Commodities

HedgeStar provides valuation and hedge accounting services to entities that use the commodities markets to hedge risks. HedgeStar has developed proprietary pricing models to structure and value all types of complex commodity hedges. We provide fair value measurements for commodity futures, forwards, options, and swaps. Our clients use our fair values in financial reports to comply with ASC 820. HedgeStar also performs hedge accounting for commodities contracts to assure compliance under either ASC 815 or GASB 53.

Many entities that use commodity hedges are required to produce financial reports that meet FASB accounting standards such as ASC 820 and ASC 815 or GASB accounting standards such as GASB 53.

Energy
Softs
Grains
Metals
Livestock / Meats
Calculating the fair value of commodity contracts for ASC 820

HedgeStar calculates the fair value, as defined under ASC 820, of all types of commodity contracts including futures, forwards, options, and swaps. This involves determining adjustments due to non-performance risk. HedgeStar analyzes the underlying instrument for each commodity contract to determine its classification in the fair value hierarchy, and then decides which methodology is most appropriate for calculating an accurate exit price. We use a combination of observable market data and proprietary pricing models to produce a non-performance risk-adjusted fair value that complies with ASC 820. The methodologies that HedgeStar uses to measure fair value have been tested and accepted by auditors.

Providing ASC 815 Compliant Hedge Accounting for Clients Using Commodity Hedges

HedgeStar’s in-house hedge accounting experts make sure that clients are using appropriate hedge accounting to comply with ASC 815. ASC 815 requires that entities assess the effectiveness of hedges using standardized testing methods and report them correctly on financial statements. HedgeStar provides hedge accounting analytics to measure hedge effectiveness and prepares the supporting documentation that is required by auditors. We also provide ongoing analysis and journal entries necessary for ASC 815 compliance.

Governmental Entities that Practice Commodity Hedging Use HedgeStar’s Services to Comply with GASB 53

HedgeStar provides a full range of services related to GASB 53, which promotes transparency in financial statements by requiring governmental entities to measure derivative instruments at fair value and provide hedge effectiveness testing and disclosures. HedgeStar’s GASB 53 services include: testing hedge effectiveness, preparing a compliance report that includes a summary of the testing methodology and assumptions used, and calculating an independent fair value of each derivative in a client’s portfolio. Clients use our GASB 53 compliance report to help them prepare their financial statements.

HedgeStar

6400 Flying Cloud Drive #200

Minneapolis, MN  55344

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