application accounting

APPLICATION ACCOUNTING

Introduction

This section covers the basic of the accounting for each T24 module in order to provide an overview in a centralised place. This document will be expanded upon for new and existing applications and feedback from users would be appreciated. In order to understand the accounting details in each application it is necessary to understand the concept of accounting in T24 ; accordingly the next few sections will provide a short explanation. Main Accounting Files/Entries

As bankers are used to the concept that for each credit or credits there is a balancing debit or debits we shall proceed on that premise. In balancing the system T24 uses a few key accounting entry files and some database type balancing files. These are:

STMT.ENTRY

The STMT.ENTRY file contains the debit/credit entries that are passed over any accounts that are entered in the ACCOUNT application. If you check a record in ACCOUNT you will see several balances; such as OPEN.ACTUAL.BAL and OPEN.CLEARED.BAL , this concept could be called a database type balance in that the amounts are affected by entries.

CATEG.ENTRY

All P/L entries are posted to the CATEG.ENTRY file and are amalgamated into the CONSOLIDATE.PRFT.LOSS file. There is no actual General Ledger account for these entries, the ‘virtual’ account this uses is explained below.

RE.CONSOL.SPEC.ENTRY

The RE.CONSOL.SPEC.ENTRY file is so named as it contains the special entries used to update the balances on the consolidation files. These entries are comprised of entries that are not passed through the CATEG.ENTRYor STMT.ENTRY files. CRB Keys/Files

As mentioned earlier, T24 does not require General Ledger accounts, so how does it maintain a General Ledger system? In order to understand this let us consider the

problems in systems that use General Ledger accounts. An account must be opened in each currency you deal in. For transactions such as loans you may have many different types such as corporate loans, inter-bank loans, personal loans, to name just a few. If you need these broken down by residence, nationality and industry, which would mean for a basket of 12, active currencies there would need to be at least 108 accounts! Obviously you may not open these all at once, but over a period you will accumulate many accounts and their administration would require a lot of effort. In T24 the transaction data is used to feed the General Ledger, this is accomplished by telling T24 how you wish to analyse the data. One of the first files set-up on implementation is the CONSOLIDATE.COND , which has just two records viz. ASSET&LIAB and PROFIT&LOSS . Here you specify where T24 searches for the required data such as Industry code, Nationality, and Residence. Once this file and the application parameters are in place, T24 is ready to create and maintain a General Ledger. See the Reporting section of the User Guide for more details on setting up the CRF system in T24 . CONSOLIDATE.ASST.LIAB file

This is easier to explain in an example, as the examples below should prove, but in essence consider this as a record in a simple database. The key is decided by T24 when the underlying transaction is entered. In its simplest form it could represent just one ACCOUNT where the conditions for the accountare unique (e.g. you only have one Albanian Lek current account for a Mexican national who is a resident of Australia). The record has details of the debit balance or credit balance in the account currency together with the local equivalent and the last movements and the total accruals for the matching accounts. Now consider we want to report all debit balances for accounts, we can simply sum the records in local currency or by account currency. In reality we would report them by account type; industry; sector and so on. The same concept is used when the transaction is a Money Market deal instead of an account.

Figure 1 - Consolidate Asset Liabilities screen Note: Some asset types are contingent and reported off balance sheet, whereas others are non-contingent. The CRF types, which we will be referring to, are detailed in the Reporting User Guide CONSOLIDATE.PRFT.LOSS file

Similar in concept and use to the CONSOLIDATE.ASST.LIAB , this file records the balance and movements based on the P/L categories. Again when building the General Ledger we can sum records or report them based on our required decisions. For example income earned on current accounts by industry.

Figure 2 - Consolidate Profit Loss screen

CRB Examples

Account based example

An ACCOUNT is opened and an entry is passed creating a debit balance, several days pass and daily accruals are passed to reflect the overdraft interest being calculated. The entries would be:

· Value 21 Apr 1997

STMT.ENTRY Credit Nostro

Account USD 100,000.00cr

STMT.ENTRY Debit Customer Account

USD 100,000.00dr

· After the first few days

During the COB process T24 will create two records with CRF types of CREDIT (for the Nostro account) and DEBIT (for the customer account) respectively. Accruals for the overdrawn customer account are raised by T24 creating: CATEG.ENTRY Credit to P/L category

Interest earned USD 10.00cr

RE.CONSOL.SPEC.ENTRY Debit to Interest

Earned not Collected USD 10.00 dr

· At Month end

At application of interest and charges the following entries are raised: STMT.ENTRY Debit Customer

Account USD 100.00dr

RE.CONSOL.SPEC.ENTRY Credit to Interest Earned not Collected

USD 100.00cr

So during the accrual period the CONSOLIDATE.ASST.LIAB record will show the balance as a DEBIT with the accrual increasing from USD 10.00 up to USD 100.00 at application time when it will be cleared by the payment from the client, thus making the new debit balance USD 100,100.00 . The P/L balance will be reflected on the CONSOLIDATE.PRFT.LOSS increasing from day one until it is left with the USD 100.00 as actual income received.

