Banking Back-Office Processing

Transcription

1 Banking Back-Office Processing General Ledger Administration Guide Copyright 2001, Unisys Corporation. All rights reserved Unisys is a trademark of Unisys Corporation Release October 2003 Printed in the UK

2 The names, places, and/or events used in this publication are not intended to correspond to any individual, group, or association existing, living or otherwise. Any similarity or likeness of the names, places and/or events with the names of any individual, living or otherwise, or that of any group or association is purely coincidental and unintentional. NO WARRANTIES OF ANY NATURE ARE EXTENDED BY THIS DOCUMENT. Any product and related material disclosed herein are only furnished pursuant and subject to the terms and conditions of a duly executed Program Product License or Agreement to purchase or lease equipment. The only warranties made by Unisys, if any, with respect to the products described in this document are set forth in such License or Agreement. Unisys cannot accept any financial or other responsibility that may be the result of your use of the information in this document or software material, including direct, indirect, special or consequential damages. You should be very careful to ensure that the use of this information and/or software material complies with the laws, rules, and regulations of the jurisdictions with respect to which it is used. The information contained herein is subject to change without notice. Revisions may be issued to advise of such changes and/or additions. All registered trademarks are acknowledged. Correspondence regarding this publication should be forwarded to Unisys Corporation, Bakers Court, Bakers Road, Uxbridge, Middlesex, UB8 1RG, United Kingdom.

3 About This Guide Purpose This guide describes the General Ledger transactions processed by the Unisys Banking Back-Office Processing product. The information contained in this guide is also available as online help. Scope The guide describes the General Ledger module and the associated data entry screens. Examples of the screens are shown and instructions for use are given. Audience This guide is for personnel preparing information for data entry. Prerequisites The audience should understand banking terminology. Users of this guide should have read the Starter s Guide that provides instruction in the use of the system. How To Use This Guide This guide should be used as a reference tool when preparing information for data entry. Use the guide in conjunction with a copy of your Guide to Setting Up or Guide to Setting Up the Retail System, and the Core Functions and Inquiries Guide or Core Retail Functions and Inquiries Guide. Refer to the Core On-Demand Reports Guide for instructions on how to select and run reports iii

4 About This Guide About Urbis The usage of the product name Urbis is due to be phased out as part of the Unisys re-branding exercise. The replacement will be the generic term "Banking Back-Office Processing" solution or "Banking Back-Office" for short. To provide continuity with existing product documentation, the name Urbis is used within this document, but is synonymous with Banking Back-Office Processing. Organisation This guide consists of three sections and one appendix. Section 1. General Ledger Accounting Introduction This section provides an introduction to the General Ledger module. Section 2. General Ledger Screens This section describes the screens associated with entering General Ledger transactions. Each of the associated screens is illustrated and a short description is given. Section 3. Definition of Field Names The field names on the General Ledger screens are all defined in this section. Appendix A. General Ledger Calculations This appendix provides the formulae used by the system for calculations associated with the General Ledger. iv

5 About This Guide Related Product Information Guides Common to all Users of the System Product Overview ( ) This document describes the capabilities and benefits of the modules of the Banking Back-Office Processing system. It consists of an overview of the system, and a description of each of the modules and interfaces available. It is intended for use by senior management. Core On-Demand Reports ( ) This guide describes how to run online reports that are provided in the core of the system and which will be relevant to most implementations of the system. Any options available when producing a report are detailed as well as any specific calculations. Overnight Reports ( ) This guide describes how to run offline reports. This includes an overview of overnight processing. Instructions on how to initiate reports are given. This guide should be used by all personnel who need to understand the reports and the overnight process. Data Dictionary ( ) This document provides details of data fields within every dataset on your banking systems database. This document should be used by staff preparing the accounting models and writing SQL reports to inquire on the database. Guides for Users of the Wholesale System Only Operations Reference Card ( ) This document is a single card that provides a list of screen names and their mnemonics. The list is organised according to the menu structure of the Graphical User Interface. The card also describes how to log on and off the system, enter data, make inquiries and print reports. These instructions are relevant to the Graphical User Interface only. Starter s Guide ( ) This guide describes how to enter data and make online inquiries. It also includes a description and example of commonly used data entry and inquiry screens. This guide is intended for all new and inexperienced personnel who need to enter data and make inquiries v

