Why this is mistaken
Economic intent is not a substitute for timely designation documentation. The file must identify the hedging instrument, hedged item or forecast transaction, specific risk, method of assessing effectiveness, and treatment of excluded components when the relationship is designated. The correction reports the actual designation date and preserves any gap. Later paperwork cannot silently create qualification for an earlier period.
Where to watch
When this mistake may appear
- We can document the hedge at quarter-end because the economics were clear.
Check your work
Your work may contain this mistake if:
- Cannot produce contemporaneous identification of the instrument, item, risk, method, and assessment plan.