Transaction based example

We agree (on the 20 April) to take on deposit a USD 1million Money Market contract from 21 April to 25 April 1997.

· On the transaction date 20 April 1997


Credit to Contingent, type FORWARDCR for

USD 1million cr

· On Value Date 21 April 1997


Debit to Contingent, type FORWARDCR for

USD 1million cr

Now the contingent is cleared we raise the liability entry. STMT.ENTRY Debit client account USD

1million dr RE.CONSOL.SPEC.ENTRY

Credit to liability, type LIVECR for

USD 1million cr

· During the life of the contract accruals will be created.

CATEG.ENTRY Debit to P/L category USD

Interest Paid (52000) 1000.00 cr RE.CONSOL.SPEC.ENTRY

Credit to Interest Payable

USD 1000.00 dr

The same each day until maturity when the accruals will be cleared and the interest paid to the customer.

· Maturity Date

STMT.ENTRY Credit client account

(prin.) USD 1million cr

STMT.ENTRY Credit client account (int.)

USD 4000.00 cr


Debit to liability, type LIVECR for

USD 1million dr


Debit to liability, type 52000 for

USD 4000.00 dr

At the end of the process we have paid interest of USD 4000 which is reflected on the CONSOLIDATE.PRFT.LOSS record. Fiduciary Accounting

Accounting entries are generated at various stages throughout the life of the contract. These are all contingent as the deposit and placement are off balance sheet items for the bank. 1) Order Unplaced Only forward entries are raised i.e. Dr Drawdown A/C (principal) Cr Principal Liquidation

A/C (principal)

Dr Commission Liquidation A/C

(commission)

Cr Interest Liquidation A/C

(interest)

2) Order Placed Forward Valued Order Cr CRF type

FWDCONTCR (principal)

Forward Valued Placement Dr CRF type

FWDCONTDB (principal)

3) Drawdown Drawdown Order Dr Drawdown A/C (principal) Cr CRF type CONTCR (principal) Commission in Advance Dr Commission

Liquidation A/C (commission)

Cr P&L PL Accr Comm (commission) Note: PL Accr Comm is a user-defined category on FD.PARAMETER . Drawdown Placement Dr CRF type CONTDB (principal) Cr Drawdown A/C (principal) 4) Commission in Arrears Accrual Order Dr CRF type PL Accr

Comm (accrued commission)

Cr P&L PL Accr Comm

(accrued commission)

5) Interest Payment Order Cr Interest Liquidation

A/C (interest)

Commission in Arrears on Interest Dr Commission

Liquidation A/C (commission)

Cr CRF type PL Accr Comm

(commission)

Placement Dr Interest Liquidation

A/C (interest)

6) Maturity Order Dr CRF type CONTCR (principal) Cr Principal Liquidation

A/C (principal)

Commission in Arrears

Dr Commission Liquidation A/C

(commission)

Cr CRF type CONTDB (commission) Placement Dr Principal Liquidation

A/C (principal)

Cr CRF type CONTDB (principal) Letters of Credit

Detailed Trade Finance accounting entries

This section outlines the accounting entries that can be passed for each event. The section has been split into three. The first covers import letters of credit, the second covers export letters of credit and the third covers charges. Charges may be taken at any time but are shown here in a separate section to avoid repeating the information against each transaction. For each entry the following details are shown:

• The sign followed by the account group being updated.

• Entry type - Stmt, Categ or Special (see note below).

• Amount.

• Transaction code (see note below).

• Asset type for Special entries. The codes shown in the entry type column are as follows:

• Stmt - statement entries on the STMT.ENTRY application.

• Categ - P&L entries on the CATEG.ENTRY application.

• Special - direct CRF entries on the RE.CONSOL.SPEC.ENTRY application. Under the transaction code column the following is shown:

• If the entry type is Special the transaction code is shown.

• If the entry type is Stmt or Categ then one of the codes below will be shown. This indicates where the actual numeric transaction code will be obtained.