6 About This Guide Guide to Setting Up ( ) This guide describes how to set up parameters that govern the operating environment of the system. It describes the procedures for setting up the business and operational tables, and setting up usercodes and access security. The procedures for setting up blueprint parameters are provided with a description of each parameter. It should be used by all persons involved in installation, implementation and maintenance of these system parameters. Core Functions and Inquiries Guide ( ) This guide describes the kernel functions that are used regularly for the maintenance of information utilised by a number of modules. It describes the procedures for setting up and maintaining data, such as market rates and dealers. It also describes inquiries that are common to all contracts. This guide is relevant to all users. Clients and Accounts Administration Guide ( ) This guide describes the data entry and inquiry screens associated with setting up and maintaining client details. This guide also describes the set up and maintenance of client accounts, including automatic payments (standing orders). An appendix covers the calculations used by client accounts. This should be used by personnel preparing information for data entry. Settlements Guide ( ) This guide describes the processes associated with settlements and customer transfers. It details how to administer the settlement queues. This guide also describes how to use the Straight Through Processing and Netting functions. It should be used by personnel managing the settlements department. Risk Management Administration Guide ( ) This guide describes the data entry screens associated with setting up limits and exposures. The guide also describes the screens associated with portfolios. The amounts that represent book and market values are listed by module in an appendix. This guide is intended for personnel preparing information for data entry and those concerned with controlling risk. Commercial Loans Administration Guide ( ) This guide describes the data entry screens associated with Commercial Loan transactions. This includes entry of commitments, various types of drawdown and contract schedules. An appendix gives the calculations used in the processing of Commercial Loan transactions. This guide is intended for personnel preparing information for data entry. vi

7 About This Guide Foreign Exchange and Money Market Administration Guide ( ) This guide describes the data entry screens associated with Foreign Exchange and Money Market transactions. An appendix gives the calculations used in the processing of Foreign Exchange and Money Market transactions. This guide is intended for personnel preparing information for data entry. Forward Rate Agreements and Interest Rate Swaps Administration Guide ( ) This guide describes the data entry screens and some related inquiries associated with Forward Rate Agreement and Interest Rate Swaps transactions. An appendix gives the calculations used in the processing of Forward Rate Agreement and Interest Rate Swap transactions. This guide is intended for personnel preparing information for data entry. Futures Administration Guide ( ) This guide describes the data entry screens associated with Futures transactions and some related inquiries. An appendix gives the calculations used in the processing of Futures transactions. This guide is intended for personnel preparing information for data entry. Traded Options Administration Guide ( ) This guide describes the data entry screens associated with Exchange-Traded Options transactions. An appendix gives the calculations used in the processing of Options transactions. This guide is intended for personnel preparing information for data entry. OTC Options Administration Guide ( ) This guide describes the data entry screens associated with OTC Options transactions. An appendix gives the calculations used in the processing of OTC Options transactions. This guide is intended for personnel preparing information for data entry. Securities Administration Guide ( ) This guide describes the data entry screens associated with Interest Bearing Securities, Discounted Securities and Repurchase Agreements transactions and some related inquiries. An appendix gives the calculations used in the processing of Securities transactions. This guide is intended for personnel preparing information for data entry. Trade Finance Administration Guide ( ) This guide describes the data entry screens used by the Trade Finance department. This guide is intended for personnel preparing information for data entry vii

8 About This Guide Generalised Fees Administration Guide ( ) This guide describes the data entry screens associated with Fee transactions and supporting business table. This guide is intended for personnel preparing information for data entry. On-Demand Reports Guide ( ) This guide describes on-demand reports in alphabetical order. Any options available when producing a report are detailed as well as any specific calculations. Note: core reports are described in the Core On-Demand Reports Guide; retail reports are described in the Retail On- Demand Reports Guide. Guide to Interfaces with External Systems ( ) This guide describes the running of all the interfaces between your Banking Back-Office system and external systems. This guide is intended for personnel involved in setting up and running external interfaces. Order Transport Management System ( ) This guide describes how to enter stock exchange securities contracts using the Order Transport and Management System. The screens in this guide allow users to add, maintain and inquire on deals, convert deals into stock exchange securities contracts, and liaise with brokers to complete settlement of a deal. This guide is intended for personnel preparing information for data entry. Portfolio Management ( ) This guide describes how to create portfolios for the clients and agents who will be trading stock exchange securities with your institution. A large array of inquiry screens for managing these portfolios is also described. This guide is intended for personnel preparing information for data entry. Stock Exchange and Securities Management ( ) This guide describes how to set up and maintain the securities master file, allowing you to record details of stock exchange securities. This guide also describes how to create, maintain and inquire on contracts based on stock exchange securities, including the necessary static data. Loan Administration System Guide ( ) This guide describes the data entry screens associated with Syndicated Loans. It includes entry of facilities, and contracts such as drawdowns, guarantees and acceptances and their schedules. The screens in this guide allow users to enter data using workflows. This guide is intended for personnel preparing information for data entry. viii

