What is effectiveness test in SAP FS-BA-PM-AFP - Accounting for Financial Products?

SAP Term: effectiveness test

• Component: FS-BA-PM-AFP

• Component Name: Accounting for Financial Products

• Description: A test of the effectiveness of a hedge relationship in accordance with IAS 39. Effectiveness test methods can be divided into retrospective methods and prospective methods. Retrospective methods use the value changes that have occurred since the inception of the hedge to test the effectiveness of the hedge. IAS do not specify whether the change during the last reporting period or the overall change since the start of the hedge relationship should be used. Prospective methods use potential future value changes to test the effectiveness of the hedge.

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• Key Concepts: 
  An effectiveness test is a process used in the FS-BA-PM-AFP Accounting for Financial Products component of SAP to ensure that the financial products being processed are accurate and up to date. It is a way of verifying that the financial products are in compliance with the applicable regulations and standards. 
  
  How to use it: 
  The effectiveness test is used to check the accuracy of the financial products being processed. This includes verifying that the product is up to date, that it meets all applicable regulations and standards, and that it is properly documented. The effectiveness test can be performed manually or automatically, depending on the complexity of the product. 
  
  Tips & Tricks: 
  When performing an effectiveness test, it is important to ensure that all relevant information is included in the test. This includes any applicable regulations or standards, as well as any documentation related to the product. Additionally, it is important to ensure that all data used in the test is accurate and up to date. 
  
  Related Information: 
  The FS-BA-PM-AFP Accounting for Financial Products component of SAP also includes other processes such as risk management, compliance management, and reporting. Additionally, there are other components of SAP which can be used to manage financial products such as SAP Treasury and Risk Management (TRM) and SAP Cash Management (CM).