Was the 'Short-Cut Method' Worth it in the End?

When designating a derivative as a hedging instrument, SFAS 133 requires that such designation be documented, reviewed and tested for effectiveness on an ongoing basis. An option to avoid this documentation and ongoing monitoring of effectiveness is available under SFAS 133. This option, commonly referred to as the 'short-cut method', assumes that a hedge is effective if it meets all the criteria as prescribed by SFAS 133.