9 About This Guide Static Database Transaction Input Guide ( ) This guide, in conjunction with the static database, enables users to evaluate the functions and features of many of the modules. It should be used by persons who are familiarising themselves with the systems functionality. Guides for Users of the Retail System Only Retail Operations Reference Card ( ) This document is a single card that provides a list of screen names and their mnemonics. The list is organised according to the menu structure of the Graphical User Interface. The card also describes how to log on and off, enter data, make inquiries and print reports. Starter s Guide to Retail ( ) This guide describes how to enter data and make online inquiries. It includes a description and example of commonly used data entry and inquiry screens. It also describes how to add a client and use a workflow with examples. This guide is intended for all new and inexperienced personnel who need to enter data and make inquiries. Core Retail Functions and Inquiries Guide ( ) This guide describes the kernel functions that are used regularly for the maintenance of information utilised by a number of modules. It describes the procedures for setting up and maintaining data, such as exchange rates. It should be used by all users. Guide to Setting Up the Retail System ( ) This guide describes how to set up parameters that govern the operating environment of the system. It describes the procedures for setting up the business and operational tables, blueprint parameters, and setting up usercodes and access security. It should be used by all persons involved in installing, implementing and maintaining the system. Retail Lending Administration Guide ( ) This guide is only relevant to the retail loans module. It describes how to set up and maintain retail loan product templates. It also details the screens needed to enter an application for a loan and administer any loan granted as a result of an application. The screens used to record details of collateral used to back a loan are also described. An appendix gives the calculations used by retail loans. This guide should be used by personnel involved in loan administration ix

10 About This Guide Retail Clients and Accounts Administration Guide ( ) This guide describes the data entry and inquiry screens associated with setting up and maintaining client details. This guide also describes the set up and maintenance of client accounts, client account templates and automatic payments, such as standing orders. An appendix covers the calculations used by client accounts. This should be used by personnel preparing information for data entry. Arrears Management Administration Guide ( ) This guide describes the data entry screens associated with the Arrears Management functionality. This allows the user to recognise when an account is in arrears, create an arrears case, and manage the arrears case. Financial Transactions Reference Guide ( ) This guide is only relevant to the retail payments module. It describes the screens used to capture data from a retail delivery system. Also covered are the back office batch entry screens and how to set up accounting centre accounts and suspense accounts. This guide should be used by personnel who need to identify the data items that are captured by financial transactions and for those preparing information for data entry. Retail On-Demand Reports Guide ( ) This guide describes retail on-demand reports in alphabetical order. Any options available when producing a report are detailed as well as any specific calculations. x

11 Contents Section 1. General Ledger Accounting Introduction The General Ledger Structure of the General Ledger General Ledger Masters General Ledger Accounts Account Type Account Definitions Account Category Postings to General Ledger Accounts Bulk Loading of Cash Wastes Back-Valued Postings Forward Valued Postings Average Balance Histories Statistics Cross Accounting Centre Postings General Ledger Updates for Retail Banking Transactions Retail Cross Accounting Centre Postings Process for Updating the General Ledger for Retail Accounts Statutory Reporting Euro Related Information Section 2. General Ledger Screens Introduction General Ledger Master (GLMAM) GL Master Contract Type Inquiry (GLMAI) Default General Ledger Masters (GLDFM) Default GL Masters Inquiry (GLDFI) Setting Up and Maintaining General Ledger Accounts General Ledger Account Definition (GLADM) General Ledger Account Details (GLSTM) General Ledger Account Close (GLCLS) Making Inquiries on General Ledger Accounts General Ledger Account Definition Inquiry (GLADI) General Ledger Accounts Inquiry (GLSTI) General Ledger Account Summary (GLASI) General Ledger Account Details Inquiry (GLACI) Account History Inquiry (HISTA) xi

12 Contents Entering Batched Postings Batch Header (BHEAD) General Ledger Credit (GLCR) General Ledger Debit (GLDR) Batch Close (BCLOS) Entering Cash Postings Cash Wastes (CASHW) Batch Inquiry (BTCHI) Batch Authorisation (CABAA) Entering General Ledger Book Adjustment Postings GL Book Adjustment Batch Header (GLABH) GL Book Adjustment Credit (GLACR) GL Book Adjustment Debit (GLADR) GL Book Adjustment Batch Close (GLABC) GL Bulk Adjustments (GLADJ) Making Automatic Payments via Standing Orders Standing Orders Input (SOSTM) Deleting a Standing Order Standing Orders Master Details Inquiry (SOSTI) Postings Inquiries Postings Inquiry By Account (POSTI) Postings Inquiry By Number (POSTN) Statement Inquiry By Date (STMTD) Journal Inquiry By Value Date (JRNLI) General Ledger Posting Inquiries for Loans Administration LA Postings Inquiry By Account (LPSTI) LA Postings Inquiry By Number (LPSTN) LA Journal Inquiry By Date (LJRNI) Setting Up Income Statements and Balance Sheets Income Statements and Balance Sheets Totals on Income Statements and Balance Sheets Procedure for Income Statement or Balance Sheet Set Up Trial Balance/Balance Sheet (TBBSM) Trial Balance/Balance Sheet Inquiry (TBBSI) Balance Sheet Rule Off Dates (GLROM) GL Statutory Reports Information Maintenance (GLSRM) Reports Section 3. Definition of Field Names Introduction Appendix A. Calculations Introduction... A 1 General Ledger Average Balance... A 1 Index... Index 1 xii

