How To Fix TPM_THXE1014 - Hedging rel. &1/&2: Retrospective test on &3 is not effective

SAP Error Message - Details

• Message type: E = Error

• Message class: TPM_THXE1 - message class for effectiveness test

• Message number: 014

• Message text: Hedging rel. &1/&2: Retrospective test on &3 is not effective

What causes this issue?

You want to calculate a prospective effectiveness test. This step in
Hedge Accounting is only allowed if the hedging relationship was always
tested as effective in the history before the test date in both test
types, prospective and retrospective effectiveness test.

System Response

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

How to fix this error?

Procedure for System Administrators

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message TPM_THXE1014 - Hedging rel. &1/&2: Retrospective test on &3 is not effective ?

  The SAP error message TPM_THXE1014 typically relates to the hedging functionality within the SAP Treasury and Risk Management (TRM) module. This error indicates that a retrospective test for a hedging relationship is not effective, which means that the hedging relationship does not meet the effectiveness criteria as defined by accounting standards (such as IFRS or US GAAP).
  Cause:
  The error can occur due to several reasons, including:
  
  
  Ineffective Hedging Relationship: The hedging relationship may not be effective, meaning that the changes in the fair value or cash flows of the hedged item do not offset the changes in the fair value or cash flows of the hedging instrument.
  
  
  Data Issues: There may be missing or incorrect data in the hedging relationship setup, such as incorrect valuation parameters, missing market data, or incorrect hedge ratios.
  
  
  Timing Issues: The timing of the transactions may not align properly, leading to discrepancies in the effectiveness testing.
  
  
  Regulatory Changes: Changes in accounting standards or regulations may affect the criteria for effectiveness.
  
  
  Solution:
  To resolve the TPM_THXE1014 error, you can take the following steps:
  
  
  Review Hedging Relationship: Check the hedging relationship configuration to ensure that it is set up correctly. Verify that the hedged item and the hedging instrument are properly defined and that the hedge ratio is appropriate.
  
  
  Perform Effectiveness Testing: Conduct a detailed effectiveness test to analyze the relationship between the hedged item and the hedging instrument. Ensure that the results meet the required effectiveness thresholds.
  
  
  Check Data Integrity: Ensure that all necessary data is complete and accurate. This includes verifying market data, valuation parameters, and any other relevant information.
  
  
  Adjust Hedge Ratio: If the hedge ratio is not appropriate, consider adjusting it to improve the effectiveness of the hedging relationship.
  
  
  Consult Documentation: Review SAP documentation and guidelines related to hedging and effectiveness testing to ensure compliance with accounting standards.
  
  
  Seek Expert Advice: If the issue persists, consider consulting with a financial expert or SAP consultant who specializes in Treasury and Risk Management.
  
  
  Related Information:
  
  SAP Notes: Check for any relevant SAP Notes that may address this specific error or provide additional guidance on hedging effectiveness.
  Accounting Standards: Familiarize yourself with the relevant accounting standards (IFRS 9, ASC 815) that govern hedge accounting and effectiveness testing.
  SAP Community: Engage with the SAP Community forums to see if other users have encountered similar issues and what solutions they have found.
  
  By following these steps, you should be able to identify the cause of the error and implement a solution to resolve it.