Course Outline

Course Outline

Two day course outline: Accounting standards on Financial Instruments and Derivatives
26th 27th April, 2013 | Kolkata

Vinod Kothari vinod@vinodkothari.com Vinod Kothari Consultants Private Limited

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This course outline is for training purpose and does not intend to stimulate any existing business process.

Course Outline

Introduction
Accounting for financial instruments is as complicated as several of the present-day financial instruments themselves. Built on the basic theme of reporting at relevant, current values, the process of rewriting age-old historical cost accounting rules that started around 1998 is still continuing hence, there has never been stability on the international landscape of accounting standards on financial instrument accounting. The mark-to-market or fair value reporting rule has been at the epicenter of the present credit crisis. Regulators world-over are investigating into whether the crisis has been impacted, at least in part, by accounting rules that require notional losses to be reported as actual losses. In the prevailing scenario, the international scenario on accounting for financial instruments is ever interesting, ever enigmatic. Fair value accounting standards, hedge accounting standards, those for classification of financial instruments for the purpose of the their MTM accounting, accounting standards for derecognition of financial assets and liabilities, and derivative accounting standards all of this adds up into a veritable web of complex rules. What makes the rules even more daunting is that the standards have been in a flux over the last few years. This workshop has been designed to make you easily apprehend the complicated accounting treatment. As the coverage is very comprehensive, you will emerge with complete inputs on accounting for financial instruments and derivatives. We will hand-hold you in this learning process. The workshop will be supported by plenty of examples, including Excel sheets, as to how fair values are to be computed in different situations. It will also give some easy-to-understand introduction on various derivative products and financial instruments.

Date and Venue details

Date: 26th -27th April, 2013 Venue: TBA, Kolkata Time: 9:30 a.m. to 5:30 p.m. On the first day, participants are expected to report at 9 am for registration.

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Your Investment
The fee for this course is Rs. 30000/- per participant and for overseas participants USD 600 per participant. Course fee includes: Tuition fees, Course Material Lunch and snacks during the breaks Fees along with the Registration Form should be mailed with cheques payable to Vinod Kothari Consultants Private Limited and may be mailed as per details annexed. Bookings can be cancelled by written intimation at least 5 days before the Course date, when a refund of fees after a 25% deduction on account of administrative charges shall be made. No refund is possible for cancellation thereafter or for no shows. We generally do not encourage proxies. We surely do not allow one person taking a part of the course and another person taking the other part.

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2-Day Course Outline

Day 1
Session 1: What are financial instruments and derivatives
a. b. c. d. e. f. g. Meaning of financial instruments Meaning of derivatives What transactions are not financial instruments What transactions are/ are not derivatives Quick overview of accounting for financial instruments Brief introduction to accounting for derivatives Meaning of embedded derivatives how to identify and separate embedded derivatives

Session 2: Recognition and De-recognition of financial instruments

a. Rules on recognition of financial instruments b. Rules on de-recognition conditions for putting financial assets off the balance sheet c. Understanding of continuing involvement d. Application to securitisation/ sale of financial instruments e. Whether receivables acquired by the company will qualify to be put on the companys balance sheet? f. Will the receivables sold by the company qualify to be put off the companys balance sheet? g. If on-balance sheet/ off-balance sheet treatment is not available, consequences thereof on the Balance sheet/ P/L account

Session 3: Basics of mark to market accounting

a. Why and what is mark to market b. Understanding fair value accounting as an exception to classic historical cost accounting rule c. Classification of financial instruments into i. Loans and receivables ii. Hold to maturity iii. Held for sale iv. Trading assets d. New classification norms under IFRS 9

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Session 4: Accounting for loans and receivables

a. b. c. d. e. What is a loan/receivable? Illustrations of what is and what is not included Meaning of amortization of a loan Treatment of upfront costs/revenues Treatment on restructuring

Session 5: Accounting for hold to maturity investments

a. b. c. d. e. Meaning Precautions as to hold to maturity classification Illustration of what can and cannot be treated as HTM When can an HTM asset be sold before maturity Examples of accounting for HTM assets

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Day 2
Session 6: Accounting for available for sale
a. Illustrations b. Re-classification of an AFS asset into trading/HTM category

Session 7: Accounting for investments in associates/ JVs/ subsidiaries

a. Accounting in stand-alone financial statements b. Accounting in consolidated financial statements

Session 8: Accounting for the liability side of the balance sheet

a. Distinction between equity and liability b. Nature of preference shares and whether they qualify as equity or liability c. Accounting for compound financial instruments, perpetual debt instruments, equity warrants, etc.

Session 9: Guide to computing fair value

a. b. c. d. Guide to projected cashflows Use of present value techniques for valuation Choice of discounting rates Use of expected value approach

Session 10: IFRS 13 on fair valuation

a. b. c. d. Guidance on fair value Use of discounted cashflows for fair valuation Use of expected value approach Examples on fair valuation