13 Figures 1 1 Structure of an Organisation Updating the General Ledger for Retail Accounts General Ledger Master screen GL Master Contract Type Inquiry screen Default GL Master Maintenance screen Default GL Masters Inquiry screen General Ledger Account Definition screen General Ledger Account Details screen General Ledger Account Close screen General Ledger Account Definition Inquiry screen General Ledger Accounts Inquiry screen General Ledger Account Summary screen General Ledger Account Details Inquiry screen Account History Inquiry screen Batch Header screen General Ledger Credit screen General Ledger Debit screen Batch Close screen Cash Wastes screen Batch Inquiry screen Batch Authorisation screen GL Book Adjustment Batch Header screen GL Book Adjustment Credit screen GL Book Adjustment Debit screen GL Book Adjustment Batch Close Screen GL Bulk Adjustments screen Standing Orders Input screen Standing Order Master Details Inquiry screen Postings Inquiry By Account screen Postings Inquiry By Number screen Statement Inquiry By Date screen Journal Inquiry By Value Date screen LA Postings Inquiry By Account screen LA Postings Inquiry By Number screen LA Journal Inquiry By Date screen Trial Balance/Balance Sheet screen Trial Balance/Balance Sheet Inquiry screen Balance Sheet Rule Off Date screen GL Statutory Information Maintenance screen xiii

14 Figures xiv

15 Tables 3 1 Definition of Field Names xv

16 Tables xvi

17 Section 1 General Ledger Accounting Introduction The General Ledger General ledger accounts are used to summarise the assets and liabilities of an institution. The system maintains a full multi-currency general ledger with separate self-balancing ledgers in every currency used. The general ledger can be updated automatically via the accounting models for users of the non-retail modules or via the product transaction table for retail module users

18 General Ledger Accounting Introduction Structure of the General Ledger The general ledger is structured according to a four tier hierarchy that can be used to represent a multi-branch or multi-company environment. The following diagram shows the relationships between elements in the structure. Each element represents a level within your organisation. Key Accounting Centre Sector Sector Sub - Sector Sub - Sector Sub - Sector Profit Centre Profit Centre Profit Centre Profit Centre Profit Centre Profit Centre Location 1 Location 2 Figure 1 1. Structure of an Organisation The structure of an organisation forms one operating unit. The basic operating unit is the accounting centre, comprising of a sector, sub-sector and profit centre. Each accounting centre is connected to one location, which can be any location. This means that sectors and sub-sectors can be related to various locations, however each profit centre is only related to one location. Most activities in the system are undertaken at accounting centre level, and even though this also defines a location for the activity, the location is not seen. Every transaction is attributable to an accounting centre. Every user belongs to an accounting centre and all their transactions automatically contribute to it (this can be overridden at transaction level). In turn each accounting centre and each user also belong to a location and all their transactions automatically contribute to it. Information on the activities in a system is drawn together to make reports and calculate total balances across your institution. These calculations involve the consolidation of figures either vertically through the system, via the accounting centre, or horizontally across the system via the location

19 General Ledger Accounting Introduction An example of how these four definitions can interact to define an institution: Sector - Could define the head office (eg in France) Sub Sector - Could define branches in different countries (eg in China, Japan, America and Germany) Profit Centre - Could define dealers in the branches. Location - Could define geographical regions for consolidation of information. (e.g. Europe, Asia, North America). However, dealers from the China branch, working in Britain could come under either the Europe or Asia location. General Ledger Masters General ledger masters are used to define the general ledger in two ways. First, each account is associated with a general ledger master, which provides a mechanism for grouping accounts. Secondly, general ledger masters define the accounts to which postings from the following are directed: Contracts Client account accruals Standing orders Direct Debits Client account interest payments Account charges Retail banking financial transactions If a specified client or general ledger account is not available when account entries are posted through the accounting models, the postings are sent to the real or memo suspense account for the general ledger master associated with that contract or client. If the error suspense account for the general ledger master is also unavailable, the postings are sent to the system error suspense accounts set up on the System Parameters (SPMTR), described in the Guide to Setting Up. Users of the retail system should see Systems Parameters (SPMTR) in the Guide to Setting Up the Retail System. A general ledger master must exist before a general ledger account can be created. General ledger masters are created and maintained using the General Ledger Master (GLMAM) screen