For the following, the transaction code will be taken from the LC.PARAMETER file:

Figure 3 - Transaction Codes For the following, the transaction code will be taken from the FT.CHARGE.TYPE or FT.COMMISSION.TYPE record:

Figure 4 - Transaction Codes For the contingent entries, the single sided entry is shown. This has been done so that when the option for single sided contingent is used the entry shown will be the one raised. Where the option to have self-balancing contingents is taken then the opposite signed entry will be raised. The sign will be different and the asset type will have BL at the end otherwise the details will be the same. Special entries will always be raised as part of the Close of Business processing. The Stmt and Categ Entries will either be raised online or as part of the Close of Business. Detailed below are examples of the accounting movements the system generates in respect of the various types of letter of credit and documentary collection transactions. The examples only indicate the basic ACCOUNT movements. Credit entries to "Profit and Loss" account have not been shown. However, to give an illustration of a transaction incorporating profit and loss entries please refer to export credit item "Sight Payment".

Import letters of credits

Detailed below are the entries generated for the various types of imports in the date of input or value date.

Issue of an import letter of credit

An LC is issued for 1 million:

Credit "Outstanding Credit Unused" Special 1,000,000 NEW ISSUE

Amendment of an import letter of credit

A letter of credit LC value is increased by 125,000:

Credit "Outstanding Credit Unused" Special 125,000 INC ISSUE

110,000 decrease an LC value: -

Debit "Outstanding Credit Unused" Special 110,000 DEC ISSUE

Sight payment under an import letter of credit

On the value date a drawing for 300,000 is paid:

Debit "Outstanding Credit Unused" Special 300,00

0 LIQ ISSUE

The following entries will always be raised online.

Credit nostro for payment to the remitting bank, beneficiary or customer Stmt 300,000 PAYCR

Debit customer account for whom letter of credit was opened. Stmt 300,000 PAYDR

Usance Acceptance

A drawing for 100,000 payable in 90 days is accepted. On day of notification of acceptance received:

Debit "outstanding credit unused". Special 100,00

0 LIQ ISSUE

Debit "customer’s liabilities for acceptance". Special 100,00

0 NEW ACPTCONTRA

Credit "outstanding acceptances" Special 100,00

0 NEW ACPTBANK

or "Acceptances executed by Head Office and branches" Special 100,00

0 NEW ACPTHO

Or "Acceptances executed by subsidiaries" Special 100,00

0 NEW ACPTSUBS

On the expiry date of 90 Days :

Credit "Customer’s liabilities for acceptance". Special 100,00

0 MAT ACPTCONTRA

Debit "Outstanding acceptances" Special 100,00

0 NEW ACPTBANK


0 NEW ACPTHO


0 NEW ACPTSUBS

The following entries will be raised online if the status is changed to MA online. Otherwise entries will be raised as part of the Close of Business processing. Credit nostro through which payment will be made to the other bank. Stmt 100,000 PAYCR

Debit customer account for whom the letter of credit was opened. Stmt 100,000 PAYDR

Sight collection - paid

A drawing for 350,000 payable at sight sent for collection/acceptance by the customer for whom the letter of credit was opened. On day sent for collection:

Credit Items sent for collection" Special 350,00

0 NEW COLL

On day sent for collection if it were to be under Trust:

Credit Items sent for collection" Special 350,00

0 NEW TRCOLL

Debit "Outstanding credit unused". Special 350,00

0 LIQ ISSUE

On day payment received : Debit "Outstanding credit unused". Special 350,00

0 LIQ ISSUE

Debit "Items sent for collection" Special 350,00

0 PAY COLL

On day payment received if the documents were under Trust:


0 LIQ TRCOLL

The following entries will always be raised online.

Credit nostro through which payment will be made to the other bank. Stmt 350,000 PAYCR Debit customer account for whom the letter of credit was opened. Stmt 350,00

0 PAYDR

Sight collection - not paid

A drawing for 225,000 payable at sight is sent for collection to the customer for whom the letter of credit was opened and it is not paid. On day sent for collection:

Credit "Items sent for collection" Special 225,00

0 NEW COLL

On day sent for collection documents under Trust:


0 NEW TRCOLL


0 LIQ ISSUE

On day notice of non-payment is received:


0 NCP COLL

On day the documents under Trust is rejected: Debit Items sent for collection" Special 225,00

0 LIQ TRCOLL

Credit "Outstanding credit unused". Special 225,00

0 REV ISSUE

Usance collection - accepted or paid

A drawing for 150,000 payable in 90 days is sent for collection to the customer for whom a letter of credit was opened and is accepted or paid. On day sent for collection:


0 NEW COLL

On day sent for collection if the documents were under Trust: Credit "Items sent for collection" Special 150,00 NEW TRCOLL

0 Debit "Outstanding credit unused". Special 150,00

0 LIQ ISSUE

If only payment received on after payment date the process as for a sight collection paid. Otherwise if acceptance received before payment date then process as follows. On day acceptance received: Debit "Items sent for collection" Special 150,00

