Derivative toolkit: Deciphering foreign currency hedging

In our Toolkit podcast series, we take a deep dive into one accounting topic each month that goes beyond the basics and into areas that require judgment. This month we are covering derivatives–a complicated area that generates numerous questions. 

In this episode, Heather Horn was joined by Bret Dooley and Chris Gerdau from PwC’s National Office to dive into the complexities of applying hedge accounting to foreign currency hedges.

In this episode, you will hear them discuss:

• 1:02 - An overview of foreign currency accounting 
• 10:35 - Hedging of forecasted foreign currency transactions 
• 18:26 - Net investment hedging and excluded components (“forward points”)
• 27:01 - What to focus on with hedges of foreign currency denominated debt
• 31:37 - Final advice and resources for more information 

Want to learn more? Listen to other episodes in our derivative toolkit series Do I have a derivative? and Hedging debt with derivatives, and refer to our Derivatives and hedging and Financial statement presentation guides. 

Bret Dooley is a Deputy Chief Accountant in PwC’s National Office and the financial instruments accounting leader. He has over 25 years of experience specializing in the financial services, banking, and capital markets industries. Bret focuses on emerging financial reporting issues relating to financial instruments, developing interpretive guidance, and assisting clients in resolving complex accounting matters.

Chris Gerdau is a partner in PwC’s National Office specializing in accounting for financial instruments and banking-related topics. Chris also conducts technical reviews of SEC filings and provides technical support to PwC’s practice offices. With over 25 years of experience, Chris’s client service expertise includes the banking, capital markets, and insurance industries.

Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series. With over 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.

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