Change to LIBOR & Other Reference Rates: Financial Accounting & Reporting Issues Webinar
Overview
The upcoming phase-out of the London Inter-bank Offered Rate (LIBOR) in favor of alternative reference rates will lead to extensive changes in global finance. LIBOR is used extensively in the US and global markets as a reference interest rate in a broad range of financial instruments and commercial agreements, but banks that report the information used to set this rate will no longer be required to do so after 2021. Regulators in various jurisdictions have been working to replace LIBOR and other interbank-offered rates with reference interest rates that are more firmly based on actual transactions from liquid markets.
Objective
This timely webinar will explore how countless contracts—such as derivative contracts and variable rate debt agreements—will need to be modified as a result of the transition. You will also learn about accounting changes that could be costly and burdensome, and which could have significant effects on financial reporting, including increased earnings volatility.
Emphasis
- Transition from LIBOR & Other Reference Rates
– The basics
– What caused the change?
– Benchmark rates
– Comparison of USD LIBOR to 90-day average SOFR - FASB—ASU 2020-04
– Impacted agreements
– Reference Rate Reform (Topic 848)
– Contract modification relief
– Hedge accounting relief
– Alternative Reform Rates (ARR)
– US dollar
– British pound
– Euro
– Swiss franc
– Japanese yen
– SOFR market adoption across:
– Futures
– Swaps
– Cash issuances
– Other interest rate derivatives
– Operational impacts of transitioning from LIBOR - ARCC Recommended Best Practices
– Impact of COVID-19 on transition timing
– Controls (entry level, business process, ITGC)
– Operational impacts
– Governance structure
– Processes and controls
– Updates to IT systems
– Industry progress
– Market liquidity
– Unknowns
– Bank/finance co. perspective
– Preparing for transition
– Regulatory (ISDA protocol, fallback language)
– Accounting (ASC 848, disclosures and exemptions)
– Operational (economic impact, feasibility)
– Contract modification - Disclosure Examples—How Are Companies Reflecting Reference Rate Reform?
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