20 General Ledger Accounting Introduction General Ledger Accounts General ledger account details are entered and maintained using the General Ledger Account Definition (GLADM) and General Ledger Account Details (GLSTM) screens. Each account is related to a general ledger master, which must exist before the account can be created. Account Type The Account Type is entered for each general ledger account. You can create the following types of general ledger account: Real - these contribute to the balance sheet and must balance within currency and accounting centre. Memorandum - these accounts need not balance. They appear on the balance sheet or trial balance as footnotes, for example to represent dealing positions not yet taken into the real accounts (showing potential future profit or loss). Account Definitions General ledger account definitions are set up using the General Ledger Account Definition (GLADM) screen. From an account definition, an account or series of accounts can be created: By completing the General Ledger Account Details (GLSTM) screen. In this case, the general ledger accounts are opened immediately. By automatic generation if the Automatic Account Generation option is set on the General Ledger Account Definition (GLADM) screen. In this case, a general ledger account is opened when a posting is made to it via: - An accounting model - A retail transaction From a general ledger account definition, accounts can be created for a single accounting centre or all accounting centres - this distinction is made on the General Ledger Account Details (GLSTM) screen. Similarly an account can be created for a single currency or all currencies - again this distinction is made on the General Ledger Account Details (GLSTM) screen. Account Category The Account Category specifies the type of postings that can be made to that account and is entered for each general ledger account. The following Account Categories are available: 1. Backing - only used for postings associated with non-retail banking client accounts. Postings cannot be made directly to Backing Accounts. 2. Control - only used for postings arising through the accounting models (for example, interest accrual on a contract). 3. Standard - used for postings arising either through the accounting models, directly through the posting screens or as the result of retail banking financial transactions. Back-valued postings cannot be posted to categories 1 and 2 above

21 General Ledger Accounting Introduction Postings to General Ledger Accounts Postings can be made to general ledger accounts in the following ways: Directly, as manually entered debits or credits Directly, using the CA Backing Account Change (CABAC) screen, described in the Clients and Accounts Administration Guide. Automatically through the accounting models as a result of: Interest settlements Contract related transactions Accruals Manually, from external accounting entries using models set up on the External Accounting Models (EXACM) screen, described in the Guide to Setting Up. Automatically as backing postings or contra-postings Automatically loaded from an outside source as cash wastes Automatically via the Product Transaction Types (PTTRM) screen as the result of retail banking financial transactions, described in the Retail Clients and Accounts Administration Guide. Note: The volume of retail banking financial transactions makes it inappropriate to make individual postings to the general ledger online. Therefore the information for each general ledger account is batched together during the day and a single posting for each general ledger account is made during the end-of-day processing by the PTTOTUPD - Post Product Total to General Ledger report (see the Overnight Reports Guide for further details). The system enables you to process forward valued postings for general ledger accounts. The ability to process back-valued postings is controlled by blueprint parameters defined at installation. All forward and back-valued postings are reflected in the general ledger account book balance on input. The value balance for the general ledger account is updated on the posting value date during the start-of-day process. Note: When opening a client account, you can choose whether transactions posted to it are reflected in the General Ledger online or offline. Online updates are recommended for client accounts to be used for low-volume banking functions. Offline updates are recommended for client accounts to be used for retail banking functions. Postings entered manually can be entered in batches or as cash wastes/bulk adjustments. The following types of direct postings can be entered in batches: Debit - to debit a general ledger account Credit - to credit a general ledger account

22 General Ledger Accounting Introduction Each batch must contain postings made by the same user and must be from the same accounting centre. The accounts must all be in the same currency. Batches must balance within value date before they can be closed. Back-valued postings must also balance within posting date. Both single and multiple currency direct postings can be entered as cash wastes or bulk adjustments. Bulk Loading of Cash Wastes The system has the capability of uploading bulk postings created in another system into its database. To do this, you must run the report LDBLKPOST - Load Bulk Postings, this will access and read the file containing the postings. The postings will then be converted into the system format, and entered into the system database as cash wastes. The report output contains details of the postings converted, and any postings that could not be converted. The LDBLKPOST - Load Bulk Postings report is described in the On-Demand Reports Guide. Back-Valued Postings You can choose whether or not you wish to be able to back-value postings. This feature is controlled by blueprint parameters. Back-valued postings update the book balance of the general ledger account from the posting date (entered with the posting) to the current balance. They also update the value balance from the value date of the posting to the current processing date. You can set up, and amend at any time, a balance sheet rule-off date to control back-valued postings. Postings can only be back-valued up to and including the balance sheet rule-off date currently in use. This date is established on the Balance Sheet Rule Off Dates (GLROM) screen. For further information on, and an example of this screen, refer to Section 2 General Ledger Screens. Back-valued postings are referred to as book adjustment postings. They are entered on the following general ledger book adjustment posting screens: GL Book Adjustment Batch Header (GLABH) GL Book Adjustment Credit (GLACR) GL Book Adjustment Debit (GLADR) GL Book Adjustment Batch Close (GLABC) GL Bulk Adjustments (GLADJ) Batched postings must balance within value date, posting date, currency and accounting centre. When reopening a batch the batch number entered must have been entered originally through the GL Book Adjustment Batch Header (GLABH) and not through the standard Batch Header (BHEAD) screen (see Entering Batched Postings )

