Derivative Instruments & Hedge Accounting for Energy Transactions

Derivative Instruments & Hedge Accounting for Energy Transactions

Properly Documenting & Reporting Commodities Fair Value Transactions in Accounting Statements & Disclosures

August 30-31, 2022 | Houston, TX

“Presenters were very knowledgeable and willing to answer all questions — very helpful.” Financial Services Coordinator, City of Garland (TX)

“I’m new to this industry, and the course was an excellent opportunity to accelerate my transition.” Accounting Manager, Liberty Power

“This course is a must-have for all areas of derivative accounting and risk.” Senior Accountant, First Choice Power

“The course exceeded my initial expectations.” Energy Commodity Risk Administrator, Tri-State G&T

This seminar addressing derivative, fair value and hedge accounting issues is tailored for accounting and finance staff operating in the energy and power industries. It provides attendees with an opportunity to delve into the nuanced application of FASB Accounting Standards Codification (ASC) Topic 815, Derivatives and Hedging (formerly FAS 133), and related amendments and disclosures.  The course will also cover 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.  In addition, it will address key concepts of International Financial Reporting Standards (IFRS) 9, Financial Instruments, (formerly IAS 39) where they differ from U.S. GAAP requirements. Finally, the program will examine specific considerations around applying these concepts to power markets and energy trading activities. 

An overview will include a summary of the standard itself, changes from existing accounting practices and a discussion of how these standards impact energy companies. There will be an optional workshop that focuses specifically on renewable energy products and the associated accounting considerations.

Learning Outcomes

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

    • Apply the understanding of ASC 815 (FAS 133) and 820 (FAS 157) requirements and its application to the energy industry
    • Demonstrate key accounting concepts and the related key controls and processes for application to derivative and hedging activities in operations
    • Explain and apply the latest disclosure requirements for derivatives and hedging activities
    • Evaluate and address the current developments in the power and energy trading markets
    • Compare some of the key differences between U.S. GAAP and IFRS in relation to the aforementioned main topics

Agenda

Tuesday, August 30, 2022 : Central Time

8:45 – 9:00 a.m.
Registration & Continental Breakfast (in person)

8:45 – 9:00 a.m.
Log In (Online)

12:00 – 1:00 p.m.
Lunch Break

9:00 a.m. – 5:00 p.m.
Course Timing

9:00 – 9:15 a.m. :: Overview and Introductions

9:15 – 10:45 a.m. :: Overview of ASC 815 Requirements for Energy and Power Companies

  • Commodity Contract Assessment Framework
    • Overview
    • IFRS/GAAP differences
    • Variable interest entities (VIE) considerations
    • Lease accounting overview
  • Scope & Definition of a derivative
    • Underlying
    • Notional – including “full requirements” contracts
    • Net settlement criteria
    • IFRS/GAAP differences

10:45 – 11:00 a.m. :: Morning Break

11:00 a.m. – 12:00 p.m. :: Overview of ASC 815 Requirements for Energy and Power Companies (cont’d)

  • Derivative accounting basics
    • Case studies – forward/swap contracts
  • Embedded derivatives
    • Definition
    • Examples
    • IFRS/GAAP differences
  • ASC 815 disclosure examples

12:00 – 1:00 p.m. :: Lunch Break

1:00 – 2:30 p.m. :: Overview of ASC 820 Fair Value

  • Fundamentals of ASC 820 as it relates to energy transacting and application
    • Definition
    • Fair value at inception (day 1 gains)
  • Illustrative examples of hierarchy levels (1, 2, 3)
  • Consideration of counterparty risk in valuation
  • Disclosure requirements
    • Overview
    • Public vs. private application
    • IFRS/GAAP differences
  • Commodity pricing and forecasting models for level 2 or 3
  • Options – valuation and accounting
  • Q&A

2:30 – 2:45 p.m. :: Afternoon Break

2:45 – 4:30 p.m. :: Power and Energy Accounting Issues

  • Application of scope exceptions available to energy contracts (normal purchase, normal sale)
  • Power market overview and transacting activities
  • Financial transmission and congestion revenue rights (FTRs and CRRs)
  • Transacting with ISOs and RTOs
  • Internal controls, compliance and best practices
  • Other common terminology used in the industry

4:30 – 4:45 p.m. :: Q&A

4:45 p.m. :: Course Adjourns for Day

4:45 – 6:00 p.m. :: Reception (in person)

 

