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Sri T.N. Manoharan

Sri T.N. Manoharan

The Government of India named Sri T.N. Manoharan the first accountancy professional from Tamil Nadu to be conferred with the Padma Shri award. Manoharan is based out of Chennai, India and was recently appointed as a board member of the scam-hit Satyam Computer Services and later made as its chairman before the company was taken over by the Mahindra group. He is a distinguished professional and has several acheivements to his credit. Son of T.L. Narayana Chowdhry, a 93-year-old a freedom fighter, Manoharan, 52, is a partner in Manoharan Chowdhry Associates. He is also the past president of the Institute of Chartered Accountants of India (ICAI).

Padma Shri is an award given by the Government of India generally to Indian citizens to recognize their distinguished contribution in various spheres of activity including the Arts, Education, Industry, Literature, Science, Sports, Medicine, Social Service and public life. It stands fourth in the hierarchy of civilian awards after the Bharat Ratna, the Padma Vibhushan and the Padma Bhushan. On its obverse, the words “Padma”, meaning lotus in Sanskrit and “Shri”, in Devanagari script, appear above and below the lotus flower. The geometrical pattern on either side is in burnished bronze. All embossing is in white gold.

‘Accounting for Investments’ blog congratulates Sri T. N. Manoharan on being conferred with the Padma Shri award.

Interview in Financial Express Newspaper dated 26th September 2009



‘We need innovative financial products that are devoid of gambling elements’

Saikat Neogi
Posted: Saturday, Sep 26, 2009 at 2126 hrs IST

The global financial crisis has underlined the need for responsible corporate governance. Many of the nuances are explained in R Venkata Subramani’s latest book Accounting For Investments: Equities, Futures and Options published by John Wiley and Sons. A chartered accountant by profession, Subramani is the chief operations officer of Chennai-based Variman Capital Markets Services and is responsible for valuation and accounting, partnership allocation and accounting for companies. He has also taught at the Institute of Chartered Accountants of India and the University of Madras. Subramani in an interview to FE’s Saikat Neogi explains the changes in the accounting process after the global slowdown, credit default swaps and peer review of accounts. Excerpts:

How has the financial crisis underscored the need for greater responsible corporate governance within financial institutions?

It is now a known fact that some large financial institutions did push under the carpet certain losses in some innovative products either to dress up the periodical results or to protect employee bonuses. When the already inflated and heated up markets developed cracks, these unhealthy practices came to the limelight as these could no longer be covered up. The losses snowballed with domino effect, resulting in all round lack of trust amongst the financial institutions per se, which aggravated the situation calling for bailout measures from the government. Though this originated in the US, some of these events replicated in other parts of the world. Perhaps, a lot of these could have been minimised if there were a greater responsible corporate governance within financial institutions.

What are the accounting lessons that one can learn from the global economic crisis?

Accounting is based on common sense. If something defies common sense, it obviously cannot stand the test of time. Accounting standards are designed to provide uniformity in accounting and reporting and to ensure adequate disclosures are made about all aspects of material transactions. The lesson that one needs to learn from this crisis is that the regulatory compliance and reporting and disclosure requirements set forth in accounting standards should be followed in spirit for their own welfare in the long run or else it will boomerang on the entire financial community sooner than later. If there is a trouble, it’s better to bring it to limelight soon and never resort to cover up by applying ‘accounting skills’.

What kind of innovations are called for in the global financial institutions in the near future?

The Street is known for its creative and innovative financial instruments to cater to the risk appetite of every type of investor. Some financial instruments like the credit default swap (CDS), which have become extremely popular since 2000, have been suffering from certain serious flaws. Some economists and financial experts have been harping about the dangers of these products and unfortunately the whole world has been forced to learn a lesson in a very hard way. These inputs will undoubtedly force the global financial institutions to think and come up with innovative products that are devoid of gambling elements.

How can the government reform the financial sector? What kind of checks and balances are needed?

OTC products should be regulated. The financial sector has created several innovative products to take care of the requirements of different types of investors on the one hand and the issuers on the other. In all these, the government has to ensure that unchecked and over ambitious greed on the part of investors does not affect other investors. In other words, while investors with risk appetite should be fed with products that suit their requirements, the loss if any suffered by those investors should be protected by being adequately funded—not causing any domino effect on other investors. The exchange traded products usually ensure this. The government should ensure the same level of safety through appropriate means to both the counter parties of even OTC products. This will go a long way in ensuring financial stability and effectively acting as a shock absorber against any financial crisis.

Will the credit derivatives market regain investors’ confidence?

