Research On The Application Of Hedge Accounting

Due to the complexity and particularity of hedging accounting,since China’s Ministry of Finance issued relevant accounting standards in 2006,hedge accounting methods have encountered many problems in the practical application,leading to the disclosure quality of corporate hedge accounting information is not high.The CAS 24 and CAS 37 that came into effect on January 1,2018 have made many improvements to the original standard.However,whether the new hedging criteria can completely solve the problems in corporate hedge accounting practice remains to be demonstrated.This article mainly uses the case study method and comparative research method.Firstly,the statistics on the application of hedge accounting by listed companies on the Main Board of Shanghai Stock Exchange were analyzed.According to the typical case analysis disclosed in the annual report of the company,the issues that will continue to exist after the implementation of the new hedge accounting standards in China are:Hedge accounting standards ignore risk management essence,the disclosure content of hedge accounting policies are decentralized,and the effectiveness evaluation method for hedging is missing.In recent years,the board of directors of the American Accounting Standards has made some amendments to accounting disclosures,disclosure forms,and validity evaluations of hedge accounting in combination with accounting practices.Through the comparative analysis of the latest hedge accounting framework in the United States,this paper believes that the US hedge accounting principles pay attention to the essence of risk management,the detailed disclosure content,and the clearness of the effectiveness evaluation method.In addition,some of the U.S.experience does not apply to China,for example,the high cost of dynamic risk management strategies and the arbitrariness of the criteria.In addition,hedging accounting standards have the common problems that need to be solved,such as the lack of specifications for hedge accounting and the inability to apply to economic hedging.These problems need to be combined with China’s national conditions to improve hedge accounting standards.The improvement of the criteria is of great significance in guiding practice,improving enterprise risk management capabilities,and promoting the sound development of hedging business.Based on the analysis of the latest hedge accounting standards in the United States,this paper concludes that China’s hedge accountingstandards should emphasize the nature of risk management,encourage companies to disclose risk exposures,conduct detailed analysis,standardize the evaluation methods of hedge effectiveness in China,and strictly limit hedging relationships.Balanced use,clear distinction between cash flow hedging and fair value hedging,standard hedging accounting,and improvement of hedging accounting disclosure content and format were completed in six areas.