There are no prerequisites.

Course Description

Accounting for derivatives and hedges has a reputation for being among the most arcane in accounting. In Accounting for Derivatives and Hedges, we attempt to reduce this concern by focusing first on the nature of derivative instruments and how they function. After a clear and thorough presentation on derivatives, we proceed to the essentials of how to account for them. Topics covered include the nature of risk, hedging, risk management, and accounting for derivatives and major types of hedges.
You can find the answers to many questions about derivatives and hedges in this course, including:

  • What causes interest rate risk?
  • How can I mitigate foreign exchange risk without using derivative instruments?
  • What are the main features of futures, options, and swaps?
  • When are gains and losses stored in other comprehensive income?
  • What documentation is used to match a hedging item with a hedged item?
  • How can I tell if a hedge is effective?
  • What controls and policies can be imposed on hedging activities?


Steven M. Bragg, CPA

Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books. He provides Western CPE with self-study courses in the areas of accounting and finance, with an emphasis on the practical application of accounting standards and management techniques. A sampling of his courses include the The New Controller Guidebook, The GAAP Guidebook, Accountants’ Guidebook, and Closing the Books: An Accountant’s Guide. He also manages the Accounting Best Practices podcast.

Steven has been the CFO or controller of both public and private companies and has been a consulting manager with Ernst & Young and an auditor with Deloitte & Touche. He holds an MBA from Babson College, a Master of Finance from Bentley College, and a BA from the University of Maine (summa cum laude).

Course Specifics

Feb 27, 2018
There are no prerequisites.

Compliance Information

Qualifies for CA Fraud: No

Learning Objectives

Upon successful completion of this course, participants will be able to:

Chapter 1

  • Identify the main aspects of foreign exchange and interest rate risk along with the methods available to mitigate them.

Chapter 2

  • Note the accounting for derivative speculation and the classifications for hedges and investments.
  • Identify the contents of other comprehensive income.
  • Recognize the methods used to measure hedge effectiveness.

Table of Contents

Chapter 1 – Derivatives and Hedging Transactions

Learning Objectives


What is a Derivative?

What is a Hedge?

What is Risk?

Foreign Exchange Risk

Interest Rate Risk

Credit Risk

Foreign Exchange Risk Management Alternatives

Take No Action

Avoid Risk

Shift Risk

Time Compression

Build Reserves

Maintain Local Reserves


Interest Rate Risk Management Alternatives

Take No Action

Avoid Risk

Asset and Liability Matching


Credit Risk Management Alternatives

Take No Action

Alter the Credit Policy

Enhance Collection Activities

Foreign Exchange Hedging Instruments

Loan Denominated in a Foreign Currency

The Forward Contract

The Futures Contract

The Currency Option

The Cylinder Option


Interest Rate Hedging Instruments

The Forward Rate Agreement

The Futures Contract

Interest Rate Swaps

Interest Rate Options

Interest Rate Swaptions

Credit Risk Hedging Instruments

Credit Risk

Credit Default Swaps


Chapter 1 – Review Questions

Chapter 2 – Accounting for Derivatives and Hedges

Learning Objectives


Other Comprehensive Income

Derivative Accounting

Hedge Accounting - General

Hedge Accounting – Fair Value Hedges

Hedge Accounting – Cash Flow Hedges

Hedge Accounting – Net Investment Hedges

Embedded Derivatives

Hedging Controls

Sample Hedging Procedure

Unhedged Foreign Exchange Gains and Losses

Derivative and Hedging Disclosures

General Disclosures

Fair Value Hedge Disclosures

Cash Flow Hedge Disclosures


Chapter 2 – Review Questions

Review Question Answers and Rationales



Qualified Assessment

Answer Sheet

Course Evaluation


Choose Your Preferred Format

Online Access

Get immediate access to a robust collection of learning and reference materials, allowing you to dive deep into the information you need. Our self-study materials are authored by top-quality, industry experts who focus on helping you grasp concepts quickly using real-life examples. Download your CPE to any device, and take it with you so you can learn when and wherever you want. Complete your CPE with an online exam, and enjoy instant grading with the option to print your certificate immediately upon passing.

online access
Hard Copy

Our self-study materials are authored by top-quality, industry experts. You’ll receive a bound notebook of all the course materials, shipped to you within one business day. In addition, you’ll also have full online access. Each self-study package includes a robust collection of learning and reference materials to help you cover the information efficiently and put it into practice immediately.

hard copy
Self-Study Video

Experience high-quality instruction with our Self-Study Videos, available to you 24/7. With more than 80+ videos currently in the Western CPE Self-Study Video library, you can see and hear our expert instructors deliver the information you need in a dynamic way that allows you to immediately apply your learning. Unlike a live course or webcast, you can complete the course on your own time, playing and pausing as needed. Self-Study Videos allow you to complete your CPE requirements on your own time.

hard copy

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