The HEDGEHOG Method —
8 Pillars of Hedge Accounting Excellence.
Our proprietary framework ensures every hedge accounting program is built on a foundation that auditors recognise and regulators respect. No gaps. No guesswork. Just results.
What Is the HEDGEHOG Method?
The HEDGEHOG Method, built by our founder Kevin, is our proprietary 8-pillar framework for designing, implementing, and maintaining hedge accounting programs. Developed over years of working with ASX-listed companies, multinationals, and specialist funds across APAC, it covers every element of a successful hedge accounting program, from initial strategy through to ongoing governance and audit support.
Unlike generic accounting methodologies, the HEDGEHOG Method is built specifically for the complexities of IFRS 9 / AASB 9 hedge accounting. It ensures your program is not only compliant but efficient, scalable, and audit-ready from day one.
The 8 Pillars
Each pillar represents a critical stage in the hedge accounting lifecycle. Together, they form a complete, closed-loop system.
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A robust hedge accounting strategy, tailored to your organisation’s unique requirements and objectives, is paramount for success. A high-level strategy aligns your hedging activities with your risk management and financial reporting goals.
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A formal Derivative and Hedge Accounting Policy is crucial for establishing a solid foundation. Your comprehensive policy document should outline the framework for managing derivatives, hedge relationships, accounting methodologies, and risk assessment procedures.
Your policy should serve as a reference point for employees and auditors, to enhance transparency and ensure adherence to best practices.
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Proper hedge accounting documentation of the necessary information to satisfy regulatory requirements is essential. Clear and accurate documentation not only strengthens internal controls but also facilitates audit processes and reduces the risk of misinterpretation.
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Timely and accurate accounting entries – such as consistent general ledger journals related to derivative transaction and hedge effectiveness – are critical for maintaining a reliable hedge accounting program. Independent valuations will ensure the fair representation of hedging instruments on financial statements and enhance the credibility of your reporting.
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IFRS 9 mandates regular testing to assess the effectiveness of hedge relationships. By monitoring and analysing the correlation between hedging instruments and underlying exposures, utilising our systematic hedge effectiveness testing framework, you can proactively identify any issues and make necessary adjustments to remain compliant with accounting standards.
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Transparent and informative hedge accounting disclosures provide stakeholders with a comprehensive understanding of your organisation’s risk management strategies, fostering investor confidence by accurately describing the nature and impact of hedging activities in your financial statements.
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By managing and optimising the optics of reported results – aligning hedging strategies with your financial goals – you can enhance the stability of your earnings profile, reduce volatility, and improve performance metrics.
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Ensure hedge accounting compliance with both GAAP and IFRS requirements to streamline your audit process. By implementing best practices, enhancing internal controls, and minimising the risk of misstatements, you can reduce audit fees and enhance the accuracy of your financial reporting.
The HEDGEHOG Method works because it is comprehensive, repeatable, and built specifically for hedge accounting. It doesn't rely on generic accounting templates or a one-size-fits-all approach.
And for absolute robustness, every element is designed to meet the specific requirements of IFRS 9 / AASB 9 and the scrutiny of Big Four auditors.
Our clients don't just pass audit, we know they will satisfy it with confidence. The HEDGEHOG Method is why we have a 100% clean audit record across more than 75 entities and $10 billion in hedge notional value.
Why it works.
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A full HEDGEHOG Method implementation typically takes 4–8 weeks, depending on the complexity of your derivatives portfolio and the current state of your hedge accounting documentation.
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No. The HEDGEHOG Method scales to organisations of any size — we have worked with ASX-listed multinationals, mid-market companies and specialist funds. The principles are the same; the implementation is tailored.
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While the framework is designed to be clear and actionable, we recommend working with our Advisory team for initial implementation — this ensures the methodology is applied correctly the first time, and your team is trained on ongoing maintenance.
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The HEDGEHOG Method provides the framework and methodology; Hedgehog Software provides the technology platform to execute it. Together, they form a complete hedge accounting solution.
FAQ’s.
Ready to remove the guesswork from Hedge accounting?
If you want to learn more about Hedge Accounting, book a no-obligation discovery call with our founder, Kevin Mitchell. We will walk you through how we can help your team achieve clean audits and full compliance.