Not immediately in the present form. Credit derivatives in the present form may not regain investors’ confidence. There is a proposal to ban credit default swap in its present form. India has been very wise in staying away from this devastating product by the good efforts of RBI. In fact, CDS has been one of the main reasons for the present global financial crisis. CDS in the present form suffers from some serious flaws. There is no requirement of insurable interest for this product, turning it into a convenient form of gambling. Look at the numbers — the notional amount of CDS outstanding at the end of 2007 was around $62 trillion as compared to around $25 trillion of the total fixed income securities issued in the US, indicating the gambling element. Unless these flaws are eliminated, credit derivatives are unlikely to regain investors’ confidence.

Book review in Business Line (The Hindu Group)


Life-cycle of financial instruments

In the case of an equity instrument investment, impairment; according to IFRS (International Financial Reporting Standards) means a significant or prolonged decline in the fair value of that investment below its cost. And as per the US GAAP (generally accepted accounting principles), impairment is when an entity considers a decline in fair value to be other than temporary.
Indicators of impairment include the financial health of the counterparty, intention of the investor to hold the asset for a reasonable length of time to permit recovery in value, the duration and extent that the market value has been blow cost, and the prospects of a market price recovery, explains R. Venkata Subramani in the first volume of Accounting for Investments: Equities, futures and options ( www.wiley.com).  Among the other differences that he highlights, in this regard, are reclassification, trading securities, and available-for-sale securities.

While in IFRS, the IAS (International Accounting Standard) 32, IAS 39, and IFRS 7 deal with the principles involved in recognition, measurement, disclosure, and presentation of financial instruments, the Indian pronouncements from the Institute of Chartered Accountants of India (ICAI) are AS 30 on the recognition and measurement of financial instruments and AS 32 on the disclosures. In sum and substance, the Indian Accounting Standards are the same as the corresponding IFRS, informs T. N. Manoharan in the foreword. Even though investment banking institutions suffered a serious setback due to the financial crisis that began in 2008, banks, hedge funds, and several other financial institutions do trade and invest in several financial instruments, the author observes in the preface.

“The need for comprehensively understanding these financial instruments, including the accounting aspects involved, assumes great importance. Even before the beginning of a trading day, the front office should know the positions of the various financial instruments held by the entity and have the flexibility to obtain a detail breakdown of cost, and so on.”

The book should be a handy reference for accountants because it deals with `the entire life-cycle’ of the different financial assets, and is replete with examples that drill down to details such as journal entries, general ledger accounts, trial balance, income statement, and balance sheet. More importantly, the book aspires to fill `the knowledge gap’ between the technology people and the finance professionals, in projects concerning the specialised field of investment accounting.

Recommended addition to the CAs’ shelf.


Review by Sri M. S. Ray, ED, SEBI


Accounting treatment of financial instruments is a highly complex subject Efficient handing of this subject requires in-depth knowledge of the intricacies of various financial products, accounting  standards and practices relating to such products and tax laws governing these products. Mr R. Venkata Subramani, being a professional Chartered Accountant of long standing, has brought in his expert knowledge of the subject in writing the book ‘Accounting for Investments’.

The book adequately covers the Indian and international accounting standards – both US GAAP and IFRS – in so far as they relate to financial instruments. This is extremely important in view of the ensuing convergence between Indian accounting standards with IFRS.

In this book, the author has attempted to explain the subject in lucid language with ample illustrations and real-life problems with solutions. The book also adequately covers a number of equity products including futures and options etc.

I must congratulate Mr. Subramani for coming out with this invaluable and painstaking work. I am sure, the book will be immensely useful as a ‘hand book’ and ready reference on financial instruments for both students and professionals in the financial world.

(Manas S Ray)

Brief profile of Mr. Manas Ray, Executive Director, SEBI.

Mr. Manas Ray is Executive Director of the Securities and Exchange Board of India (SEBI),  where he is heading the ‘Market Regulation Department’ ‘Market Intermediaries Regulation and Supervision Department’ and ‘Derivatives and New Products Department’.  He is a member of the International Organisation of Securities Commissions (IOSCO)’s  ‘Standing Committee on Secondary Market’ and International Standards Organisation (ISO)’s ‘Association of National Numbering Agencies’ (ANNA).  Mr. Ray has been a member of the ‘Inter-Departmental Committee’ appointed by the Ministry of Finance for examination of India – Mauritius Double Taxation Avoidance Agreement.  He is also SEBI’s co-ordinator for the ‘High Level Consultative Committee on Financial Markets’ and is SEBI’s representative at ‘RBI-SEBI Standing  Technical Committee’. He heads the ‘RBI-SEBI Standing Committee on Exchange – traded Currency Derivatives and Interest Rate Futures’.  He is also a member of the Governing Council of the Indian Institute of Capital Markets, Mumbai.

