HEDGE ACCOUNTING AND DERIVATIVES STUDY FOR CORPORATES DISCLOSURE, HEDGE ACCOUNTING, AND RESTATEMENT RISK

Abstract

Fitch Ratings has completed its first study of derivatives accounting and disclosure among corporate entities, excluding financial institutions. Derivatives have become an integral part of the risk management framework for major corporate issuers of debt, allowing active management of interest rate, foreign exchange, commodity price, and equity exposures. Moreover, the growing use of derivatives coincides with rapid developments in the derivatives market, including the availability of a broader range of derivative products. Fitch surveyed 57 global corporations to assess the types of derivatives used, accounting and financial reporting implications, and disclosure quality. This survey was intended to generate representative data only and is not necessarily reflective of the market as a whole. The paper presents the key findings and other important industry issues.