Accounting

1.   Definition, regulation and business approach

Definition of hedge accounting

A hedge accounting means designating one or more hedging instruments so that their change in fair value offsets the change in fair value or the change in cash flows of a hedged item.

Regulations on hedge accounting in Germany

HGB §254 Bildung von Bewertungseinheiten; Bilanzrechtsmodernisierungsgesetz (BilMoG)

International financial reporting standard (IFRS) 9 Financial Instruments.

A typical bank balance sheet and revenue structure in IFRS9. Items marked with “xx” are recommended by me as key items: by reading reports of a bank, might pay more attention on the detailed structure of these items.

Background/Scenario

IFRS9 implemented in 2018 has further changed the old bank accounting classification and measurement rules. By SAP Bank project implementations, we need to setup debit/credit settings for Loans Management, Collateral Management, Bank Customer Account, Business Partner, etc. The concept debit/credit, in German Soll/Haben, in Chinese and in Japanese, 借方/贷方 or 借方/貸方, is important for our configuration.