Aug. 6, 2002-- Kiodex , Inc., a technology company that provides a Web-services platform for corporate risk management and financial reporting, today announced the launch of the Kiodex Risk Workbench(SM) Accounting Tools module.
With corporate governance and accountability at the forefront of business news, companies are looking for ways to manage stringent new regulations regarding proper accounting in financial statements. Kiodex 's Accounting Tools module provides a platform for companies who must abide by these strict regulations - specifically, those who must provide accurate reporting of derivatives usage as required by the Financial Accounting Standards Board in its Statement No. 133. (SFAS 133, commonly referred to as FAS 133.)
"We have seen recently the potential disastrous consequences for companies that do not maintain high levels of corporate accounting transparency," said R. Martin Chavez, CEO of Kiodex . "Our new Accounting Tools module not only offers our customers a way to simplify meeting complex FAS 133 reporting requirements, but also gives them the peace of mind of knowing that they have access to independent, unbiased third-party market data for their financial reporting."
FAS 133 requires firms to report gains and losses on derivative transactions in earnings, unless the trades are specifically designated as hedges. Prior to FAS 133, firms were not required to report derivative positions on their balance sheets, and were not required to report changes in the positions' value in earnings, particularly if the trades were over-the-counter (OTC) instruments.
The new Accounting Tools module provides all the key reports and accounting entries necessary for FAS 133 compliance - everything from trade entry to general ledger. Users can also generate exhaustive and configurable reports on all their hedges, hedged items, and hedge relationships. As a module of the Kiodex Risk Workbench(SM), the Accounting Tools integrate seamlessly into the platform's four core services: deal capture, independent market data, financial reports, and valuation models. The powerful integration of these services in a Web-services platform with comprehensive audit capabilities gives corporations a complete business process for managing all aspects of energy price risk.
Module Launched on Heels of Successful Beta Program
The launch follows a beta program that included extensive independent testing by a variety of companies in energy-intensive industries. Devon Energy Corporation, one of the top five U.S.-based independent oil and gas producers in North America and a participant in the beta program, recently signed on as a full customer of the Kiodex Risk Workbench(SM) and the Accounting Tools module.
"In our evaluation of the Risk Workbench, we found the simplicity and accuracy of the application's mark-to-market reporting, coupled with Kiodex 's independent market forward curves, extremely valuable," said Michael Howe, Credit Risk Manager at Devon Energy Corporation. "We look forward to using the Risk Workbench to simplify much of the work required for proper reporting for FAS 133."
Functionality Highlights of the Accounting Tools Module
Single source for matches, strategies, and tests: A burden of FAS 133 compliance is the requirement to combine designated relationships, effectiveness tests, and a corporation's underlying strategies when accounting for derivatives. The Accounting Tools module offers a comprehensive set of tools to facilitate this process, and a platform to track this vital information.
Matching of hedges to hedged items: The Accounting Tools module has the ability to match trades - a unique feature that eliminates many of the challenges associated with FAS 133 compliance. A company can track two or more trades together in a match, such that hedges are grouped alongside hedged items. Trades are broken down by month, allowing the user to view quantities, and offering unlimited matching flexibility between trades classified as hedges and hedged items. Trades can be matched on a one-to-one, one-to-many, or many-to-many basis.
Pre-set effectiveness testing: Users of the module can store company-approved effectiveness tests in templates and can quickly re-compute all of the stored prospective tests with a single mouse-click. The module also saves a history of effectiveness test results for all hedge relationships, satisfying the FAS 133 "ongoing testing" requirement. The Accounting Tools module thus eliminates the cumbersome procedure of locating and updating any static effectiveness tests that a company uses, and of remembering the strategy underlying each test.
Comprehensive audit trail: In addition to tracking all trades (as well as any changes or updates to them) in the Trade Entry screens, the Accounting Tools module generates documentation at the match inception and de-designation stages, so each transaction's history is immediately available and is protected from being modified, lost, or destroyed.