HedgeStar provides GASB 53 hedge accounting services for governmental entities
GASB 53 requires that all derivatives used by a governmental entity be reported in the entity’s financial statements. HedgeStar uses the best method available to evaluate the effectiveness of a potential hedging instrument (qualitative or quantitative). We then provide financial reporting and other guidance related to GASB 53 disclosures.
GASB 53 Methodologies
Consistent critical terms method
Synthetic instrument method
Dollar offset method
Hybrid instruments analysis
Valuation Services & GASB 53 Compliance
Our staff verifies the details of the hedging transaction, reviews all of the critical terms and determines whether or not the transaction meets the requirements of the consistent critical terms method of GASB 53 compliance. If this qualitative approach fails, then HedgeStar will perform the calculations necessary to determine the effectiveness of the potential hedging instrument. The synthetic instrument method, dollar offset method, and regression analysis are used to test the potential hedging derivative. HedgeStar performs all of the possible mathematical tests available under GASB 53 and provides a report to the governmental entity showing which (if any) of the tests passed the hedging requirements of GASB 53.
HedgeStar performs valuations on the potential hedging derivative instrument that meet the rigorous standards in today’s market. In addition, we perform all of the GASB 53 calculations and provide a report to the governmental entity that can be used to prove the hedging relationship to the auditors.