A pragmatic view on the derivative financial instruments mechanism - futures contracts -

Author:University professor, PhD. Tatiana DĂNESCU, PhD Student Ovidiu SPĂTĂCEAN

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Keywords:characteristics, conceptual approaches, recognition, assessment, accounting

Abstract:
Considering the more pregnant globalization tendencies of the national economies, the process of derivative financial instruments knowledge and use has meanings with a high level of complexity. From this perspective, requirements concerning their recognition, measurement and disclosure in the financial statements of the reporting entities (financial investments companies, credit institutions, traders, institutional investors and other factors operating on the regulated markets of commodities and derivative financial instruments) become more exigent under the pressure of offering a more fair view of transactions with derivative financial instruments, of the inherent and specific risks involved or of the impact on the financial position and performances. \r\n\r\nFor the reporting entities, the efficient use of the derivative financial instruments leaded to a reduce exposure to the risk of change in foreign exchange, in interest rates, in prices of the tradable financial instruments acquired for placements or in the commodities prices. \r\n\r\nBy contrast, the characteristics of activities specific to trading the derivative financial instruments, especially future contracts, can also lead to an appreciation of the business (activity) risk for the reporting entities, implicitly increasing the audit risk and causing serious challenges for both those who prepare the financial statements and for the auditors, as far as concerns the adequate professional judgments. \r\n

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