Energy company BP has become the first European-based corporate client to go live with The Wall Street System Hedge Compliance Module.
The implementation ensures BP’s finance division met the accounting requirements for its FX treasury transactions ahead of the mandatory implementation date for International Accounting Standard (IAS) 39 on January 1, 2005.
BP Finance runs the treasury cash management requirements for the whole BP Group and its subsidiaries in over 100 countries around the world. As part of its hedging strategy, BP Finance uses derivatives to manage the FX exposure for non-functional currency forecast revenue and capital expenditure transactions, via the centralized treasury. These transactions must now be in line with the requirements of IAS 39 and FAS 133. The Wall Street System Hedge Compliance Module makes this easy to achieve.
The emergence of IAS 39 in Europe, and Federal Accounting Standard (FAS) 133 in the US, has significantly changed the accounting principles for the recognition and measurement of financial instruments, especially derivatives. Both standards require financial institutions and corporations to clearly demonstrate the effectiveness of hedging strategies.
Wall Street Systems launched its enhanced Hedge Compliance Module in December 2003. Using the module, customers can report and account for hedge gains and loses on a fair market value basis. The system’s hedge tracking and linking functionality connects exposures and hedging transactions and automatically creates the accounting entries. All valuations and changes in values are written to a time series database. Full audit query capabilities are embedded in the database, and users have access to summary information by date and can easily view hedge histories.