0 PAY COLL


0 LIQ ISSUE

Debit "Customer’s liabilities for acceptance". Special 150,00

0 NEW ACPTCONTRA

Credit "Outstanding acceptances" Special 150,00

0 NEW ACPTBANK


0 NEW ACPTHO


0 NEW ACPTSUBS

On day acceptance received if the documents were under Trust: Debit "Items sent for collection" Special 150,00

0 LIQ TRCOLL


0 NEW ACPTCONTRA

Credit "Outstanding acceptances" Special 150,00 NEW ACPTBANK

0 or "Acceptances executed by Head Office and branches" Special 150,00

0 NEW ACPTHO


0 NEW ACPTSUBS

On the expiry date of 90 Days:


0 MAT ACPTCONTRA


0 NEW ACPTBANK

or "Acceptances executed by Head Office and Branches" Special 150,00

0 NEW ACPTHO

Or "Acceptances executed by Subsidiaries" Special 150,00

0 NEW ACPTSUBS

The following entries will be raised online if the status is changed to MA online, otherwise entries will be raised as part of the Close of Business processing. Credit nostro through which payment will be made to the other bank. Stmt 150,000 PAYCR Debit customer account for whom the letter of credit was opened. Stmt 150,000 PAYDR

Usance collection - not accepted or paid

A drawing for 175,000 payable in 90 days is sent for collection to the customer for whom the letter of credit was opened and it is not accepted or paid. On day sent for collection:


0 NEW COLL

On day sent for collection if it were under Trust:

Credit "Items sent for collection" Special 175,000 NEW TRCOLL Debit "Outstanding credit unused". Special 175,000 LIQ ISSUE On day notice of non-payment/acceptance is received:


0 NCP COLL

On day notice of non-payment/acceptance is received if it were under Trust:

Debit Items sent for collection" Special 175,,00

0 LIQ TRCOLL

Credit "Outstanding credit unused". Special 175,00

0 REV ISSUE

Maturity of letter of credit

When a LC matures with a balance of 250,000 yet to be drawn, then on the maturity date:


0 MAT ISSUE

Collection Documents

On day documents are received: Credit "Items sent for Collection" Special 100,00

0 NEW COLL

On day documents are received and handled under Trust: Credit "Items sent for Collection" Special 100,00

0 NEW TRCOLL

On day documents under Trust is accepted:

Credit "Items sent for Collection" Special 100,00

0 NEW COLL

Debit “Items sent for Collection” Special 100,00

0 LIQ TRCOLL

On day documents under Trust is rejected: Debit "Items sent for Collection" Special 100,00

0 DEC TRCOLL

On day documents are paid: Debit "Items sent for Collection" Special 100,00

0 LIQ COLL

Export letters of credit

The split for Head Office or subsidiaries will be obtained from the sector code of the customer for bank for whom we are processing the letter of credit.

Request to advise only

Requested to advise a letter of credit which has been opened for 2 million. On the day the letter of credit is input to T24 : Credit "LC advised" Special 2,000,00

0 NEW ADVICE

Request to confirm

Requested to confirm a letter of credit, which has been opened for 1.5 million. On the day the letter of credit is input to T24 : Credit "Outstanding credit unused" Special 1,500,00

0 NEW CONFIRM

Request to open

A letter of credit is issued for 1 million. On the day it is input to T24 : Credit "Outstanding credit unused" Special 1,000,00

0 NEW OPEN

Request to change an export letter of credit from advised to confirmed

We are originally requested to advice a letter of credit for 2.5 million. We are subsequently asked to confirm the same letter of credit. On the day the original letter of credit is input to T24 : Credit "LC advised" Special 2,500,00

0 NEW ADVICE

On the day the letter of credit is changed to confirm: Debit "LC advised" Special 2,500,00

0 CON ADVICE

Credit "Outstanding credit unused" Special 2,500,00

0 ADV CONFIRM

Amendment of an export letter of credit

A letter of credit is increased by 125,000. On the day of increase: Credit "LC advised” or "Outstanding credit unused" Special 125,00

0 INC ADVICE/CONFIRM/OPEN

A letter of credit is decreased by 110,000 on the day of decrease: Debit "LC advised" or "Outstanding credit unused" Special 110,00

0 D ADVICE/CONFIRM/OPEN

When the Letter of Credit is partially confirmed for 1,000,000:

If the Original entry were: Credit "LC advised" Special 2,500,00

0 NEW ADVICE/CONFIRM

It would now appear as: Credit "LC advised" Special 1,500,00

0 NEW ADVICE

Credit "LC advised" Special 1,000,00

0 NEW CONFIRM

Debit "LC advised" Special 2,500,00

0 REV ADVICE/CONFIRMN

Sight payment under an export letter of credit

A drawing for 300,000 payable at sight is made then on the day payment is made: Debit "Outstanding credit unused" Special 300,00

0 LIQ ADVICE/CONFIRM

A drawing for 300,000 payable at sight is made where the available confirmed portion under a partially confirmed LC is 200,000, then on the day payment is made: Debit "Outstanding credit unused" Special 200,00

0 LIQ CONFIRM

Debit "Outstanding credit unused" Special 100,00

0 LIQ ADVICE

These entries will always be raised online. Credit account of customer requesting payment. Stmt 300,000 PAYCR Debit nostro through which payment will be received from the other bank. Stmt 300,000 PAYDR

Note: A message (Swift, telex, etc.) will be sent to this bank to advise that payment has been made under a letter of credit and requesting reimbursement.

