NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS: QUALITATIVE DISCLOSURES

Disclosure is an effective mechanism to expose financial risk management practices to market discipline. Disclosure should be sufficiently comprehensive to meet the needs of users within the constraints of what can reasonably be required. Improved transparency through better disclosure may reduce the chances of a systemic financial crisis or the effects of contagion because creditors and other market participants will be better able to distinguish between the financial circumstances that face different institutions or countries. During this last decade, the accountability of the financial assets and debts has experienced a real revolution as a result of the fact that the accountability norms regarding the acknowledgement and evaluation of the financial instruments. The provisions of the mentioned standards, elaborated with the declared aim to bring the accountability practices at the level of the most recent evolutions that have taken place on the global financial markets have significantly changed the way of accountabilisation of the financial assets and debts and of the instruments of the own capitals, of the derivatives or of the operations of risks covering, as being a direct reflect of the nature of the transactions developed in the modern economy. The complexity of the new rules contained by the norms generated animated debates and challenged the practitioners involved in preparing and drafting the financial balances, for whom applying the requests referring to: the acknowledgement of all the derivatives of the balance, the evaluation of many of the financial assets and debts at their real value, the criteria that must be observed to annul the acknowledgement or the use of the special accountability treatment applicable to the protection operations against the financial risks etc. was, in most of the cases, an absolute novelty. Covering the fair value against currency risk. Unlike operations cover other types of risks, the coverage in a relationship of this kind may originate among nederivatelor. This is explained by the fact that, in general, changes in exchange rates are reflected for financial assets and liabilities in the profit and loss. Exceptions are non-monetary items (such as shares) denominated in foreign currency and classified in the category of assets available for sale to fair value changes recorded in equity. In this case, the exchange differences are recognized in profit or loss. Although IAS 39 does not prohibit the designation of such elements as tools for hedging currency risk, the relationship is unlikely to be effective. Due to the requirements of IAS 21 to assess all elements of the monetary exchange rate at the close of the financial year and to record changes in the profit and loss accounting operations risk coverage is not needed. Non-monetary items (assets or financial liabilities) record exchanged differences relating to equity, where the transfer results in the cancellation only in the recognition of such items. These rules have the consequence of using a less extended accounting operation of a fair value hedge against currency risk. The most frequently used instrument for hedging currency risk is the forward contract. If holding an asset denominated in a declining exchange rate is covered by a contract of sale of foreign currency on time. In the possession of a debt denominated in foreign currency, ANNALS of the ORADEA UNIVERSITY. Fascicle of Management and Technological Engineering, Volume IX (XIX), 2010, NR2