How this tech-savvy CA developed a SaaS solution to help CFOs & Auditors in the valuation of exotic financial instruments
- Hi! I am Venkata Subramani, a chartered accountant (CA), cost accountant and senior finance professional with over 35 years’ worth of industry experience.
- I have been in the corporate world since 1994, assuming various roles in hedge accounting and valuations.
- In 2020 after three decades of corporate experience, I decided to start my own consulting firm focused on the valuation of various financial instruments. As part of my consulting engagements, I built discrete systems to value different financial instruments.
- When the Covid-19 pandemic put us in a nationwide lockdown I came up with the idea of developing a cloud-based software platform providing analytical solutions for accounting as per Ind IAS/IFRS.
- This is my entrepreneurial journey of how I founded RVSBELL Analytics.
How I discovered my fascination with technology and entrepreneurship
From the beginning of my school years (in the mid ‘70s), my late father, Sri S Ramachandran who was a cost accountant and auditor, implanted the idea of becoming a CA in my mind.
As a result, I never considered other options such as engineering, medicine, or law, as I was only determined to become a CA.
I qualified as a cost accountant and CA in 1981 and ’83, respectively. After a year and a half of employment, I took the entrepreneurial leap and set up my own CA practice in 1985.
I have to mention that technology always fascinated me and we were among the few CA firms who had a PC and colour printer. (Nowadays, it is no big deal, but it surely was back in the late ‘80s.)
While I was in practice, I used database and windows based latest technologies to develop several software applications for my everyday use, which included applications for tax computations and other accounting-related apps.
I was interested in developing this further and around the same time, I got an opportunity to work with a software company specializing in taxation and other accounting products apart from turnkey software projects.
By now I was almost 8 years in CA practice with a good setup of my own but the ‘techie’ in me jumped at the opportunity and, in 1994, I moved into the corporate world as a chief architect of the taxation and accounting products at Quintegra Solutions at IT service management company.
Entering the world of hedge fund accounting
In 2005, after almost a decade and plenty of learnings at the IT company, I got an opportunity to work as the chief operating officer (COO) of a hedge fund administration company headquartered in New Jersey, USA. It was an exciting role and I took it up.
There I was managing a Chennai-based team of core finance and accounting professionals and serving several global clients.
In that company, I learnt the nuances of financial instruments in-depth and even wrote my first book, Accounting for Investments – Volume 1: Equity, Futures and Options.
Fast forward, in 2010, I became a product manager for hedge accounting at Calypso Technology, Inc. - a leading provider of cross-asset, technology solutions for financial markets. This was a good break-through because several banks/financial institutions across the globe use Calypso’s services.
The learnings at Calypso were great and I later took up an opportunity as the Head of Business Management at Northern Trust, one of the largest and oldest banking institutions with continuous operation in the USA. This role was out of Bengaluru in India, and I was heading the operations control and training functions.
Entrepreneurial leap only to return to the corporate world
Everything was going well but I always had this desire to have my own venture and so in 2014, after two decades in the corporate world, I quit my job and started my own consulting firm.
My consulting firm focused on the valuation of various financial instruments as per the requirements of Ind AS, as well as implementing Ind IAS for multiple companies. As part of my consulting engagements, I built discrete systems to value different financial instruments.
All was going well when an opportunity came knocking once again in 2016…my previous company, Calypso offered me another role.
Banks in Europe were implementing IFRS and the company needed someone with a background in accounting for financial instruments.
Honestly, it was an interesting opportunity, so I took it up!
In my second stint at Calypso, I was the key domain expert for hedge accounting functionality, and my team was involved in implementing hedge accounting as per IFRS 9 for various banks across Europe and the ANZ regions.
In articulating and interpreting the finer aspects of hedge accounting, I interacted with bankers as well as their auditors, who were mainly Big 4 firms.
After yet another stint in the corporate world, RVSBELL Analytics was born
In 2020, after a hectic yet amazing spell filled with travels and learnings at Calypso, I decided it was time to get started on my own as a consultant… Once again.
My plan was simple: to act as a consultant, helping CFOs and auditors in the valuation and accounting of exotic financial instruments.
All was going well when the pandemic put us in a nationwide lockdown, where everyone was working remotely. This acted as a catalyst and I took the time to integrate all the systems I had built over the years.