Usance acceptance of an export letter of credit

A drawing for 100,000 payable in 90 days is accepted. On day of acceptance: Debit "Outstanding credit unused". Special 100,00

0 LIQ CONFIRM/ADVICE


0 NEW ACPTCONTRA


0 NEW ACPT

A drawing for 100,000 payable in 90 days is accepted where the confirmed portion available under a Partially confirmed LC is 75,000. On day of acceptance: Debit "Outstanding credit unused". Special 75,000 LIQ CONFIRM Debit "Outstanding credit unused". Special 25,000 LIQ ADVICE Debit "Customer’s liabilities for acceptance". Special 100,00

0 NEW ACPTCONTRA


0 NEW ACPT

On the expiry date of 90 Days: Credit "Customer’s liabilities for acceptance". Special 100,00

0 MAT ACPTCONTRA

Debit "Outstanding acceptances" Special 100,00 MAT ACPT

0 The following entries will be raised online if the status is changed to MA online. Otherwise entries will be raised as part of the Close of Business processing. Credit account of customer requesting payment. Stmt 100,000 PAYCR Debit nostro through which payment will be received from the other bank. Stmt 100,000 PAYDR

Discount of own acceptance (without a load amount)

A drawing for 200,000 is accepted payable in 90 days and is then presented for discount. On day of acceptance: Debit "Outstanding credit unused". Special 200,00

0 LIQ ISSUE


0 NEW ACPTCONTRA


0 NEW ACPT

On day of discounting assume this to be the same as acceptance day and that the amount for discount is 75 per day, which gives a total of 6,750 over the 90 days: The special entries will be raised as part of the Close of Business, but the Stmt entry will be raised online. Note, for the "Own acceptances discounted" and "Discount received not yet earned" the CRF key will need to be created using the customer to whom the discount has been given. Debit "Own acceptances discounted". Special 200,00

0 NEW LIVEDB

Credit "Discount received not yet earned". Special 6,750 CAP Discount category

from LC Parameter. Credit Account of customer request discount or suspense account. Stmt 193,250 DISPY At the first month end as part of the Close of Business run an accrual will be made for the current month assuming 10 days in month 1: Debit "Discount received not yet earned". Special

750 ACC Discount category

from LC Parameter. Credit profit and loss for discount earned using the discount category code from LC.PARAMETER. Categ

750 DISPL

At the other two month ends as part of the Close of Business run an accrual will be made for the current month assuming 31 days in each of the months: Debit "Discount received not yet Earned". Special

2,325 ACC Discount category

from LC Parameter. Credit Profit and loss for discount earned using the discount category code from LC.PARAMETER. Categ

2,325 DISPL

On day expiry of 90 Days: These entries will be raised as part of the Close of Business run: Credit "Customer’s liabilities for acceptance". Special 200,00

0 MAT ACPTCONTRA


0 MAT ACPT

Debit "Discount received not yet earned". Special 1,350 ACC Discount category

from LC Parameter Credit P&L for discount earned using the category code from

LC.PARAMETER. Categ 1,350 DISPL Credit "Own acceptances discounted". Special 200,00

0 MAT LIVEDB

Debit nostro through which payment will be received from the other bank. Stmt 200,00

0 PAYDR

Discount of own acceptance (with a load amount) . A drawing for 400,000 is accepted payable in 90 days and is then presented for discount. On day of acceptance: Debit "Outstanding credit unused". Special 400,00

0 LIQ ISSUE


0 NEW ACPTCONTRA


0 NEW ACPT

On day of discounting assume this to be the same as acceptance day and that the amount for discount works out at being 150 per day giving a total of 13,500 over the 90 days and the extra load amount is 50 per day giving a total of 4,500 over the 90 days: The special entries will be raised during Close of Business, but the Stmt entry will be raised online. Note for the "Own acceptances discounted" and "Discount received not yet earned" the CRF key will need to be created using the customer to whom the discount has been given. Debit "Own acceptances discounted". Special 400,00

0 NEW LIVEDB

Credit "Discount received not yet earned".