Wednesday, August 31, 2022 : Central Time

8:15 – 9:00 a.m.
Continental Breakfast (in person)

8:45 – 9:00 a.m.
Log In (Online)

9:00 a.m. – 12:00 p.m.
Course Timing

 

9:00 – 10:15 a.m. :: Cash Flow & Fair Value Hedge Designation Overview

  • Types of hedges and hedge criteria
  • Requirements and accounting updates
  • Documentation requirements and timeline
  • Effectiveness testing requirements

10:15 – 10:30 a.m. :: Morning Break

10:30 – 11:45 a.m. :: Cash Flow & Fair Value Hedge Designation Overview (cont’d)

  • Application of hedge accounting
  • Example journal entries
  • Disclosure requirements
  • Public vs. private application
  • IFRS/GAAP differences

11:45 a.m. – 12:00 p.m. :: Q&A

12:00 p.m. :: Course Adjournment

Workshop

Renewable Energy Instruments and Their Associated Accounting Considerations

Wednesday, August 31, 2022 : Central Time

Transactions involving the generation, trading and consumption of renewable energy – as well as the buying and selling of environmental credits and carbon offsets including renewable energy credits (RECs) – are now commonplace in the power industry as more business organizations and governments embark on the road to net-zero carbon emissions and transition to clean energy.  Such transactions are often complex in structure and require special accounting treatment, which often depend on the entity’s role(s) in the transaction. 

This workshop will provide an overview of accounting considerations around these renewable energy instruments, including a deep dive into contract assessments for renewable energy PPAs – both physical and financial (“virtual”).

Learning Outcomes

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

  • Examine emerging types of renewable energy products in the marketplace
  • Evaluate the accounting considerations related to different renewable energy products
  • Assess renewable energy contracts under the appropriate accounting framework
  • Apply best practices for environmental, social and corporate governance (ESG) disclosures related to the energy industry

 

Program Agenda

12:45 – 1:00 p.m.
Registration / Log In

1:00 – 4:45 p.m.
Workshop Timing

 

1:00 – 1:20 p.m. :: Introduction and Overview

1:20 – 2:15 p.m. :: Renewable Energy Overview

  • Renewable energy consumption
  • Renewable generation trends
  • Renewable energy credits (RECs)
  • Emerging trends

2:15 – 2:45 p.m. :: Contract Assessment – Renewables

  • VIE accounting considerations (ASC 810)
  • Derivative accounting considerations (ASC 815)

2:45 – 3:00 p.m. :: Afternoon Break

3:00 – 3:45 p.m. :: Contract Assessment (cont.)

  • Lease accounting considerations (ASC 842)
  • Conditions precedent
  • Physical PPA example
  • Virtual PPA differences

3:45 – 4:30 p.m. :: Other Accounting Considerations

  • Partnership flip structures
  • Battery storage lease accounting considerations (ASC 842)

4:30 – 5:00 p.m. :: ESG Disclosure Overview

5:00 p.m. :: Workshop Adjournment

Instructors

Tawanda Chadenga, Partner – Energy Trading & Marketing Group, Deloitte

Tawanda Chadenga is a Houston-based partner with more than 22 years of experience serving a variety of large, complex public and private companies in the energy industry, primarily power and utilities (conventional and renewable) and oil & gas, energy trading and marketing companies. He leads the firm’s energy trading and marketing audit and accounting advisory practice, which provides specialized audit and accounting advisory services to companies with energy trading, marketing, or hedging activities.


Andres Sanchez, Senior Manager – Energy Trading & Marketing Group, Deloitte

Andres Sanchez is a Senior Manager, with more than 13 years of experience in audit and advisory working with a wide range of multinational corporations with energy and commodities trading in the US.  He is a member of the Deloitte US Energy Trading & Markets group specializing in technical accounting (US GAAP and IFRS) and auditing matters, risk assessment, and internal controls in the energy marketing and trading industry. His experience also includes the valuation and accounting assessment of complex energy contracts in both the conventional and the renewables power and utilities industry.


Adam Weingarten, Senior Manager – Energy Trading & Marketing Group, Deloitte

Adam Weingarten is a Senior Manager, who has served Deloitte’s energy clients for more than a decade. He is a member of Deloitte’s energy trading and marketing audit and accounting advisory practice, which primarily focuses on auditing energy trading companies and providing related accounting advisory services, including cash flow and fair value hedge accounting, valuation, and disclosure requirements.


