Case Study - Non-Bank Lender
A non-bank lender had concerns about their current hedge accounting policy and operations as they were due to move to a Big Four audit firm. Specifically, they were worried about their growing lease book and hedging activities. They needed a health check on the hedge accounting process.
Challenges
The Finance Director and CFO did not have direct experience in running an effective hedge accounting program. Therefore, they lacked the internal capability to review the existing process. Additionally, the existing hedge accounting documentation appeared sound; however, the application of the policy in practice was incomplete. Lastly, hedge accounting was needed at a consolidated level as the business had securitised some of its assets into SPVs.
Our support
Hedge Effective Advisory was hired to advise and implement the following services:
A review of the existing policy and processes was undertaken, resulting in recommendations for remedial actions to correct the General Ledger.
Improved hedge relationship documentation was produced to be used for future trades.
Managed services were provided to run the hedge accounting program for the finance team.
Ongoing advice and support was provided to the business during subsequent audits.
Outcome
With our support
The business obtained a clean audit from the Big Four accounting firm.
The finance team was able to focus on core finance objectives without getting bogged down in the details of hedge accounting.
All the hedge accounting reports and documentation are available to the client via our proprietary hedge accounting software Hedgehog.