The fund manager runs several funds that invest in non-AUD assets. That gives the funds a direct foreign-currency exposure: every movement in the AUD against the relevant currencies affects the value of the underlying investments, and by extension the return that ultimately flows to investors.

The fund manager manages this exposure with FX forward contracts. That's the right instrument for the job, but it introduces a second problem sitting behind the first. A derivative held at fair value moves every month, and unless it's accounted for carefully, realized gains or losses from the hedging contracts hit the PnL throughout the tax year  — with no offsetting realized gain or loss on the underlying investment, because the hedged item hasn't been sold yet. Left alone, this creates one-sided earnings volatility that has nothing to do with the fund's actual investment performance. 

For the fund manager, that volatility isn't an abstract reporting concern. It flows through to the consistency of the funds' income distributions to investors — the numbers investors see and rely on period to period. Managing it properly means applying hedge accounting under AASB 9 (documenting each hedge relationship, testing effectiveness, running the right journals) and, separately, correctly applying the TOFA Hedging Election for tax purposes — a technical, judgement-heavy area that most funds management teams don't have in-house, and one where getting it wrong is costly to unwind after the fact.

Running this well, across multiple fund classes with FX forwards against multiple non-AUD exposures, needed more than a spreadsheet and a year-end scramble. It needed a hedge-accounting specialist doing the work continuously through the year, with the discipline an auditor would expect to see from day one.