A Study On Hedge Accounting Of Derivative Financial Instruments

The rapidly development of international trade, along with the upgrade of the theory and practice of financial risks management, accelerates the innovation of financial instruments greatly. In order to avoid risks of price and credit, enterprises use various derivatives to hedge against the risks more and more. So the author will probe into the hedge accounting issues of the derivative financial instruments. The thesis is to prove the necessity of implementing hedge accounting in our country, analyze the actuality of criterion and practice of hedge accounting, and put forward some advices on how to perfect and implement the existing hedge accounting standards.The thesis begins with presenting the developmental course of hedge accounting standards and the basic content of hedge accounting. And then, we discuss the essential of the hedge accounting and its existing problems. We also analyze the rationality of the hedge accounting and reach a conclusion that before the fair value accounting coming true, it's a preferable choice to use the hedge accounting because it can evaluate and disclose the achievement of the managers' risk management effectively. And it's also necessary for our country to implement the hedge accounting. Not only because it's a condition for enterprises to use derivatives to counterbalance possible loss, but also because our economy needs to engage in the global economy. In the last chapter, the author analyzed and discussed the actuality of criterion and practice of hedge accounting of our country, and then put forward some advices fromtwo angles------how to perfect and how to implement the existing hedge accountingstandards. As to the first issue, the author brings forward two suggestions: one is to establish implemental guides and give demonstrations to cooperate with the standard; another is to add criteria of disclosure in the standard. As to the second issue, the author put forward a point of view that we should set up a solid foundation for implementing the hedge accounting standards in four aspects: advancing technology, upgrading the capability of employees, attaching more importance to the risk management of enterprises and improving public audit.