Derivative Instruments & Hedge Accounting for Energy Transactions

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

September 9-10, 2024 | Houston, TX and Online :: Central Time

“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

Dive into the complexities of derivatives, fair value, and hedge accounting tailored for the energy and power sectors. Conducted by top experts in tax accounting and advisory, this course provides both foundational knowledge and in-depth insights.

Program materials and discussion will include a summary of the standard, 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.

What You’ll Learn:

• ASC Topic 815: Derivatives and Hedging
  Understand the nuanced application and disclosures
• ASC Topic 820: Fair Value Measurements
  Learn strategies for valuing challenging energy contracts
• IFRS 9: Financial Instruments
  Key differences from U.S. GAAP and their impact on energy companies
• Power Markets and Energy Trading
  Specific considerations for applying these accounting standards

Join us for a comprehensive learning experience that will enhance your accounting practices and decision-making in the dynamic energy industry.

Learning Outcomes

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

• Apply the understanding of ASC 815 and 820 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

Monday, September 9, 2024 : Central Time

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 (continued)

• Derivative accounting basics
  • Overview
  • Case studies – forward/swap contracts
• ASC 815 Disclosure Requirements
  • Overview
  • Public vs. private application
  • IFRS/GAAP differences
  • Illustrative examples
• Q&A

12:00 – 1:00 p.m. :: Lunch Break

1:00 – 1:45 p.m. :: Embedded Derivatives

• Definition
• Examples
• IFRS/GAAP differences

1:45 – 3:00 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
  • Illustrative examples
• Commodity pricing and forecasting models for level 2 or 3
• Q&A

3:00 – 3:15 p.m. :: Afternoon Break        

3:15 – 4:30 p.m. :: Power and Energy Accounting Issues

• Application of scope exceptions available to energy contracts (normal purchase, normal sale)
  • Overview
  • Capacity exception
  • Documentation requirements
  • Common pitfalls
• Accounting for financial transmission and congestion revenue rights (FTRs and CRRs)
• Accounting for bundled contracts
• Internal controls, compliance, and best practices

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 attendees)

Tuesday, September 10, 2024 : Central Time

9:00 – 10:15 a.m. :: Hedge Accounting Overview

• Hedge accounting introduction
• Types of hedges and hedge criteria
• Documentation requirements and timeline
• Effectiveness testing requirements

10:15 – 10:30 a.m. :: Morning Break

10:30 – 11:45 a.m. :: Hedge Accounting Overview (continued)

• 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

Renewable Energy Instruments and Their Associated Accounting Considerations

Tuesday, September 10, 2024 : Central Time

Transactions involving the generation, trading, and consumption of renewable energy – as well as the buying and selling of related environmental attributes including renewable energy credits (RECs) – are now commonplace in the power industry with increasing states’ renewable portfolio standards and as more corporate organizations and governments pursue net-zero carbon emissions goals.  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 power purchase agreements (PPAs) – both physical and financial (virtual) and an overview of renewable natural gas processes including the related environmental attributes.

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

Agenda

1:00 – 1:15 p.m. :: Introduction and Overview

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

• Renewable energy consumption
• Overview of renewable natural gas and related environmental attributes
• Overview of other carbon credits
• Accounting considerations for carbon credits

2:15 – 3:00 p.m. :: Contract Assessment – Renewables

• Power Purchase Agreements
• VIE accounting considerations (ASC 810)
• Derivative accounting considerations (ASC 815)

3:00 – 3:15 p.m. :: Afternoon Break

3:15 – 4:30 p.m. :: Contract Assessment (continued)

• Lease accounting considerations (ASC 842)
• Battery storage lease accounting considerations (ASC 842)
• Conditions precedent
• IFRS Considerations – Hedge Accounting & Own-Use
• Physical PPA example
• Virtual PPA differences

4:30 – 4:45 p.m. :: Q&A

5:00 p.m. :: Workshop Adjournment

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

Tawanda Chadenga is a Houston-based partner with more than 25 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.

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.

Sara Mazzoccoli, Manager – Commodities & Energy Markets Group, Deloitte

Sara Mazzoccoli is Audit & Assurance Manager, who has served Deloitte’s energy clients for over 7 years.  She is a member of Deloitte’s commodities and energy markets audit and accounting advisory practice, which primarily focuses on derivatives and commodities being traded in the United States, and has extensive experience auditing energy trading companies and the related accounting matters, related to commodity transactions, valuation, and disclosure requirements. Further, Ms. Mazzoccoli has extensive experience serving in an advisory role as part of an internal control SOX remediation team. She worked on multiple acquisitions that required conversion from IFRS to US GAAP standards for reporting purposes, where she focused primarily on the derivative related areas of the company.

Kevin Rupp, Manager – Commodities & Energy Markets Group, Deloitte

Kevin Rupp is an Audit & Assurance Manager with more than over 7 years of combined experience in public accounting and industry having served a variety of public and private clients within the energy, consumer business, and industrial building materials sectors. Kevin primarily specializes in the audit and advisory of accounting and valuation risk areas for energy commodity contracts including natural gas, power, crude oil, refined products, renewable energy, and structured products, from the recognition and valuation at inception to accounting and reporting of such contracts upon settlement. He has experience coordinating with front, middle, and back-office groups for the proper recognition and ongoing valuation of commodity contracts. Kevin also has experience with assessing contracts for derivative reporting requirements under both IFRS and GAAP standards and the related internal controls and processes throughout the life cycle of a deal.

Chase Duncan, Manager – Commodities & Energy Markets Group, Deloitte

Chase Duncan is an Audit & Assurance Manager who has served Deloitte’s financial services clients for over 7 years.  He is a member of Deloitte’s commodities and energy markets audit and accounting advisory practice, and primarily focuses on audit and valuation of commodity derivative transactions as well as hedge accounting and disclosure requirements. Chase has extensive experience auditing internal controls over financial reporting for our largest regulated Banking & Capital Markets client and brings perspective on valuation best practices to the PU&R and O&G industries and energy trading markets. He has advised on commodity- and financial-hedge accounting and effectiveness assessments, and further has experience serving as a “subject matter expert” over Valuation for audits in other financial services industries.

Deloitte & Touche LLP – Houston

1111 Bagby St.
Suite 4500

Houston, TX 77002

 

REGISTER NOW FOR THIS EVENT:

Derivative Instruments & Hedge Accounting for Energy Transactions

September 9-10, 2024 | Houston, TX

RELATED WORKSHOPS:

Renewable Energy Instruments and The Associated Accounting Considerations

September 10

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 August 09, 2024 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

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: Accounting – Technical
Program Level: Basic
Delivery Method: Group Internet Based
Advanced Preparation: None

EUCI 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.