23 General Ledger Accounting Introduction Note: If the batch was entered via the GL Bulk Adjustments (GLADJ) screen, then it must be reopened using that screen. The batch cannot be reopened using the GL Book Adjustments Batch Header (GLADH) screen. For further details of how to enter back-valued postings see Entering General Ledger Book Adjustment Postings. Forward Valued Postings Forward valued postings are only reflected in the general ledger account book balance on input. The value balance of the general ledger account is updated on the value date during the start-ofday process. Postings with a value date of today or later can only be posted to standard accounts. Batched postings must balance within value date. Note that the number of days forward that a posting can be valued is defined at installation using blueprint parameter BP-FWD-VAL-DAYS, described in the Guide to Setting Up. Users of the retail system should see BP-FWD-VAL-DAYS in the Guide to Setting Up the Retail System. For details of how to enter forward valued postings see General Ledger Screens. Average Balance Histories The following information is maintained to enable average balance information (based on the book balance at the end of the day) to be reported and used for statistical purposes: Days Credit - This is the total number of days during a period where a credit balance exists on an account at the close of business. A balance of zero is counted as a credit balance for this purpose. Days Debit - This is the total number of days during the period where a debit balance exists on an account at the close of business. Average Credit Balance - At any date during a profit period the average credit balance is calculated by summing the close of business balance for each day the account has been in credit during the period thus far and dividing this total by the current Days Credit value. Average Debit Balance - The average debit balance is calculated by summing the close of business balance for each day the account has been in debit during the period thus far and dividing this total by the current Days Debit value. History records, for example turnover, balance and average balance, are created when an account changes and at the end of each period. These are used to record period statistics, for example to compare one year's turnover with that of another year, or to control back-valuations. All historical records are retained for a number of days specified at installation. See Blueprints for Record Retention in the Guide to Setting Up. Users of the retail system should see Retail Blueprints for Record Retention in the Guide to Setting Up the Retail System. Note: Client account records are usually retained for a shorter period than general ledger accounts

24 General Ledger Accounting Introduction Statistics The following statistics are maintained for each account: Account balances Debit and credit of average balance for period-to-date Debit and credit days turnover Number of days in debit or credit period-to-date Net average balance year-to-date Cross Accounting Centre Postings If a transaction performed at one accounting centre is actioned against an account held at another accounting centre, then cross accounting centre postings are required to balance the general ledger at each accounting centre. The general ledger accounts to be used for the credits and debits between specified accounting centres can be defined using the Cross Accounting Centre Rules (ACRLM) screen, described in the Guide to Setting Up. Cross accounting centre postings for general ledger accounts can be entered manually in batches using the GL Bulk Adjustments (GLADJ) screen. See Retail Cross Accounting Centre Postings later in this section for a description of how cross accounting centre postings affect users of a retail system

25 General Ledger Accounting Introduction General Ledger Updates for Retail Banking Transactions Retail banking general ledger account transactions do not post via the accounting models. The postings that are made depend on rules specified for a product on the Product Transaction Types (PTTRM) screen. Two accounts are specified for every transaction that is permitted for a product: one for the product itself and one for the transaction. The Product Transaction Types (PTTRM) screen can pick up defaults for both general ledger accounts. The default general ledger account for a transaction code is defined on the Retail Transaction Definition (TRDFM) screen. The default for a product is defined with the product details on the Product Maintenance Screen 1 (PTA1M) for retail banking client accounts and on the Loan Product Maintenance - 2 (PTL2M) screen for retail loan accounts. The Product Maintenance screens are described in the Retail Clients and Accounts Administration Guide, the Retail Transaction Definition (TRDFM) screen is described in the Financial Transactions Reference Guide and the Loan Product Maintenance -2 (PTL2M) screen is described in the Retail Lending Administration Guide. The provision of two general ledger accounts for every combination of product and transaction enables you to group activity by product and by transaction. Therefore, on the transaction side you could group all proceeds from one type of transaction together (for example, deposits) or you could subdivide them into any size of group down to a single transaction code and product combination (for example, interest settlement on a savings account could update a different general ledger account to interest settlement on a current account). When a transaction occurs that causes the balance of a client account to be updated, there must be corresponding updates to the general ledger for the product. This occurs in the form of two postings: a debit and a credit. One posting is to the general ledger account for the product and the other to the general ledger account for the transaction (the transaction type determines which account receives the credit and which receives the debit). For example, the system generates three postings for a cash deposit of 100 to a current account: Client s account is credited with 100 Product general ledger account that represents the current account product is credited with 100 Transaction general ledger account that represents the cash till is debited with 100 The following cases are handled slightly differently to the scenario outlined above: Transactions that involve nostro accounts Cross currency transactions Credit interest accrual and settlement Debit interest accrual and settlement Deferred charges accrual and settlement Loan account interest accrual and settlement Loan account interest accrual and settlement on non-performing loans The above cases are explained below