Special 13,500

CAP Discount Category from LC Parameter.

Credit "Discount (load) received not yet earned". Special

4,500 CAP Load Category from

LC Parameter. Credit account of customer request discount or suspense account. Stmt 382,00

0 DISPY

At the first month end as part of the Close of Business run an accrual will be made for the current month assuming 10 days in month 1: Debit "Discount received not yet earned". Special


from LC Parameter. Credit profit and loss for discount earned using the discount category code from LC Parameter. Categ

1,500 DISPL

Debit "Discount (load) received not yet earned". Special

500 ACC Load category from

LC Parameter. Credit profit and loss for discount (load) earned using the load category code from LC Parameter. Categ

500 DISPL

At the other two month ends as part of the Close of Business run an accrual will be made for the current month assuming 31 days in each of the months: Debit "Discount received not yet earned". Special


from LC Parameter. Credit Profit and loss for discount earned using the discount category code from LC Parameter. Categ

4,650 DISPL

Debit "Discount (load) received not yet earned". Special ACC Load category from

1,550 LC Parameter. Credit Profit and loss for discount (load) earned using the load category code from LC Parameter. Categ

1,550 DISPL

On day of expiry, of 90 Days, these entries will be raised as part of the Close of Business run: Credit "Customer’s liabilities for acceptance". Special 400,00

0 MAT ACPTCONTRA


0 MAT ACPT

Debit "Discount received not yet earned". Special


from LC Parameter. Credit profit and loss for discount earned using the discount category code from LC Parameter. Categ

2,700 DISPL

Debit "Discount (load) received not yet earned". Special

900 ACC Load category from

LC Parameter. Credit profit and loss for discount (load) earned using the load category code from LC Parameter. Categ

900 DISPL

Credit "Own acceptances discounted". Special 400,00

0 MAT LIVEDB

Debit nostro through which payment will be received from the other bank. Stmt 400,00

0 PAYDR

Sight collection – paid

A drawing for 350,000 payable at sight sent for collection to the Bank that opened the LC and payment is made. On day sent for collection: Credit "Items sent for collection" Special 350,00

0 NEW COLL

On day payment received: Debit "Outstanding credit unused". Special 350,00

0 LIQ ISSUE


0 PAY COLL

The following entries will always be raised online: Credit account of customer requesting payment. Stmt 350,000 PAYCR Debit nostro through which payment was received from the other bank. Stmt 350,00

0 PAYDR


A drawing for 225,000 payable at sight is sent for collection to the bank that opened the letter of credit but it is not paid. On day sent for collection: Credit "Items sent for collection" Special 225,00

0 NEW COLL

On day notice of non-payment is received: Debit "Items sent for collection" Special 225,00 NCP COLL

0

Sight collection - paid and payment made under reserve

A drawing for 350,000 payable at sight sent for collection to the bank that opened the letter of credit. Payment is made to the exporter under reserve and payment is received from the opening bank. On day sent for collection: Credit "Items sent for collection" Special 350,00

0 NEW COLL

Debit "Payments made under reserve" Special 350,00

0 NEW PAYRES

The following entry will always be raised online: Credit customer presenting the drawing. Stmt 350,000 RESCR On day payment received: Debit "Outstanding credit unused". Special 350,00

0 LIQ ISSUE


0 PAY COLL

Credit "Payments made under reserve" Special 350,00

0 PAY PAYRES

The following entry will always be raised online: Debit nostro through which payment was received from the other bank. Stmt 350,00

0 PAYDR


A drawing for 225,000 payable at sight is sent for collection to the bank that opened the LC. Payment is made to the exporter under reserve and the payment is not received from the opening bank. On day sent for collection: Credit "Items sent for collection" Special 225,00

0 NEW COLL

Debit "Payments made under reserve" Special 225,00

0 NEW PAYRES

The following entry will always be raised online: Credit customer presenting the drawing. Stmt 225,000 RESCR On day of notice of non-payment is received: Debit "Items sent for collection" Special 225,00

0 NCP COLL

Credit "Payments made under reserve" Special 225,00

0 NCP PAYRES

The following entry will always be raised online: Debit customer presenting the drawing. Stmt 225,00

0 RESDR

Usance collection - accepted or paid

A drawing for 150,000 payable in 90 days is sent for collection to the customer for whom the letter of credit was opened and is accepted or paid. On day sent for collection:

Credit "Items sent for collection" Special 150,00 NEW COLL

0

If the payment is received on or after the payment date then accounting is the same as for a sight collection paid. Otherwise if the acceptance is received before payment date then process as follows. On day acceptance received:


0 PAY COLL


0 LIQ ISSUE


0 NEW ACPTCONTRA


0 NEW ACPT

On the expiry date of 90 Days:


0 MAT ACPTCONTRA


0 NEW ACPT

The following entries will be raised online if the status is changed to MA online. Otherwise entries will be raised as part of the Close of Business processing.

