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 noncontingent. 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
Account
Nostro USD 100,000.00cr
STMT.ENTRY
Debit
Account
Customer 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 USD 10.00cr

earned
Debit to Interest Earned USD 10.00 dr

not Collected
At Month end
At application of interest and charges the following entries are raised:

STMT.ENTRY
Debit Customer Account USD

100.00dr
Credit to Interest Earned USD

not Collected
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
RE.CONSOL.SPEC.ENTRY Credit to Contingent, type USD

FORWARDCR for
1million cr

On Value Date 21 April 1997
RE.CONSOL.SPEC.ENTRY Debit to Contingent, type USD

FORWARDCR for
1million cr
Now the contingent is cleared we raise the liability entry.
STMT.ENTRY
Debit client account
USD 1million
dr
Credit to liability, type USD 1million
LIVECR for

cr
During the life of the contract accruals will be created.
CATEG.ENTRY
Debit to P/L category USD 1000.00

Interest Paid (52000)
cr
Credit
Payable
to
Interest 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
(prin.)
account USD 1million

cr
STMT.ENTRY
Credit
(int.)
account USD 4000.00

cr
Debit to liability, type USD 1million

LIVECR for
dr
Debit to liability, type USD 4000.00

52000 for
dr
client
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
Cr
Principal
A/C
Dr
Commission
(principal)
Liquidation (principal)
(commission)
Liquidation A/C
Cr
Interest
A/C
Liquidation (interest)
2) Order Placed
Forward Valued Order
Cr
CRF
FWDCONTCR
type (principal)
Forward Valued Placement

Dr
CRF
FWDCONTDB
type (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 (accrued commission)

Comm
Cr
P&L PL Accr Comm
5) Interest Payment
Order
(accrued commission)
Cr
Interest
A/C
Commission in Arrears on Interest

Dr
Commission
Liquidation A/C
Cr
CRF type
Comm
(commission)
PL Accr (commission)
Placement
Dr
Interest
A/C
Dr
CRF type CONTCR
Cr
Principal
A/C
6) Maturity
Order
(principal)
Commission in Arrears
Dr
Commission
Liquidation A/C
(commission)
Cr
CRF type CONTDB
(commission)
Placement
Dr
Principal
A/C
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
110,000 decrease an LC value: -
INC
ISSUE
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
300,000
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
100,000
LIQ
Debit "customers liabilities for acceptance".

Special
100,000 NEW
ISSUE
ACPTCONTRA
Credit "outstanding acceptances"

Special
100,000 NEW
ACPTBANK
or "Acceptances executed by Head Office and branches"
Special
100,000 NEW
ACPTHO
Or "Acceptances executed by subsidiaries"
Special
100,000 NEW
ACPTSUBS
On the expiry date of 90 Days :
Credit "Customers liabilities for acceptance".
Special
100,000
MAT
ACPTCONTRA
Debit "Outstanding acceptances"

Special
100,000 NEW
ACPTBANK
Special
100,000 NEW
ACPTHO
Special
100,000 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
350,000
NEW
COLL
On day sent for collection if it were to be under Trust:

Credit Items sent for collection"
Special
350,000
NEW
Debit "Outstanding credit unused".

Special
350,000
LIQ
ISSUE
LIQ
ISSUE
TRCOLL
On day payment received :

Special
350,000
Debit "Items sent for collection"

Special
350,000
PAY
COLL
On day payment received if the documents were under Trust:

Special
350,000
LIQ
TRCOLL
The following entries will always be raised online.

Stmt
350,000
PAYCR
Stmt
350,000 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.
Credit "Items sent for collection"
Special
225,000
NEW
COLL
On day sent for collection documents under Trust:

Special
225,000
NEW

Special
225,000
LIQ
TRCOLL
ISSUE
On day notice of non-payment is received:

Special
225,000
NCP
On day the documents under Trust is rejected:

Debit Items sent for collection"
COLL
Special
225,000
Credit "Outstanding credit unused".

Special
225,000
LIQ
TRCOLL
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.
Special
150,000
NEW
COLL
On day sent for collection if the documents were under Trust:

Special
150,000
NEW

Special
150,000
LIQ
TRCOLL
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:
Special
150,000
PAY
COLL

Special
150,000
LIQ
ISSUE
Debit "Customers liabilities for acceptance".

