Month End Process - Realised & Unrealised Accounting

Realised Accounting

Before starting the Month End process, the Realised Accounting for the month should be completed.

Realised accounting is normally processed every business day (or on weekly basis) and a final check is done before the Unrealised Accounting is run to verify that all Realised Accounting is completed.

Start by opening the 'Accounting' view:

1. In 'Accounting' view - handle all accounting entries in the tabs: 'Error', 'Update FX Rates' and 'Incomplete'.
2. Check that all deals have been confirmed, i.e. open the view 'Confirm' to verify that no deals are listed related to the month to be closed or related to previous months.
3. Approve and Export all Realised Accounting to ERP.

Unrealised Accounting

At Month End, all Unrealised Accounting entries, such as accrued interest, market valuation etc. are created via the function 'Accounting of Unrealised'.

Prerequisites

Before running the Unrealised Accounting, the following checks should be done to make sure all neccessary information is in the system and required steps have been performed:

• Realised Accounting for the month should be completed.
  
• Interest Fixing - verify that all transactions with floating interest are fixed. This is done by open the view 'Fixing'. Make sure all missing interest rates are set before month end. This can be done either from the view 'Fixing' or by running the Autopilot activity. 
• Market Data - validate that the FX Rate table and Interest Rate table include all rates needed for Unrealised Accounting. If there are any rates missing, the tables must be updated. There are two alternative options to consider related to Market Data and Month-End processes;
  • Always have a rate tabled stored for the last date of the month, even if this date falls on a weekend or bank holiday. This can be achieved by copying the rates from the last business day.
  • Use rates from the last business day of the month. Ensure that no incomplete rate table is created for a later date than the expected date of use (e.g., if Easter falls at the end of March)
• Confirmation - Check that all deals have been confirmed, i.e. no deals are related to the month to be closed are listed in the view 'Confirm'.
• Errors - In the 'Accounting' view - make sure there are no accounting entries in the tabs: 'Error', 'Update FX Rates' and 'Incomplete'.
• Report controls - Run Month End Reports to check the figures and that there are no error messages in the reports, i.e. this to make sure all necessary market data is available and that all outstanding deals are fixed etc.  Example of reprots to run: 'FX market value', 'Balance position: Loan FX gain loss, accrued interest, accrued fees' etc

Run Unrealised Accounting

Open the view 'Accounting of Unrealised' (or go via 'Accounting' and 'Code Unrealised' to open the view) 

1. The date of the closest Month End is automatically populated inte the field 'Balance Date' which means that normally there is no need to change this date. 
2. The fields 'FXRate End' and FX Rate End Date Code' is normally left empty. The system will then automatically use the rates from the set Balance Date, or the rates closest prior to the balance date if there are no rates for the balance date (i.e. if last day of month occurs on a weekend or bank holiday). 
3. Market Valuations (if applicable) - the Interest Rate table for the balance date will be fetched, or the date closest prior to the balance date.
4. To generate the Unrealised Accounting, click the button 'Run'.
5. Unrealised Accounting is generated for deals in status Confirmed, New and Modified. But please note that Unrealised Accounting for deals in status 'New' or 'Modified' are not visible in the 'Accounting' view until they are confirmed. 
6. After Unrealized Accounting is run, the created Accounting Entries are visible and handled in the 'Accounting' view. Verify that no Unrealised Accounting are in the tab 'Incomplete'. The error message indicates why the entry is incomplete and possible causes could e.g. be that interest fixing is not done or an FX Rate is missing. When the errors have been corrected, run 'Accounting of Unrealised" again. See also section below - 'Unrealised Accounting in tab 'Incomplete''.
7. All correct unrealised accountings will appear in the tab 'Preliminary' and need to be checked and Approved. 
8. Finally, the accounting entries are exported to be imported in to the ERP system. 
9. NOTE: All unrealised accounting will, when you press Run, also get a reversal accounting the first day of the next month. The reversal accounting also needs to be approved and exported to the ERP system.  
   

Rerun Unrealised Accounting

Open 'Accounting of Unrealised' view, select the correct date and click 'Run'. All already created Unrealised Accounting entries, that are not yet Approved or Exported, will be updated with changes in market data, deals or accounting / dimension rules. If the accounting would not be updated, then delete the existing unrealised accounting on the month end date before you run it again.

NOTE: If the unrealised accountings are approved or exported, then it is not possible to update the accounting. The 'Undo Export' and 'Undo Approved' must be done first. It is possible to  'Undo Approved' in the views 'Accounting' or 'Accounting Overview' but to undo 'Exported' this must be done from 'Accounting Overview'.

Unrealised Accounting in 'Incomplete' 

If a floating rate transaction has not been updated and has "Missing" in Fixing Status, the unrealised accounting will appear in the tab 'Incomplete' in the 'Accounting' view. Then fix the interest and rerun 'Accounting of Unrealised'. 

If FX-rates are missing in the 'FXRATE END' table, the Unrealised Accounting entries will also appear in the tab 'Incomplete' in the 'Accounting' view. Add the missing FX-rates in the table and rerun 'Accounting of Unrealised'.

Rerun of 'Accounting of Unrealised' can be done for all deals or for specific Deal ID(s). The selection of what should be included in the run is defined under Settings. 

Delete Unrealised Accounting

To delete Unrealised Accounting entries for a single transaction, open the deal in question and click 'Accounting' button.

then mark the Unreal Accounting to be deleted (including the reversal) and click Remove.

To delete multiple Unrealised Accounting Entries at the same time, this is easiest done in 'Accounting Overview'.  

In this view, filter on Event Time 'Unreal' and a specific 'Due Date'. Mark all Accounting Entries to be deleted (including the reversal entries) and go to '...' and click 'Remove'.