Credit customer requesting payment. Stmt 150,000 PAYCR Debit nostro through which payment was received from the other bank. Stmt 150,000 PAYDR

Usance collection - not accepted or paid

A drawing for 175,000 payable in 90 days is sent for collection to the customer for whom the letter of credit was opened and is not accepted/paid. On day sent for collection: Credit "Items sent for collection" Special 175,00

0 NEW COLL

On day notice of non-payment/acceptance is received: Debit "Items sent for collection" Special 175,00

0 NCP COLL

Payments under reserve

For export letter of credit it is possible that payment can be made to the customer at the time the documents are presented. This payment is made under reserve meaning that if there is any problem the money can be claimed back. For sight collections the entries that will be raised are shown. Similar processing can happen in Usance collections.

Maturity of letter of credit

When a letter of credit matures with a balance of 250,000 yet to be drawn, then on the maturity date: Debit "Outstanding credit unused".

Special 250,000 MAT ISSUE

Charges

Charges applied immediately and not accrued

Where a charge for 500 is applied directly and not accrued then the following entries are raised on the date of the charge. These entries will be raised online, when the charges are entered. Debit Customer paying

Stmt 500

FTDR

Credit profit and loss using the category code from the charge (see note 1) Categ

500 FTCR

Charges applied immediately and amortised

Where a charge for 600 is applied directly and accrued over 3 months then the following entries are raised. At time of charge (stmt entry raised online, special entry raised as part of the Close of Business run): Debit Customer paying Stmt 600 FTDR Credit "Charges received not yet earned". Special

600 CAP Category code from

charge (see note 2) At each month end, as part of the Close of Business run, assuming charges accrued over three equal months: Debit "Charges received not yet earned". Special

200 ACC Category code from

charge (see note 2) Credit profit and loss for charges using the category code from the charge (see note 2) Categ

200 AMRT

Charges claimed from beneficiary and paid

Where charges for 700 are claimed from some one else then the following entries are raised. At time of claiming charge (Categ raised online, special during Close of Business): Debit "Charges claimed" Special

700 CLM Category code for

claiming charges

(LC.PARAMETER.) Credit profit and loss for the charges using the category code for charge (see note 1) Categ

700 CENCPL

When charges are paid (Stmt raised online, special during Close of Business): Credit "Charges claimed" Special

700 PAY Category code for

claiming charges (LC. PARAMETER)

Debit customer paying charge Stmt

700 CENCPY

Customer paying charge.

Charges claimed from beneficiary and not paid

Where charges for 800 are claimed from some one else but are not paid. At time of claiming charge (Categ raised online, special during Close of Business): Debit “Charges Claimed” Special 800 CLM Category code for claiming

charges (LC.PARAMETER) Credit profit and loss for the charges using the category code for charge (see note 1) Categ 800 CENCPL Category code for charge When charges are paid (Categ raised online, special in Close of Business): Credit “Charged claimed” Special 800 NOP Category code for claiming

charges (LC.PARAMETER) Debit profit and loss for the charges using the category code for charge (see note 1) Categ 800 CENCPL Customer paying charge

Notes for charges accounting

Note 1 The FT.CHARGE.TYPE and FT.COMMISSION.TYPE

allow for either a CATEGORY (P/L) or an internal

ACCOUNT to be issued. This document has shown the category being used, but it can easily be an internalaccountin which case an Stmt type of entry will be raised but the amount, sign and TRANSACTION code will be the same.

Note 2 The FT.CHARGE.TYPE and FT.COMMISSION.TYPE allow for either a CATEGORY (P/L) or an internal ACCOUNT to be issued. Where charges are being accrued then only the CATEGORY option can be used for the particular charge.

Teller Accounting

It is possible to raise entries through the TELLER application that have exposure splits on them. This has been illustrated with an example shown below: Customer A makes a deposit for $12,000 of which $4,000 in cash and a $1,000 Cashier’s Check is made immediately available. The transactions made are described as under:

Figure 5 - Example Teller Accounting The value date on all above transactions must be set to the same value. Let us assume that the value date for all of the transactions made is the 29/06/98, the same as the booking date for the transactions. Assuming that these are the only deposits made to the account, this would cause the following balances on the account for the following days:

Figure 6 - Example Account Balancing Days If on Monday (the 5 th business day from the first deposit) a deposit is made for a 15,000 value dated the 06/07/98 of which all checks are drawn locally and all items are ‘floated’ for 3 days as shown under:

Figure 7 - Example Teller Account The above table would be amended to as show under:

Figure 8 - Example Account Balancing Days

Accounting for revaluation

Asset and Liability revaluation

The total current asset and liability position for each foreign currency is revalued at spot rate, and the profit or loss is posted as specified in the AL section of the REVALUATION.PARAMETER record.

