FAS133.com Special Report

A Guide to Understanding FAS 133 Effectiveness Testing: Part I

The problem with implementing FAS 133 has always been the disconnect between the front and back offices – those doing the trades and those making the accounting entries. The effectiveness test provides the intellectual (and in systems logic, the actual) linkage between the two. However it is only effective if handled correctly.

This two-part FAS133.com Special Report addresses the issue of how to assess effectiveness in a way that’s consistent with finance theory and risk management objectives. Part 1 addresses the issues of FAS 133 effectiveness requirements, when effectiveness matters and why.