26 General Ledger Accounting Introduction Nostro Accounts In this case, there are three postings as usual: one to the client account that is the object of the transaction, one to the product general ledger account and one to the transaction general ledger account. The difference is that the transaction general ledger account cannot be determined until the currency and nostro number used by a transaction are known; these are included as part of the transaction details. The system can then access the nostro record indicated to determine the general ledger account and nostro to be updated. Cross Currency Transactions As it is important to retain control of the foreign currency exposure of a financial institution, an Other Currencies Control Account is held by the system in all currencies for each accounting centre. This enables the system to balance a multi-currency general ledger. This Other Currencies Control Account is specified as system wide parameter (see the description of the System Parameters (SPMTR) screen in the Guide to Setting Up the Retail System) and can be picked up by the system as the default transaction general ledger account when indicated for cross currency transactions. An example of a cross currency transaction is given below: Client Account A is a GBP account, transferring 100 GBP to Client Account B, which is a USD account. Assume that the exchange rate is 1 GBP to 1.5 USD. The postings created for the above transaction are: Client Account A is debited with 100 GBP Client Account B is credited with 150 USD Product general ledger account that represents Client Account A's product is debited with 100 GBP Currency Control Account is credited with 100 GBP Product general ledger account that represents Client Account B's product is debited with 150 USD Currency Control Account is debited with 150 USD Credit Interest Accrual and Settlement Credit interest is accrued in a separate product general ledger account where it remains until settlement. The balance of this account represents a liability and can be grouped by product or type of product. The transaction general ledger account represents the account in which such expenses are accumulated. When interest is settled, three postings are made: a credit to the client account that receives the interest, a debit from the product general ledger account where interest has accrued and a credit to the product general ledger account that represents the product balances

27 General Ledger Accounting Introduction Debit Interest Accrual and Settlement Debit interest is accrued in a separate product general ledger account where it remains until settlement. The balance of this account represents an asset. The transaction general ledger account represents the account that receives such income. When interest is settled, three postings are made: a debit to the client account that pays the interest, a debit from the product general ledger account and a credit to the transaction general ledger account in which the interest for the product has accrued. Deferred Charges Accrual and Settlement Deferred charges are accrued in a product general ledger account where they remain until settlement. The balance of this account represents an asset. The transaction general ledger account represents the account that receives income from charges. When a deferred charge is settled, three postings are made: a debit to the client account that pays the charge, a debit from the product general ledger account where charge has been deferred and a credit to the transaction general ledger account in which income accumulates. Loan Account Interest Accrual and Settlement Interest accrual on a loan is represented by three transactions: Loan interest accrual (transaction code 850) Loan interest arrears interest accrual (transaction code 851) Loan principal arrears interest accrual (transaction code 852) This gives you the opportunity to accrue the different types of interest in different product general ledger accounts so that they can be recorded as separate assets. At the same time, you use one transaction general ledger account to record income for the product. When interest is settled, the product general ledger account(s) where interest accrued is credited, the transaction general ledger account in which income accumulates is credited and the loan account itself is debited. Loan Account Interest Accrual and Settlement on Non-Performing Loans The same principal applies to interest on non-performing loans as to interest on performing loans in that the three types of interest can be accrued in separate general ledger accounts, the difference is that the general ledger account(s) are normally memo suspense general ledger accounts. This means that arrears accrual balances for non-performing loans are not reflected as income in your profit and loss statement and are not included as assets on your balance sheet