David Sackllah, Manager – Energy Trading & Marketing Group, Deloitte

David Sackllah is Audit & Assurance Manager, who has served Deloitte’s energy clients for some seven years.  He is a member of Deloitte’s energy trading and marketing audit and accounting advisory practice, and primarily focuses on auditing both energy trading companies and regulated power and utilities companies, related to commodity transactions (including natural gas and power trading) valuation and contract assessments.  Mr. Sackllah has considerable experience auditing internal controls over financial reporting for SEC. He has provided various accounting advisory services, ranging from contract accounting assessments, internal control assessments and recommendations, and valuation methodology implementation.

Location

hotel photo

Deloitte & Touche LLP – Houston

1111 Bagby St.
Suite 4500

Houston, TX 77002

 

Nearby Hotels

Hyatt Regency Houston
0.19 miles from location
1200 Louisiana Street, Houston, TX, 77002
713-654-1234

The Whitehall Houston
0.39 miles from location
1700 Smith St, Houston, TX 77002
(855) 318-8945

The Laura Hotel, Houston Downtown, Autograph Collection.
0.41 miles from location
1070 Dallas St, Houston, TX 77002
(713) 242-8555

Club Quarters Downtown Houston
0.49 miles from location
720 Fannin St, Houston, TX 77002
(713) 224-6400

Hyatt Place Houston Downtown
0.57 miles from location
1114 Texas Ave, Houston, TX 77002
(832) 930-8500

Register

REGISTER NOW FOR THIS EVENT:

Derivative Instruments & Hedge Accounting for Energy Transactions

August 30-31, 2022 | Houston, TX
Individual attendee(s) - $ 1395.00 each
- OR - I choose to attend remotely
Individual remote connections(s) - $ 1395.00 each

Volume pricing also available

Individual attendee tickets can be mixed with ticket packs for complete flexibility

Pack of 5 attendees - $ 5,580.00 (20% discount)
Pack of 10 attendees - $ 9,765.00 (30% discount)
Pack of 20 attendees - $ 16,740.00 (40% discount)

RELATED WORKSHOPS:

Renewable Energy Instruments and The Associated Accounting Considerations

August 31
Individual attendee(s) - $ 495.00 each

Volume pricing also available

Individual attendee tickets can be mixed with ticket packs for complete flexibility

Pack of 20 attendees - $ 1980.00
Pack of 20 attendees - $ 3495.00
Pack of 20 attendees - $ 5940.00

Your registration may be transferred to a member of your organization up to 24 hours in advance of the event. Cancellations must be received on or before July 29, 2022 in order to be refunded and will be subject to a US $195.00 processing fee per registrant. No refunds will be made after this date. Cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other EUCI event. This credit will be good for six months from the cancellation date. In the event of non-attendance, all registration fees will be forfeited. In case of conference cancellation, EUCIs liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at 303-770-8800

CEUs

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EUCI is accredited by the International Accreditors for Continuing Education and Training (IACET) and offers IACET CEUs for its learning events that comply with the ANSI/IACET Continuing Education and Training Standard. IACET is recognized internationally as a standard development organization and accrediting body that promotes quality of continuing education and training.

EUCI is authorized by IACET to offer 0.9 CEUs for this course and 0.4 CEUs for the workshop.


Upon successful completion of this event, program participants interested in receiving CPE credits will receive a certificate of completion.

Course CPE Credits: 10.5
Workshop CPE Credits: 4.5
There is no prerequisite for this Course.
Program field of study: Specialized Knowledge
Program Level: Basic
Delivery Method: Group Internet Based
Advanced Preparation: None

CpeEUCI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org

 

Who Should Attend

Operating Functions

  • Accountants
  • Auditors
  • Controllers
  • Treasurers
  • Financial analysts
  • Structured credit
  • Credit risk analysts
  • Portfolio managers
  • Front office / Traders
  • Middle office / Risk
  • Back office

Representative Industries

  • Integrated electric utilities
  • Market operators and transmission companies
  • Public power
  • Generation companies
  • Retail power marketers
  • Wholesale power trading and marketing companies
  • Gas utilities and distribution companies
  • Retail gas marketers
  • Wholesale gas trading and marketing companies

This course is open to utilities, power and energy industry operating companies (see above), software vendors, consumer groups, and regulators only.  Registrations received from other tax, accounting and consulting practitioners will be evaluated on a case-by-case basis and may not qualify for attendance.  Questions re: the application of this restriction can be addressed to [email protected].  Any determination as to the fulfillment of a registration to attend this program shall reside solely with EUCI.

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