Introduction by CA M.P. Vijaya Kumar to the book Financial Instruments as per Ind AS

Almost all business transactions culminate in financial instruments in some form. In the present era of money, money and money, we witness an increasing trend of businesses being done through contractual arrangements which are structured to such an extent that after some time the contracting parties themselves struggle to understand the arrangement – intent vs agreement, substance vs form. Further, with commerce becoming global and development in any part of the globe affecting us, the movement of financial instruments is the first indicator of direction of impact. Derivatives market is growing, will take time to mature, more complex instruments are getting designed, markets’ depth is under test and they do impact valuation of both derivatives and the underlying. Financial reports should reflect the state of business and the business/ economic environment it is operating and hence all Financial Instruments have to be valued at the fair values on a continuous basis. Having said this, would like to highlight that this principle has been there in the Indian GaaP to date in the form of mark to market for forex receivables and payables, provisioning for receivables, mark to market of current investments and recognising shortfall, etc. The Financial Instruments standard is quite refined and has a matured approach where fair value is applied consistently and the gains/loss is recognised in “other comprehensive income” in most cases. The mark to market affects profit and loss statement only when there is an explicit choice or a conduct reflecting intent, to treat financial instruments as “fair value through profit and loss”. Also, there are many instruments which will continue to be carried at amortised cost (with right usage of effective interest rate) and do not require fair value determination.
The standard on Financial Instruments, has taken significant time to develop and even today there is no consensus on many aspects of the standard and unlikely in near future. A topic such as this, without a deep understanding of the financial markets is difficult to understand.
We in India, have a very peculiar situation of adopting a very complex standard like IFRS 9 (in the form of Ind AS 109), ahead of the rest of the world by 2-3 years. For companies who have voluntarily adopted Ind AS in FY15-16, the adoption has been done with transition date of 1st April 2014 vs. rest of the world who would follow from 1st Jan 2018.
In this backdrop, Venkat authoring a book is highly commendable and I thank him for the effort. Mr. R. Venkata Subramani (Venkat) has given adequate treatment of the subject with his hands-on experience on financial instruments as part of his previous assignments.
I have given a quick reading of the manuscript and compliment R. Venkata Subramani (Venkat) for the comprehensive coverage on Presentation, Recognition, Measurement and Disclosure aspects of financial instruments. Guidance is provided exhaustively on the new impairment methodology known commonly as ‘expected credit loss model’, which will be very relevant for banks and financial services companies. The book deals at length the complex topic on hedge accounting with several illustrations including guidance on basic journal entries for recording the same. The topics on fair value hedge and cash flow hedge are illustrated through a several examples. The book also covers the much needed first time adoption of Ind AS relating to financial instruments in particular. The Guidance Note on accounting for derivatives issued by ICAI is also covered quite well. The extracts from annual reports incorporated in the penultimate chapter should serve as ready reference to the professionals who implement Ind AS as it would give the precedence on several topics relating to financial instruments. To sum up, the book is a good teacher of the standards on financial instruments, a good reference book for practical application.
I advise readers of any authored text book to supplement with a reading of the text of the Ind AS, before applying the principles for professional purpose.
Happy reading. I wish Venkat the best and multiple editions of the book in years to come.

M P Vijay Kumar
Chartered AccountantBook cover

Message from CA Anand Banka, Director, S.R. Batliboi & Co. LLP Chartered Accountants

????????????????????????????????????Financial Instruments has always been a dreaded topic for many and CA. R. Venkata Subramani has tamed the topic like no other. His explanation to the toughest of the topics is lucid enough to make it look easy. I was eagerly awaiting his book on financial instruments as per Ind AS since some time now. The book covers each topic exhaustively along with illustrations, journal entries and effects on profit and loss statement and balance sheet. Further, disclosures at the end of the chapter along with sample extracts of published accounts augment understanding of the standards. I would recommend this book to all professionals working/ aspiring to work in Ind AS domain.

CA Anand Banka, 
Director, Financial Accounting and Advisory Services
S.R. Batliboi & Co. LLP Chartered Accountants

Message from CA Kamal Garg, Author of several books on Finance, Audit, Taxation etc.

Kamal Garg Profile PictureThe present book is an excellent treatise on this complex but indispensable topic of “Financial Instruments”. The illustrations forming part of the book add understanding to the knowledge on the subject. This book authored by Mr. R. Venkata Subramani is surely going to be a useful reference guide for all the readers connected, directly or indirectly, with accounting and reporting of financial instruments.

CA Kamal Garg
Author of several books on Finance, Audit, Taxation and Corporate laws.

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Message from Dr. Rajkumar S. Adukia

Mr. R. Dr. Rajkumar AdukiaVenkata Subramani, a published author of two volumes of the series ‘Accounting for Investments’, known for his in-depth practical exposure in the field of Financial Instruments has brought out the book Financial Instruments as per Ind AS” which would prove to be an invaluable companion for anyone dealing with the financial instruments – accounting, reporting, presentation and disclosure.

The key concepts enunciated by the accounting standards on financial instruments are brought out in a very simple manner. Each topic is discussed along with adequate illustrations to elucidate the topic for getting an insight into the same.  Journal entries along with the ledger accounts, trial balance, profit & loss account and balance sheet are also given to get a complete grasp of the topic covered which makes this book an extremely useful.

Dr. Rajkumar S. Adukia, FCA, ACS, ACMA, LL.B. MBA., Dip IFRS (UK), Ph.D.
Central Council Member, ICAI (1998 – 2016)
Chairman, Ind AS (IFRS) Implementation Committee (2014-15)

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Message from CA. Tarun Jamnadas Ghia

CA Tarun GhiaMy compliments to CA. R. Venkata Subramani in bringing out the book ‘Financial Instruments as per Ind AS’ and making a very sincere attempt to bring out the nuances on financial instruments, relevant to Ind AS. The concepts have been explained in a lucid language with ample illustrations. Hedge accounting is another area explained in simplified manner with relevant examples. The writings on new impairment methodology should also be quite useful to the readers to understand the concept with more clarity. All the best.

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