28 General Ledger Accounting Introduction Event Charges Event charges are attached to events rather than financial transactions, for example providing a replacement statement. Event charge transactions are treated in the same way as ordinary withdrawal transactions. When an event charge is applied, the system makes three postings: the client s account is debited, the product general ledger account for the client account is debited and the transaction general ledger account is credited. You could define a series of charge transaction general ledger accounts to separate different types of charge within the income area of the general ledger. Retail Cross Accounting Centre Postings If a transaction performed at one accounting centre is actioned against a real account held at another accounting centre, then cross accounting centre postings are required to balance the general ledger at each accounting centre. For example, the following postings are required for a cash deposit of 100 made at one accounting centre for a current account held at another accounting centre: Client s account is credited with 100 Product general ledger account that represents the current account product is credited with 100 at the accounting centre of the current account Transaction general ledger account that represents the cash till is debited with 100 at the accounting centre where the transaction took place To enable the general ledger of each accounting centre to balance, the following additional postings are generated by the system: At the accounting centre holding the client s account, the general ledger account that represents cross accounting centre debits is debited with 100 At the accounting centre at which the transaction took place, the general ledger account that represents cross accounting centre credits is credited with 100 The general ledger accounts to be used for the credits and debits between specified accounting centres can be defined using the Cross Accounting Centre Rules (ACRLM) screen, described in the Guide to Setting Up the Retail System

29 General Ledger Accounting Introduction Process for Updating the General Ledger for Retail Accounts The following figure shows the process used in updating the general ledger when a posting to a retail client account is received. The datasets shown are described in the 'Data Dictionary'. Retail Client Account Posting Incoming Posting to Retail Client Account Client Account Updated Retail Account Master Dataset (RACCO) Transaction Created Retail Transaction Details Dataset (RTRNO) Today s Transactions Added to Database Product Daily Transaction Details Dataset (PTTOT) Today s Transactions Processed During Next Overnight PTTOTUPD Post Product Totals to GL Report General Ledger Updated PTTOTUPD Post Product Totals to GL Report Figure 1 2. Updating the General Ledger for Retail Accounts

30 General Ledger Accounting Introduction Statutory Reporting The system provides an interface to rframe, the statutory reporting package from CMG. Information is extracted from the system and placed in flat files. These flat files are fed through to the rframe software that produces and sends the statutory reports. At present only Capital Adequacy Reports for the Bank of England are supported. The extraction process is carried out at regular intervals, depending on the requirements of the central bank this might be daily or monthly. The timing of the reports can be changed by altering the list of overnight reports that is to run each day. Extraction is undertaken by the STRXTRACT - rframe Interface Extract Report, which runs during phase C of the overnight. This report, and the overnight process in general are described fully in the Overnight Reports Guide. Information is extracted from the system database grouped into 10 records groups: Record type 0 - Exchange Rate Record type 1 - Current Accounts Record type 2 - Deposit and Loan Accounts Record type 3 - Internal Accounts Record type 4 - Profit and Loss Record type 5 - Bills Record type 6 - Investments Record type 8 - Facilities and Commitments Record type 9 - Foreign Exchange and Interest Rate Contracts Record type 10 - Contingent Liability All internal accounts (general ledger) which are required to be reported on must be defined on the General Ledger Statutory Information (GLSRM) screen, detailed in Section 2, General Ledger Screens. There are two methods of reporting accrued amounts using the rframe interface, cumulative and non-cumulative. These are controlled by the blueprint parameter BP-STRCUMOPT. This parameter can be either: "N"- Non Cumulative. Amounts reported by the interface are those accumulated during the last reporting period only. "Y" - Cumulative. Amounts reported by the interface are cumulative, that is the value sent is the total of accrued amounts in all reporting periods

31 General Ledger Accounting Introduction The following points should be followed when preparing statutory reporting: For the correct reporting of period to date information on interest accruals, it is necessary that the profit periods are aligned to the periods at which statutory returns will be submitted. Profit periods are set up on the Profit Period Dates Maintenance (PPDAT) screen, described in the Guide to Setting Up. System data should be retained for a sufficient period to allow correct reporting of period income and expenses for deleted or matured contracts or accounts. The following definitions are used by the rframe interface when preparing reports: Accrual Amount is interpreted as the interest amount accrued to date since the last reporting period minus the part of this interest that has been paid or received up to the reporting date (i.e. the accrued interest outstanding). Interest Payable / Receivable is interpreted as the interest amount accrued to date since the last reporting period regardless of how much of it has since been paid or received. Where the Cumulative Reporting Option is chosen, this amount will be the cumulative figure covering the current and all past profit periods in the current financial year. Euro Related Information Economic and Monetary Union (EMU) is a process by which certain countries in the European Union are converting their national currencies (also called in currencies) into a single European currency called the Euro. The system supports this conversion process fully for all currencies and all phases of the conversion (see "Euro Related Information" in the Core Functions and Inquiries Guide for more information)