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About the Faculty

Vinod Kothari is internationally recognized as author, trainer, consultant and expert on specialized financial subjects, viz., accounting for financial instruments, securitisation, credit derivatives, etc. As such, he lectures all over the world. The locations where he has lectured on these subjects include New York, Washington, London, Milan, Singapore, Hong Kong, Sydney, Colombia (South America), South Africa, Malaysia, Jordan, Egypt, Dubai, Kuwait, Sri Lanka, Bangladesh, etc. besides almost every important location in India. And we have handled very diverse groups from rating agency professionals in Malaysia, to group of investors in Sydney, to tax officers in South Africa, to group of lawyers in India, to executives of the Worlds largest securitisation agency in Washington, to a group of quants in New York. Consulting assignments: Vinod Kothari claims extensive consulting experience in securitisation offering comprehensive securitisation-related consulting services to a variety of clients including originators, investors, IT companies, etc. Apart from one-off services to several companies in different countries, Vinod Kothari has been retained by an Indian rating agency for structured finance ratings. Vinod Kothari had been retained by Govt. of Jordan for suggesting and working on funding for a highprofile low-cost housing project. Vinod Kothari has been currently engaged as a consultant by a micro finance company in Egypt for their Leasing venture. Author of Books: Securitisation, Asset Reconstruction and Enforcement of Security Interests, 2010 Third edition has been published by Butterworths Lexis Nexis Wadhwa: This book is a detailed commentary on the law by the same name enacted in India. Besides a thorough and incisive commentary on the law, the book contains generic chapters dealing in detail with the law of enforcement of security interests in global context. Credit Derivatives and Structured Credit Trading, 2009 edition: This is one of the very few comprehensive texts on credit derivatives and is read all over the World. Introduction to Securitisation by Frank J. Fabozzi and Vinod Kothari, July 2008 outlines the basics of securitization, addressing applications for this technology to mortgages, collateralized debt obligations, future flows, credit cards, and auto loans. The authors present a comprehensive overview of the topic with experience they have gathered through years of interaction with practitioners and graduate students around the world.

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This book contains coverage of such key topics as: structuring agency MBS deals and nonagency deals, credit enhancements and sizing, using interest rate derivatives in securitization transactions, asset classes securitized, operational risk factors, implications for financial markets, valuation of MBSs and ABSs, and applying securitization technology to CDOs. Securitisation: The Financial Instrument of the Future, Third edition 2006: Published by Wiley, this highly popular book runs over nearly 1000 pages, and is an internationally-read publication. The book has received rave reviews from readers and reviewers all over. The book explains securitisation techniques in lucid details and includes comprehensive coverage on multi-faceted issues relating to securitisation and international case studies to illustrate different aspects of securitisation. Lease Financing and Hire purchase (4Th edition, 1996): This book, first published in 1985, is widely recognized as the bible on leasing in the continent and has been the most popular text on the subject for last 15 years. The book runs over 2000 pages and has elaborate contents on leasing, hire purchase and similar credit agreements. Author of 3 Chapters in Handbook of Finance, (editor Frank Fabozzi), published by Wiley, USA Editor - Guide to the Companies Act, 1956, A. Ramaiya, 17th Edition, 2010: The book runs over nearly 12000 pages of commentary on Indian company law.

Articles: Vinod Kothari's articles on asset-based finance, securitisation etc. have appeared in several national and international journals including Duke Journal of Comparative International Law (USA), US Banker (USA), Exportrader (Spain), Trade and Forfaiting Review (UK), Journal of International Banking Law and Regulation (UK), Equipment Finance Journal (USA), Monitordaily (USA), Analyst (India), etc. Vinod Kothari also contributes to Euromoney's yearbooks on leasing and securitisation. Lecturing: Regular speaker at professional institutes, Visiting faculty at Indian Institute of Management, Joka, Calcutta for several years. Currently, offering a course on structured finance, rated as one of the most popular courses (last term had 130 registrations). Guest faculty at National University for Juridical Sciences: the subject taught here are insolvency and credit interest enforcement laws in India and other countries. The course included a comparative study of the insolvency and creditors' rights in USA, UK and Australia. Awards: In 1987, a voluntary organization of Calcutta chose him as the Outstanding Young Person of Calcutta in the field of Finance and Taxation. Vinod Kothari won several academic awards.

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About Vinod Kothari Consultants Pvt Ltd

Vinod Kothari Consultants Pvt Ltd (VKCPL) is premier consulting and training entity in the field of structured finance. Headed by Mr. Vinod Kothari, who is the author of several books on the subject and trainer all over the world, VKCPL has been into the very thick core of structured finance in India. Apart from India, VKCPL has carried out transaction advisory services in several other countries Indonesia, Sri Lanka, Egypt, Jordan, Philippines, to name a few. As far as experience is concerned, the team has an established track record of conducting quality training programmes for over 20 years. With more than 500 workshops, focusing on leasing, securitisation, credit-derivatives etc we have addressed scores of industry events and conferences. In terms of variety of audience, we have handled both public and private groups. From investors and asset managers to Australia, to rating agency in Malaysia, to a leading law firm in India, to income-tax department in South Africa, to students in several academic institutions, we have dealt with different groups and different situations. See the presentation on our vast training as well as consulting experience here. Our experience is not limited to trainings and workshops, we have been conducting conferences on a large scale, on specialized areas to bring together industry players and provide a forum for relevant discussion and wide networking. So far, we have organized Regional Microfinance Summit in April 2010 with participation of over 100 people, The Securitisation Summit, 2012; The Infrastructure & Asset Finance Summit, 2012; and the latest is The Affordable Housing Finance Summit, 2013. All of these conferences witnessed coming together of high profile executives, speakers, sponsors, co-sponsors, panelists, supporters and participants.

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Course Outline

Contact us:
Kolkata Office: 1012 Krishna 224 AJC Bose Road Kolkata -700 017, 91(033) 22811276/7715/ 3742 Mumbai Office: 222, Ashoka Shopping Centre 2nd Floor, LT Road, Near GT Hospital Mumbai - 400 001 (022) 22675600

Mail your queries to: piyush@vinodkothari.com and nehagupta@vinodkothari.com Websites: Securitisation: www.vinodkothari.com Credit derivatives: www.credit-deriv.com Leasing and asset-backed financing: www.india-financing.com Whole lot of articles and presentations on variety of topics: www.indiafinancing.com Asset reconstruction companies: www.india-financing.com/arc/