Financial institutions and corporations are required under International
Accounting Standard 39 (IAS 39) to be able to calculate and report fair value for all assets
on the book; to amortise up-front fees and commissions over the life of an underlying loan;
to determine effective interest rates; to measure impairment; to determine the hedge effectiveness
of any derivatives used for hedging purposes, and apply specific accounting treatment based
on the results of the effectiveness tests.
IPS-Sendero KRM can help you streamline your IAS 39 process and can provide detailed analysis
to enable you to qualify for hedge accounting if required, thereby reducing volatility in your
income statement.
IPS-Sendero KRM has the functionality to manage these tasks with ease. The system:
- Generates cash flows and fair values for all asset classes;
- Amortises fees and commissions over the life of underlying loans;
- Determines effective interest rates;
- Supports the definition of hedge relationships;
- Tracks retrospective hedge effectiveness;
- Tests prospective hedge effectiveness through powerful forward-looking simulation of cash
flows and fair values
- Tests hedge effectiveness of options against components of value, for example intrinsic
value
- Leverages the integrated default intensity framework to support the determination of individual
and collective impairment
With an open database structure, IPS-Sendero KRM results can easily be utilised to generate
accounting entries and hedge documentation. |
