Russian Practice of Applying Hedge Accounting

Abstract

Currently there are no comprehensive empirical studies in the scientific literature regarding hedge accounting in non-financial organizations of the Russian Federation for the period from 2010 to 2021, which does not allow us to identify trends, problematic aspects and potential directions for the development of accounting technology in close connection with real practice. The purpose of the study is to analyze the results of scientific work carried out on this topic. The author of the article substantiates the need to analyze Russian practice in the field of hedge accounting, and also studies the experience of its application, including analysis in the context of separate companies. The theoretical basis of the study was the provisions of IFRS and US GAAP in terms of derivatives and hedge accounting, literature sources on the topic and the empirical basis — is the annual consolidated financial statements of 22 Russian companies for the period from 2010 to 2021. It has been revealed that the main thing in non-financial organizations is cash flow hedge accounting. It has been established that there is a gap between the facts of risk reduction or mitigation based on derivatives and the application of hedge accounting to them, which is evidence of the conscious refusal of some companies to apply this accounting methodology. The analysis of the identified cases of hedge accounting shows the examples of using exchange differences for hedging (rather than derivatives); also, the adaptation of fair value hedging to the practice of non-financial organizations is considered. The results of the study will be useful for non-financial organizations that have not applied, but consider hedging and related accounting features as a promising area of activity; researchers and consultants in the field of futures and derivatives market development and risk management.