Kawaller & Company provides a full range of services in connection with issues pertaining to strategic uses derivatives, with a recognized expertise in connection with accounting concerns. Capabilities include writing or revising hedge policies, preparing documentation pertaining to hedge relationships, devising hedge-effectiveness testing methodologies, and performing hedge-effectiveness tests in accordance with prescribed policies.
Processing Accounting Journal Entries and Disclosures
We provide the journal entries and disclosures for all derivatives positions (e.g., measures of effective hedge results, ineffective hedge results, amounts excluded from hedge-effectiveness assessments, amounts reclassified to earnings from other comprehensive income, and projected reclassifications in the coming 12 months). The service provides independent valuations of derivative positions and determination of appropriate credit valuation adjustments to reflect the capacity to perform on the part of derivative counterparties. Our objective is to generate the required information, freeing our clients from the need to purchase and implement costly management information systems.
Documentation for Hedging Transactions
Companies that use derivatives to manage interest rates, currencies, or commodity price risks typically appreciate the importance of qualifying for “special hedge accounting”; and proper hedge documentation is a prerequisite for this treatment. Inadequate or incomplete documentation could preclude applying or continuing hedge accounting — or possibly precipitate the need for an earnings restatement. Kawaller & Company has extensive experience preparing of customized documentation that assures clients the greatest likelihood that hedge accounting can be applied without interruption.
Internal Auditing for Derivatives Transactions
The skill set required for hedging and trading derivatives contracts is often limited to a small cadre of key personnel. The power of these tools, however, offers the potential for serious damage if misused or misunderstood. Kawaller & Co. has the requisite expertise and experience to offer boards and/or senior managements an independent review of hedging and trading policies and procedures.
Education and Training
In the course of Ira Kawaller’s 30+ years of experience, he has spoken before hundreds of groups and thousands of individuals. Content encompasses money and capital markets, foreign exchange, futures, options, and over-the counter derivatives. Kawaller has the capacity to make even the most arcane mathematical concepts intuitive and understandable. He offers formal presentations and workshop at public conferences (see Education) and also tailors proprietary programs to meet the particular needs of client companies.
Market Research and Technical writing
Kawaller & Company has served many futures exchanges, investment banking companies, and professional associations in preparing technical documentation for use in both internal and external communications. Experience includes writing brochures and supporting materials pertaining to trading and hedging strategies, devising surveys to assess market attitudes and inclinations, and analyzing the use of derivatives by publicly traded companies for purposes of assessing how well companies manage their exposures.
Derivative values reported on financial statements must reflect an adjustment from traditional street pricing conventions to reflect the credit qualities of the respective derivative counterparties. Kawaller & Company assists clients with this requirement and provides the required valuations.
Kawaller & Company is well suited to assist counsel in litigation where the use of derivatives is at the core of the case. Kawaller has worked both as an expert witness and as a behind-the-scenes consultant during the initial stages of case preparation.