where it's tested

BAR: Derivatives & Hedge Accounting — study notes, a five-minute revision sheet and practice questions.

Practise: 3 questions

Question 1 of 3 · 0 answered

To qualify for hedge accounting, an entity must, at inception:

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