Press Release
Principia Partners Delivers Tools to Comply With FAS 133
End-Users Welcome Solution to Looming New Regulations for Derivatives and Hedge Accounting
Dynamic Flexibility of PAS/SLS Enables Seamless Integration
of
Data From and To Existing Accounting Systems
New York, April 6, 1999 – Principia Partners, the premier provider
of turnkey software for end-users of derivatives and other financial
instruments, today announced that it has delivered to all existing
clients an important new sub-ledger component to its Principia Analytic
System (PAS). PAS/SLS (Sub-Ledger System) will enable end-users of
derivatives to customize their systems to comply fully with FAS 133,
the Financial Accounting Standards Board's derivatives and hedge
accounting standard for non-dealers. FAS 133 will be mandated for
fiscal years beginning after June 15, 1999. The new sub-ledger component
takes full advantage of the dynamic flexibility of PAS, and provides
a comprehensive framework to meet specific requirements of the new
rule, one of the most controversial and far-reaching accounting standards
issued in recent years.
Prior to the release of PAS/SLS, Principia Partners hosted a one-day seminar to demonstrate the new sub-ledger system's capabilities. The event was attended by more than 50 senior accounting officials from organizations across the nation. Tim Beebout, Senior Vice President, the Federal Home Loan Bank of Des Moines, an attendee, said, "The broad capabilities of PAS/SLS are impressive, and will position us well to comply with the rigorous regulatory requirements of FAS 133. We look forward to a smooth and speedy implementation of this thoughtfully conceived and well-designed product." FHLB Des Moines has been a Principia client since 1995, and uses PAS extensively in its bond issuance and funding programs.
FAS 133, with its extensive new disclosure requirements, mandates that all derivatives be recorded on the balance sheet as assets or liabilities at their fair value. It also requires that changes in the fair value be recognized in income when they occur, with the exception of derivatives that qualify as hedges. Companies can elect to use various methods of "hedge accounting" to eliminate or reduce income-statement volatility arising from reporting changes in a derivative's fair value.
Principia Partners is leading its industry in providing clients with a complete suite of tools for FAS 133 compliance. The PAS/SLS system provides maximum flexibility to structure internal and external reporting of derivative and hedge positions to meet the new accounting standards as well as internal reporting and risk management practices. Sub-ledger capabilities include marking derivatives to market, linking specific assets and liabilities with specific hedge instruments, documenting hedge relationships, and showing the effectiveness of hedging policies. The new sub-ledger component also provides users with a chart of accounts facility that forms a foundation for customized reporting. This set of user-defined rules enables extensive customization for client-specific accounting needs.
"Release of PAS/SLS represents a major milestone for Principia Partners because it clearly positions us as the technology provider with the best tools to help a widely encompassing group of end-users of derivatives cope with the multiple challenges of FAS 133," said Theresa Adams, a founding partner and principal of Principia Partners. "During the development process, we received valuable insights from many of our end-user clients about their needs and concerns, and this exchange helped us to design and implement what we believe is the most complete solution available within our industry," she added.
About Principia Partners
Principia Partners was founded by a group of finance and technology professionals thoroughly familiar with end-user requirements for managing risk through the use of derivatives. Their collective expertise in trading, operations, systems, and risk oversight has built the framework for the Principia Analytic System (PAS), the company's cash management tool. PAS includes a complete set of robust risk management tools to value portfolios and evaluate risk under expected, historical and stressed conditions. The PAS/SLS sub-ledger enables clients to comply fully with FAS 133 accounting rules. The dynamic flexibility of the PAS system is reflected in the capability of the new sub-ledger system to receive data from or export data to external applications. Further flexibility is demonstrated by the scalability of the PAS system — from a one-person hedge effort to a global derivative trading operation. The turnkey system, which is distinguished by its ease and speed of installation, is used by a wide range of end-users of derivatives, including corporations, insurance companies, government agencies, commercial banks, money managers, and hedge funds, as well as by derivatives dealers. For more information on Principia, see www.principiapartners.com.
For press information contact:
Shamira Alidina
Write Image
271 Regent Street
London W1B 2BP
shamira@write-image.co.uk
Tel: + 44 (0) 20 7959 5450
Fax: + 44 (0) 20 7493 5499
Email: shamira@write-image.co.uk