Mr. Ray holds a post-graduate degree in Political Science from the University of Delhi in addition to a degree in Law  and Post-graduate Diploma in Securities Law.

Mr. Ray belongs to the Indian Revenue Service where he holds the rank of Commissioner of Income-tax.


R. Venkata Subramani is a brilliant author with many years of hands-on experience in financial accounting field. Accounting for Investments was created from his efforts to teach future accountants and anyone working in the world connected with investment and financial accounting today on how to see accounting from a new and easy angle. Never has this topic been written in such simple but theoretical, practical and comprehensive form – a total triumph of maverick erudition and publishing.

Yoshio Nakayama, Director, Professional Service, Calypso Technology Inc, Japan

Review by Prof. (retd.) Girish G Yajnik, South Carolina, USA


This handbook provides a basic foundation with deep insight into the current global economic and financial crisis. The author has effectively employed a user-oriented approach to illustrate the complex mechanics of financial accounting for investments in a dynamic, volatile environment. With clear writing and pragmatic yet detailed guidance, this is a good resource for a novice researching accounting for equity investments.  No library, investment advisor or CPA practitioner should be without this handbook in their collection.

Prof. (retd.) Girish G Yajnik : alumni of USC Darla Moore School of Business and a research faculty member of University of South Carolina.

Review by Sri V. Ranganathan, Partner, Ernst & Young


In the current unprecedented and volatile economic environment which owes much of its malaise to the financial and banking sectors’ behavior, a comprehensive   guide to accounting for investment and financial transactions is a very timely addition to the existing literature on this branch of accounting. This book provides a clear understanding of the intricacies of the evolving products of the investment industry, in a very meticulous and illustrative way. A book which would be highly respected by all discerning professionals in this field.

V. Ranganathan, Partner, Ernst & Young, India.

Dr. K Sriram, Consulting Actuary


This book on “Accounting for Investments” is a pioneering work in demystifying the complex accounting mechanics associated with financial instruments – particularly the derivative instruments like options, futures, forwards and swaps.

Based on his hard-won experience in this field, the author Venkata Subramani has presented a thorough and insightful view of the investment accounting process through structured numerical examples which mirror the trade life cycle of the different financial instruments. The added advantage is that these examples are dovetailed to the US GAAP requirements.

This detailed step-by-step guidebook is an essential reading for anyone who seeks to have an end-to-end understanding of the investment accounting process. It is a ready-to-use comprehensive course-ware for any training program focused on investment accounting.

Consulting Actuary

Dr. K. Sriram is a Consulting Actuary Engaged in Employee Benefits Consulting Practice. He is also an Actuarial Consultant to Genpact, India which is the largest BPO [Business Process Outsourcing] company in India. In his role as the Actuarial Consultant to Genpact, Sriram has the over-sight responsibility for life insurance & pensions related actuarial work, which Genpact does for the US life insurance companies.

Before setting up his practice, Sriram was the Chief Actuary & Appointed Actuary of MetLife India Insurance Company at Bangalore. Overall he has about 15 years of experience in actuarial engagements related to life insurance and pensions.

Sriram is a Fellow Member of the Institute of Actuaries of India and an Associate Member of the Institute of Cost & Works Accountants of India. He has a Masters Degree in Management from the Indian Institute of Management, Bangalore [IIMB] and has a Doctorate Degree in Management from the Bharathidasan University.

Sriram is a member of the Executive Council of the Institute of Actuaries of India [IAI] and is a member of the Financial Risk Management Advisory Group of IAI. He is also a Guest Faculty Member at IIM, Bangalore. He has published a number of papers in the areas of life insurance &Investments. He has authored a book on “Leasing, Hire Purchase & Factoring”.

Review – Mr. R. Ravichandran – Commissioner of Income Tax


“Accounting for Investments” by R. Venkata Subramani is a great attempt to deliver a right blend of knowledge and application. Especially in the rapid and ever growing investment scenario there are very few books that focus on the accounting aspects of complex financial products. Ways of accounting treatment in different situations are explained in detail with apt examples right from journal entries till the preparation of a balance sheet. Venkata Subramani is a professional accountant who has specialized knowledge in this field and it is indeed good for the accounting profession that he chose to share his knowledge through his good book.

Any accounting professional in the investment world would find this as an appropriate book for education and reference. Equity investment firms, fund houses, banking and other financial institutions also would find loads of information required for them in this book. The author has bestowed the reader with a book worthy to find a place in one’s personal library.

R. Ravichandran, Commissioner of Income Tax, Government of India.