Deal revaluation

Revaluation of Foreign Exchange deals is covered in the Foreign Exchange section. Where contracts other than Foreign Exchange generate forward FX positions and consequent revaluation profit and loss they can be revalued separately. The requirements can be specified in REVALUATION.PARAMETER .

REVALUATION.PARAMETER

Figure 9 - Revaluation Parameter Input screen

Accounting entries for revaluation

The revaluation is calculated on spot or rebate basis as specified for the application in the parameter record. Asset/Liability revaluation is specified in the revaluation parameters as a special application.

Figure 10 - Accounting Entries for revaluation

Statement Print Masking

Introduction

It is now possible to mask accounting entries, where entries have either been posted incorrectly and had to be reversed out, or other financial postings that customers do not want on their statements. Masking is also necessary because some customers reconcile directly against the statements they receive from the banks and unexpected entries can cause confusion to their reconciliation. This is especially true when the statement is delivered electronically and the customer uses it to reconcile internally within their computer systems. Masking will only apply to statements only. The entry will not be removed from the account and the transaction will not be deleted it, it just won’t show on the statement.

Setting up the statement masking

A new field called MASK.PRINT has been added to the STMT.ENTRY file, which will indicate whether certain statement entries should be masked from printing, or not. To update the MASK.PRINT field a new application called AC.PRINT.MASK has been produced to allow users to manually go in and flag statement entries that customers do not want to see on their statements. The selection of entries to be masked for a particular account will be assisted by the provision of STMT.ENTRYenquiries. Once the statement entries have been captured into AC.PRINT.MASK application, the system will then perform routine validations on the selected entries, firstly to ensure the integrity of the selected items and to also make sure that the net movement of the selected entries is zero. Once all the routine validations have taken place, the statement print programs or formatting enquires must now check the MASK.PRINT field on the STMT.ENTRY record, if the value of the field is true then the entry should not be displayed.

AC.PRINT.MASK

As mentioned before, the AC.PRINT.MASK application has been produced to allow users to go in and manually flag certain statement entries that have to be omitted from customers’ statements. This section will show you how to set up an AC.PRINT.MASK record and explain the rules and validations of the application.

Figure 11 - Statement Entry Print Masking Input screen First of all run the application AC.PRINT.MASK and capture and id which can be automatically generated by setting up an AUTO.ID.START record for AC.PRINT.MASK and by also making sure that the application exists in the COMPANY record under the PG.AUTOM.ID . Once you have captured the id you will be required to capture the account number of the customer and the current date in MASK.DATE . Enter dates in ENQ.START.DATE and ENQ.END.DATE . These dates are captured to ensure that statement entries that are to be masked fall within the start dates and end dates. If you do not enter any dates into these fields a default date of today will be captured in those fields. The MASK field will indicate whether the statement entries should be masked and unmasked. You can capture either “YES” or “NO” and is mandatory. The MATCHED.TO field is used to capture all the statement entries you wish to mask or unmask, however they must all be debit entries or all credit entries. You cannot mix debit and credit entries in the same field. The same applies to the MATCHED.FROM field. You can use STMT.ENTRY enquiries to pick the entries you wish to select to update the relevant fields in STMT.ENTRY . There is an example below that explains how to run the enquiries and to select, copy and paste the relevant entries into the MATCHED.TO and MATCHED.FROM fields.

Figure 12 - STMT ENTRY Enquiry This is an example of all the statement entries that are associated with account number 0000001775. To bring up this list you have to run an enquiry on the STMT.ENTRY application of all statements that belong to the particular account that you want to mask.

Figure 13 - View STMT ENTRY screen Once you have found the statement entry that you wish to mask or unmask for printing on the enquiry list, you then double click on the statement entry and the full record for the statement entry will then be displayed. You then highlight the statement entry id at the top of the record and right click on the mouse and copy the id. Once you have copied the statement entry id, you then go back to the running AC.PRINT.MASK application, move your mouse to either the MATCHED.TO or MATCHED.FROM fields, right click on them and then paste the id into the field and hit enter. Once you hit enter, the TO.TOTAL and FROM.TOTAL as well as the NET.TOTAL fields will be updated with totals in the statement entry record. Once again, make sure that your MATCHED.TO and MATCHED.FROM fields consist of either all debit or all credit entries.

When all the entries have been captured you can then commit and authorise the record, but the system will make sure that the net movement between the statement entries captured is zero. Once the authorisation takes place the relevant STMT.ENTRY records will be either masked or unmasked for printing at a later stage.

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