Serving the energy industry for over 30 years
By - Jon Brown

Derivatives Accounting for Power and Energy Companies
An Accounting Course on Derivative Instruments, Hedging Activities, and Fair Value
August 10-11, 2016 | Chicago, IL

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Overview

Achieving hedge accounting has proven to be difficult in almost all industries because of the complexities in the accounting rules and infrastructure necessary to document, test, and track all the hedging relationships.  In the energy and power industries, hedge accounting is especially hard in the best of times, but with the recent volatility in the energy markets — coupled with the uncertainty surrounding the capital markets — it has become even more difficult to apply.

Achieving hedge accounting has proven to be difficult in almost all industries because of the complexities in the accounting rules and infrastructure necessary to document, test, and track all the hedging relationships.  In the energy and power industries, hedge accounting is especially hard in the best of times, but with the recent volatility in the energy markets — coupled with the uncertainty surrounding the capital markets — it has become even more difficult to apply.

This one and a half day seminar addressing these critical issues is tailored to controllers, accounting and audit managers, credit/risk/portfolio analysts and front/mid/back office accounting personnel in the energy and power industries. It provides attendees with an opportunity to learn about the application of FASB Accounting Standards Codification (ASC) Topic 815, Derivatives and Hedging (formerly FAS 133), and related amendments and disclosures.  This course will also cover FASB Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures (formerly FAS 157), including a discussion of strategies for determining fair values for hard-to-value energy and power contracts. Finally, the course will include an overview of recently issued accounting standards on Revenue Recognition and Leases.  An overview will include a summary of the standard itself, changes from existing accounting practices and a discussion of how these standards are expected to impact energy companies.

Learning Outcomes

Attendees will receive instruction and cover materials that will allow them to:

  • Apply their understanding of ASC 815 (FAS 133) requirements and its application to the energy industry
  • Review the latest disclosure requirements for derivatives and hedging activities
  • Discuss and evaluate application of fair value measurements
  • Assess the implications of  recently issued convergence standards, Revenue from Contracts with Customers (ASC 606) and Leases (ASC 842)

Credits

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EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).  In obtaining this accreditation, EUCI has demonstrated that it  complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.

EUCI is authorized by IACET to offer 1.0 credits for this event.

Agenda

Wednesday, August 10, 2016

Registration & Continental Breakfast: 8:00 – 8:30 a.m.

Course Timing: 8:30 a.m. – 4:30 p.m.

Group Luncheon: 12:00 – 1:00 p.m.

Thursday, August 11, 2016

Continental Breakfast: 8:00 – 8:30 a.m.

Course Timing: 8:30 – 11:30 a.m.

Overview of ASC 815 Requirements for Energy and Power Companies
  • Definition of a derivative
  • Embedded derivatives
  • Hedge accounting documentation requirements
Cash Flow Hedging Overview and Case Study
  • Review the documentation requirements for cash flow hedges
  • Effectiveness testing requirements
Fair Value Hedging Overview and Case Study
  • Review the documentation requirements for fair value hedges
  • Effectiveness testing requirements
Specialized Energy Transacting Issues
  • When is a power purchase agreement a derivative?
  • Other common derivative instruments

Overview of Disclosure Requirements

Updates on Recent Accounting Rule-Making Activity on Revenue Recognition and Lease Accounting Impacting the Sector, including
  • Timeline on when standards become effective and transition
  • Overview of accounting and disclosure requirements
  • Impacts to your organization
Power and Energy Industry Examples and Case Studies on the Following Accounting Issues
  • How to get a hedge out of Accumulated Other Comprehensive Income (AOCI)
  • Cash flow hedging for options
  • Example of disclosure(s)
  • Structured deals (embedded derivative examples)
  • Changes in hedge documentation/de-designation
  • Bookout examples
Illustrate Various Contracts, such as Operating Leases, Tolling Agreements and FTRs
  • Overview of ASC 820 requirements and application issues
  • Examine the requirements of ASC 820
  • Assess the difficulties and hurdles of applying the standard as financial markets remain volatile
  • Evaluate the disclosure requirements of the standard and recent amendments
Power and Energy-Industry Examples of Accounting Issues Associated with…
  • Consideration of counterparty risk in valuation
  • Commodity pricing and forecast modeling as it relates to derivatives accounting
  • Reporting issues associated w/power markets  (ISO/RTO) trading
  • Illustrative examples of hierarchy levels (1, 2, 3)
  • Financial transmission and congestion revenue rights (FTRs and CRRs)

Instructors

Marc Hunter is a Senior Manager in Deloitte & Touche’s Financial Accounting and Valuation Services practice with some 10 years of energy and resources industry experience. While specializing in the power and utilities sector, his experience in treasury and commodity risk management spans several industries.  His energy experience ranges from domestic electric and gas utility companies and merchant generators to asset optimization divisions of oil majors to international gas marketing companies, stemming from his four years serving within Deloitte’s UK practice.  Mr. Hunter is an accountant by training and has specialized experiences related to the governance, processes, and reporting related to the energy industry and to risk management activities.  He has served on or led various projects, including those that focused on the process and control environment, application of financial reporting framework, and application of accounting standards to complex transactions. Mr. Hunter’s experience in this sector includes accounting and reporting aspects related to power purchase arrangements, impairment considerations, RTO operations, acquisition accounting, financing related transactions and transactions that qualify for derivative accounting.

Irfan Khan is an Advisory Manager in Deloitte & Touche’s Accounting & Reporting Transformation (A&RT) group, specializing in financial accounting and reporting, accounting policy development, including adoption of emerging guidance and conversions between accounting standards framework, commodity trading, marketing and risk management, business valuation, business processes and controls. He possesses more than nine years of public accounting experience through a global career based in the United States, Dubai, and Pakistan. He has gained strong exposure to the accounting, control environment, management functions prevailing in various multi-national and multi-cultural organizations and has acquired deeper understanding of both the local regulatory and operational framework relating to various industries as well as application of various U.S. GAAPs & IFRSs. In his current role, Mr. Khan provides advisory, accounting consultation, and audit support services on complex and technical accounting issues to Deloitte audit teams as well as non-attest relationship clients.

Deloitte & Touche LLP
The course instructors are senior energy industry specialists from Deloitte & Touche LLP’s Commodity Trading & Risk Management (CTRM) practice.  Consisting of over 200 professionals, this group provides specialist consulting services to the world’s leading energy companies and institutions in the areas of energy transacting and risk management.  Leveraging deep industry experience, unsurpassed business acumen, and broad technical skills, Deloitte’s CTRM practice provides an integrated suite of services that encompass risk strategy, technology and operations, regulatory compliance, credit advisory, accounting, and quantitative analytics.

The Deloitte U.S. firms provide Audit and Enterprise Risk services, Consulting services, Financial Advisory services, and Tax services for clients in a broad range of industries through 70,000 people in more than 80 U.S. cities.  Deloitte serves approximately 97 percent of Fortune 500 energy companies.

Location

Millennium Knickerbocker Hotel Chicago
163 E Walton Pl
Chicago, IL 60611

To reserve your room, please call 1-312-751-8100
Please indicate that you are with the EUCI group to receive the group rate.

ROOM RATE:

The room rate is $179.00 single or double plus applicable taxes.

ROOM BLOCK DATES:

A room block has been reserved for the nights of August 9- 10, 2016.

RATE AVAILABLE UNTIL:

Make your reservations prior to July 19, 2016. There are a limited number of rooms available at the conference rate. Please make your reservations early.

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