Trema releases hedge accounting module for IAS 32/39 compliance

Source: Trema

Trema, the premier provider of strategic software solutions for the financial industry, today announced the launch of its enhanced hedge accounting module. The solution enables corporate and financial institutions to effectively support the hedge accounting and reporting complexities introduced by IAS 32/39, as well as enhancing support for FAS 133/138.

The module, a key component of Trema's enterprise suite, is included in Version 6.5.1 of the software and forms part of an extensive treasury accounting solution. It is the first comprehensive system available to assist clients with the increased hedge accounting burden introduced by the new IFRS requirements that will become mandatory in the EU on 1 January 2005.

This new module responds to the fair value accounting regulations set out under IAS 39 and offers continued support for FAS 133 and 138. Fair value accounting requires companies to record derivative positions on the balance sheet, which may have a substantial impact on P&L volatility. Without system support, hedge accounting can be a heavy burden with labour intensive and error prone manual calculations and reporting, including effectiveness testing and equity reserve management.

By deploying Trema's Hedge Accounting Module, companies are able to efficiently manage the entire hedge accounting process; from the creation of the hedge and fair value calculation, through to hedge effectiveness and the formation of accounting entries, in an automated and efficient manner. Trema provides corporate treasuries and financial institutions with the most comprehensive, enterprise suite for managing financial resources, covering the entire financial data life-cycle. This complete end-to-end automated business process delivers consistency in data, transparency and auditability of the hedging process.

The module supports the following key IAS 39 requirements:
  • Cashflow hedging
  • Fair value hedging
  • Net investment hedging

  • FX currency hedging
  • Interest rate hedging using change in variable cashflow method, fair value, and hypothetical derivative methods
  • Cross currency interest rate hedging

    It also supports the short-out method required under FAS 138.

    George Brown, FCA, Chief Accounting Functional Architect, Trema, comments, "Compliance with FAS 133/138 and IAS 39 will have a huge impact on an organisation's treasury activities. Organisations who currently manage hedge accounting by means of manual activity and/or spreadsheets will simply be unable to cope with the added complexity and sheer volume of transactions. The end result being an unsustainable increase in risk. Automation really is the only way. However, organisations first need to ensure their processes and procedures are compliant and a solution can then be used to support those, as is the case with Trema's the Hedge Accounting Module."

    Commenting on the new module, Michele Fitzpatrick, Trema CEO said, "The market has been crying out for a solution to help them deal with IAS 39 and FAS 133/138. Hedge accounting is a complex topic and with the regulations constantly evolving, it has been a moving target for systems vendors. It is testament to our commitment to the market and high investment in R&D that we are the first to market with a solution to support IAS and FAS compliance. We already have several key clients looking to sign up for the system and have seen a marked increase in the number companies who have contacted us recently, as we approach the 2005 deadline.
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