Navigating today’s risks through effective hedging strategies

Continuing our October all-star series, Tom Barbieri, PwC US Chief Accountant, shares insights on critical accounting and reporting topics.

Tom is joined by Nick Milone, a PwC practice partner with experience advising clients on hedging strategies, to discuss effective hedging strategies for various types of macroeconomic and business risks.

In this episode, you’ll hear:

• 2:47 - An overview of the theory and purpose of hedge accounting
• 6:04 - Initial considerations for applying hedge accounting, including an overview of the effectiveness assessment
• 10:07 - A breakdown of the three most common hedge strategies and why companies might use them
  • 10:21 - Cash flow hedges
  • 12:23 - Fair value hedges
  • 14:33 - Net investment hedges
• 17:49 - Common examples of and questions related to hedging strategies 
• 22:02 - Common pitfalls in applying hedge accounting
• 27:57 - An overview of other hedging strategies, their purpose and how to use them
  • 28:04 - Forecasted debt issuance hedges
  • 35:29 - Foreign currency hedges
  • 39:04 - Hedging strategies for companies with foreign subsidiaries
  • 42:42 - Commodity hedges
• 47:05 - Hedging strategies that do not qualify for hedge accounting
• 50:22 - Final reporting considerations and key reminders for companies using hedge accounting

For more information, read our Derivatives and hedging guide. 

Tom Barbieri is PwC’s Chief Accountant. He has over 30 years of experience advising large financial services and multinational corporations on complex accounting issues. Tom leads the Accounting & SEC Services Group within the National Office, which is focused on supporting our clients and engagement teams in navigating complex technical accounting and financial reporting matters. He is also a member of the Financial Accounting Standards Advisory Council.

Nick Milone is a partner in PwC’s Financial Markets practice, and formerly a practice fellow at the Financial Accounting Standards Board (FASB), with a wealth of experience advising clients on structured transactions, derivatives and hedging activities, transfers of financial assets, securitizations, financings, investments, valuation and other issues. 

Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series. With over 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.