From scratch, I also decided to develop certain applications that would save time and maintain consistency in our processes.
I realized that software has good potential on its own, as several CFOs and auditors were looking for such a solution. I then decided to develop several cloud-based accounting and analytical solutions, which we offer on a Software as a Service (SaaS) model.
I hired a team of technical experts to do the actual development of the software using state-of-the-art technology.
I also took help from well-versed, learned, and experienced professionals with exposure to the theoretical and practical aspects of accounting standards and industry practices.
Hence, I founded RVSBELL Analytics to achieve this purpose as a software-cum-consulting firm that helps auditors and CFOs comply with the requirements of accounting standards.
Building it one step at a time and overcoming challenges
There were challenges in building the applications, as I had to answer several key questions like (1) the right technology, (2) the delivery thereof, (3) how frequently we need to change the code, (4) the availability of resources for the selected technology, (5) the recurring cost of hosting, (6) the cost of development and maintenance, and so on.
We had to do quite a few iterations before we came up with the right mix of each one of these elements and I am happy that we underwent these challenges initially rather than at a later point in time.
We learnt lessons, which, I am confident, will be extremely useful and will greatly benefit our firm as well as our clients.
The architecture is capable of scaling and the system is equipped to handle large volumes of data.
We aim to be the leading application service provider that covers key areas of accounting standards mainly as per Ind AS/IFRS.
Our pricing model is a monthly fixed charge, with a one-time implementation fee and no storage costs.
We determine the monthly fixed charge based on several key metrics such as the number of line items, number of locations, and number of companies that will be using the system in the group of companies as well as the number of licenses the client requires.
Some more details about our software:
1. Expected credit loss (ECL) computation for loan portfolios
- The ECL for Loans computation transcends beyond the domain of an accountant, as it involves applying the requirements of the accounting standards in letter and in spirit.
- ECL computation involves many data analytics, using statistical techniques that are appropriate for the level of data provided and available with the client.
- Our solution offers multiple methods of computation, and the client can choose the appropriate one, considering all relevant factors applicable to them.
2. ECL for receivables portfolios
- The Standards require the application of the simplified approach for computing ECL for receivables portfolios that do not contain a significant financing component per Ind AS 115/IFRS 15.
- Our solution enables the user to dynamically create segments and define the analysis or sample period to compute the historical loss, which we, in turn, apply to the receivables balance to get the ECL.
- There is also a scenario builder, which enables the user to create scenarios based on forward-looking macroeconomic data.
3. Valuation of loan portfolios classified at fair value through other comprehensive income (FVOCI)
- We compute the fair value of the loan portfolio as per the requirements of Ind AS 113/IFRS 13. To populate each installment, we drill down the contractual cash flows of every loan.
- To arrive at the losses in every installment, we then consider the historical prepayment, probability default, as well as the loss given default.
- We compute the current interest rate applicable to every loan based on the weighted average tenure of each loan.
- To determine the discount factor, we consider the risk-free credit spread based on the entity’s credit rating.
- Thereafter, we discount the net cash flows to compute the fair value of the loan on the valuation date. Mainly for disclosure purposes, we compute the fair values for sensitivity analysis using the bump-up-and-down scenarios.
4. Lease accounting
- The Lease accounting application computes right-of-use assets, lease liability, the amortization schedule, finance charges and imputed interest income from the input files. It further provides exemptions for short-term leases and leases of low-value items.
- Users can define asset classes for availing exemptions as per the asset class. The system can handle different modes of payment – quarterly, monthly, half-yearly or yearly either at the beginning or at the end of the period.
- The software generates all accounting entries on the fly with the ability to see key accounting balances at every reporting date. It further provides disclosures as per the requirements of the Standard.
Hungry for more...
From my first employment, I have been a technology architect apart from being the domain expert right through my career. So, I am a keen learner, with a great interest in technology.
Change is the only constant thing, and I am constantly reinventing myself so that I can ultimately be useful to society.
Apart from keeping abreast of the latest changes in the accounting standards, I also learn new technologies and because of that, I am quite comfortable working with my developers. I teach at various forums on a regular basis to keep myself up to date.
After three decades of work experience, I am extremely confident and glad that RVSBELL Analytics is a product of well-thought-out and implemented ideas exploiting the full potential of the tech wave.