Special
150,000 NEW
ACPTCONTRA
Credit "Outstanding acceptances"
Special
150,000 NEW
ACPTBANK
Special
150,000 NEW
Special
150,000 NEW
ACPTHO
ACPTSUBS
On day acceptance received if the documents were under Trust:

Special
150,000
LIQ
TRCOLL

Special
150,000 NEW
ACPTCONTRA
Special
150,000 NEW
ACPTBANK
Special
150,000 NEW
ACPTHO
Special
150,000 NEW
ACPTSUBS
On the expiry date of 90 Days:
Special
150,000 MAT
ACPTCONTRA
Special
150,000 NEW
ACPTBANK
or "Acceptances executed by Head Office and Branches"
Special
150,000 NEW
ACPTHO
Or "Acceptances executed by Subsidiaries"
Special
150,000 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.
Stmt
150,000
PAYCR
Stmt
150,000
PAYDR
Usance collection - not accepted or paid
the letter of credit was opened and it is not accepted or paid.
Special
175,000
NEW
COLL
On day sent for collection if it were under Trust:

Special
175,000
Special
175,000
NEW
TRCOLL
LIQ
ISSUE
On day notice of non-payment/acceptance is received:

Special
175,000
NCP
COLL
On day notice of non-payment/acceptance is received if it were under Trust:

Debit Items sent for collection"
Special
175,,000
LIQ
TRCOLL
Credit "Outstanding credit unused".

Special
175,000
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:
Special
250,000
Collection Documents
On day documents are received:

Credit "Items sent for Collection"
MAT
ISSUE
Special
100,000
NEW
COLL
On day documents are received and handled under Trust:

Special
100,000
NEW
TRCOLL
On day documents under Trust is accepted:

Special
100,000
Debit Items sent for Collection
Special
100,000
NEW
COLL
LIQ
TRCOLL
On day documents under Trust is rejected:

Debit "Items sent for Collection"
Special
100,000
DEC
TRCOLL
On day documents are paid:

Debit "Items sent for Collection"
Special
100,000
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
2,000,000
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
1,500,000
NEW
CONFIRM
Request to open
A letter of credit is issued for 1 million. On the day it is input to T24 :

Special
1,000,000
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
2,500,000
NEW
ADVICE
On the day the letter of credit is changed to confirm:

Debit "LC advised"
Special
2,500,000
CON
ADVICE

Special
2,500,000
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
125,000 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
110,000 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
2,500,000
NEW
ADVICE/CONFIRM
It would now appear as:

Credit "LC advised"
Special
Credit "LC advised"
Special
Debit "LC advised"
Special
1,500,000
NEW
ADVICE
1,000,000
NEW
CONFIRM
2,500,000
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
300,000 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:
Special
200,000
Special
100,000
LIQ
CONFIRM
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:
Special
100,000 LIQ
CONFIRM/ADVICE

Special
100,000 NEW
ACPTCONTRA
Special
100,000
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.
Special
75,000
LIQ
CONFIRM
Special
25,000
LIQ
ADVICE
Special
100,000 NEW
ACPTCONTRA
Special
100,000
NEW
ACPT

Special
100,000 MAT
ACPTCONTRA
Special
100,000
MAT
ACPT

Stmt
100,000
PAYCR
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.
Special
200,000
LIQ
ISSUE

Special
200,000 NEW
ACPTCONTRA
Special
200,000
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
200,000 NEW
Credit "Discount received not yet earned".
Special
6,750 CAP
LIVEDB
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

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
ACC
2,325

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:
Special
200,000 MAT
ACPTCONTRA
Special
200,000
MAT

Special
1,350 ACC
ACPT

LC Parameter
Credit P&L for discount earned using the category code from
LC.PARAMETER.
Categ
1,350 DISPL
Credit "Own acceptances discounted".
Special
200,000 MAT
LIVEDB
bank.
Stmt
200,000 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.
Special
400,000
LIQ
ISSUE

Special
400,000 NEW
ACPTCONTRA
Special
400,000
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
400,000 NEW
Credit "Discount received not yet earned".
Special
13,500 CAP
LIVEDB
Discount
Category
from LC Parameter.
Credit "Discount (load) received not yet earned".

Special
CAP
Load Category from LC
4,500
Parameter.
Credit account of customer request discount or suspense account.
Stmt
382,000 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:
Special
ACC
1,500

LC Parameter.
code from LC Parameter.
Categ
1,500 DISPL
Debit "Discount (load) received not yet earned".
Special
ACC
Load category from LC
500
Parameter.
Credit profit and loss for discount (load) earned using the load category
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:
Special
ACC
4,650

LC Parameter.
Credit Profit and loss for discount earned using the discount category
Categ
4,650 DISPL
Special
ACC
1,550
Parameter.
Credit Profit and loss for discount (load) earned using the load category
Categ
1,550 DISPL
On day of expiry, of 90 Days, these entries will be raised as part of the Close of Business
run:
Special
400,000
MAT

Special
400,000
MAT

Special
2,700 ACC
ACPTCONTRA
ACPT

LC Parameter.
Categ
2,700 DISPL
Special
ACC
900
Parameter.
Credit profit and loss for discount (load) earned using the load category
Categ
900 DISPL
Credit "Own acceptances discounted".
Special
400,000 MAT
LIVEDB
bank.
Stmt
400,000 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.
Special
350,000
On day payment received:
NEW
COLL
Special
350,000
LIQ
ISSUE

