Risk Exposure Management And Hedge Accounting Research

After the breakdown of the Bretton Woods systems of fixed exchange rates in 1973,a new era of credible monetary system formed.On the one hand,credit currency avoids the rigid restriction on the total amount of gold,which makes the increase of wealth no longer have the upper limit of measurement;on the other hand,the monetary value support changes from the gold to the national credit.Credit comes from people’s subjective thinking and will change with the inflow of new information.If the central bank over issues money,the rise and fall of the national economy will affect the value of money.The value of the currency issued by central bank is becoming more and more unstable,and the price of each commodity is also affected by this.This has seriously affected the stability of the income and profit of the manufacturing enterprises which trade commodities as raw materials or products.In order to avoid the income risk caused by commodity price fluctuation,enterprises choose derivatives which have a high correlation with the price trend of the spot market to hedge,partially or completely hedge the price risk of the spot market.The world’s first futures exchange was established in Chicago in the 1848.After one and a half century development,the global derivatives trading scale has surpassed the spot market,and the trading group has expanded from grain producers to all enterprises and financial institutions engaged in commodity trading.The futures,one of the most famous derivatives,become the first choice of hedging tools for enterprises bearing the risk of commodity price changes in production and operation because of the high correlation with spot products and good liquidity.The use of derivatives puts forward higher technical requirements for accountants.At first,accountants account the derivatives according to the CAS22.But it can’t reflect the mechanism of hedging.In 2006,the Ministry of Finance separately listed accounting standard CAS24 to solve the problem.But this accounting standard is not well used because of the strict standards about the definition of arbitrage tool and arbitraged items.Hence,CAS24 accounting standard was revised in 2016.Compare to the old version,the new version loosen the standards of accounting.Hence,the market react positively to public more information about hedge.This paper will start from the statement of the disclosure of hedging information of listed companies since the reform of the CAS24.Then the paper’s contents will transfer to the case company,through its financial statement data,to analyze the accounting procedure of the company according to the old version of CAS24.The next step is to compare the change of the accounting procedure after the reform of the CAS24 and find out the reasons through this change.Base of these reasons,we could find out the function of CAS24.