Special
350,000
PAY
COLL
The following entries will always be raised online:

Stmt
350,000
PAYCR
Debit nostro through which payment was received from the other bank.
Stmt
350,000 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.
Special
225,000
NEW
COLL
On day notice of non-payment is received:

Special
225,000
NCP
COLL
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.
Special
350,000
NEW
Debit "Payments made under reserve"

Special
350,000 NEW
COLL
PAYRES
The following entry will always be raised online:

Credit customer presenting the drawing.
Stmt
350,000
RESCR
On day payment received:

Special
350,000
LIQ
ISSUE

Special
350,000
PAY
COLL
Credit "Payments made under reserve"

Special
350,000 PAY
PAYRES

Stmt
350,000 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.
Special
225,000
NEW
COLL
Debit "Payments made under reserve"

Special
225,000 NEW
PAYRES

Credit customer presenting the drawing.
Stmt
On day of notice of non-payment is received:
225,000
RESCR

Special
225,000
NCP
Credit "Payments made under reserve"

Special
225,000 NCP
COLL
PAYRES

Debit customer presenting the drawing.
Stmt
225,000 RESDR
Usance collection - accepted or paid
the letter of credit was opened and is accepted or paid.
Special
150,000
NEW
COLL
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:
Special
150,000
PAY
COLL

Special
150,000
LIQ
ISSUE

Special
150,000 NEW
ACPTCONTRA
Special
150,000
NEW
ACPT

Special
150,000 MAT
ACPTCONTRA
Special
150,000
NEW
ACPT
Credit customer requesting payment.
Stmt
150,000
PAYCR
Stmt
150,000
PAYDR
Usance collection - not accepted or paid
the letter of credit was opened and is not accepted/paid.
Special
175,000
NEW
COLL
On day notice of non-payment/acceptance is received:

Special
175,000
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:
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
FTDR
500
Credit profit and loss using the category code from the charge (see note
1)
Categ
FTCR
500
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
Credit "Charges received not yet earned".
Special
CAP
600
600
FTDR
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
ACC
200
Category code from

charge (see note 2)
Credit profit and loss for charges using the category code from the
charge (see note 2)
Categ
AMRT
200
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
CLM
700
Category code for claiming

charges
(LC.PARAMETER.)
Credit profit and loss for the charges using the category code for charge
(see note 1)
Categ
CENCPL
700
When charges are paid (Stmt raised online, special during Close of Business):
Credit "Charges claimed"
Special
PAY
700
Debit customer paying charge

Stmt
700
CENCPY
Category
code
claiming charges
PARAMETER)
Customer
charge.
for
(LC.
paying
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

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

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 Cashiers
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 wont 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.

Application Accounting

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Application Accounting

Uploaded by

Copyright:

Available Formats

APPLICATION ACCOUNTING

Main Accounting Files/Entries

Figure 1 - Consolidate Asset Liabilities screen

Figure 2 - Consolidate Profit Loss screen

Value 21 Apr 1997

Nostro USD 100,000.00cr

Customer USD 100,000.00dr

After the first few days

Credit to P/L category Interest USD 10.00cr

Debit to Interest Earned USD 10.00 dr

At application of interest and charges the following entries are raised:

Debit Customer Account USD

Credit to Interest Earned USD

On the transaction date 20 April 1997

RE.CONSOL.SPEC.ENTRY Credit to Contingent, type USD

On Value Date 21 April 1997

RE.CONSOL.SPEC.ENTRY Debit to Contingent, type USD

Debit client account

Credit to liability, type USD 1million

During the life of the contract accruals will be created.

Debit to P/L category USD 1000.00

Interest USD 1000.00

account USD 1million

account USD 4000.00

Debit to liability, type USD 1million

Debit to liability, type USD 4000.00

Forward Valued Placement

CRF type CONTCR

P&L PL Accr Comm

Note: PL Accr Comm is a user-defined category on FD.PARAMETER .

CRF type CONTDB

4) Commission in Arrears Accrual

CRF type PL Accr (accrued commission)

P&L PL Accr Comm

Commission in Arrears on Interest

CRF type CONTCR

CRF type CONTDB

CRF type CONTDB

The sign followed by the account group being updated.

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

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.

Figure 3 - Transaction Codes

Figure 4 - Transaction Codes

An LC is issued for 1 million:

Amendment of an import letter of credit

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

Debit "Outstanding Credit Unused"

Sight payment under an import letter of credit

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

The following entries will always be raised online.

A drawing for 100,000 payable in 90 days is accepted.

Debit "customers liabilities for acceptance".

Credit "outstanding acceptances"

Debit "Outstanding acceptances"

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

Debit "Outstanding credit unused".

On day payment received :