End of Year Procedure R15 T24

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PL.CLOSE.PARAMETER

The PL.CLOSE.PARAMETER has six settings of note.

Reports

Year End

Excluded Types

Grouping

Halt Process

Multi-GAAP

Reports

The reports section has three related fields, REPORT.TYPE, REPORT and REPORT.DATA. These control the reports that are produced during theclose out process. The reports can be ENQUIRY, REPGEN.CREATE or program driven; this is where REPORT.TYPE is used to specify the type(CRF, RTN, RPG or ENQ). REPORT contains the key to REPGEN.CREATE, enquiry.report, re.stat.request or a valid compiled program name.Lastly, the REPORT.DATA field allows the program driven routines to be passed a parameter

PL.CLOSE.PARAMETER report fields

Year End

The financial period end, usually yearly but can be defined as Monthly, Quarterly, Semi-Annual or Annual is set in CLOSE.FREQ.DATE as a monthend date and the frequency to cycle.

End of Year Procedure


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PL.CLOSE.PARAMETER Year End cycle

Excluded Types

Certain PL categories are used for non-financial purposes and these would not normally be included in the close out (though they are parameterisedin case there is a specific need to include them). TYPES.TO.EXCLUDE contains the types, which should not be included. As a default, we exclude thetypes:

CP – Contingent

CI – IAS P&L

CL – Local Gap P&L

Grouping

The structure of the keys in the CONSOLIDATE.PRFT.LOSS file is set in CONSOLIDATE.COND record profit&loss. The essential elements arepreset as ‘PL’ for the application id, ‘CURRENCY’ based on the transaction of the deals and so on. AL.GROUPING can be set to group the entriesbased on the user configured elements.

By default the entries produced are based on the CATEGORY/CURRENCY and one entry is passed to the internal account (as defined by the(ACCOUNT.CLASS record PLCLOSE). Each of these entries is the sum of the all the CONSOLIDATE.PRFT.LOSS records matching the combinationof CATEGORY & CURRENCY.

To produce entries summed at different group levels, you can add the additional elements from the profit&loss key so that for example, the entriesare summed for all records matching the same PLCATEGORY/CURRENCY/PLNATIONALI/PLSECTOR/PLINDUSTRY or whatever local settingsyou have defined.


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PL.CLOSE.PARAMETER Grouping

Halt Process

In essence this is just a flag that allows the cob process to be halted just before the close out process is run. This allows the users to access reports orfiles to extract key financial data they require, before the files are updated by the process. If left unchecked, the process runs without halting.

Set the field PL.CLOSE.HLT.PRCSS as required.


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PL.CLOSE.PARAMETER halt option

Note.

Though the halt field is included on each PL.CLOSE.PARAMETER record, there will in fact only be the one halt to the cob processing. This happensonce all the companies have finished this stage of the PL close out processing.

Multi-GAAP

For multiple reporting scenarios (IA, IFRS, Multi-GAAP and so on), the PL.CLOSE.PARAMETER provides the option to define the CATEGORY foreach POSITION.TYPE in the fields POSITION.TYPE and CLOSE.CATEGORY which of course need to be for the same FX.POS.TYPE


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Setting the CATEGORY for each POSITION.TYPE

Accounting

The most essential parts of the PL close out are the accounting and the backup to how this has been created from the system.

During the financial year, the PL accounts become used and contain both credit and debit balances; hopefully, profit accounts in credit and a smallnumber of loss with debit balances.

Some of these are simple expense type accounts where just a few accounting transactions can be seen to build up the balance at year end. Others arethe daily accrual type where a large number of transactions spread over the year have affected the balance, together with adjustments, reversals,cancellations and so on. Each day when a General Ledger report is produced, it is possible to monitor both the balances and movements over the PLand as such at the year end, the accountants need to evidence the totals.

Let’s assume a simple PL account has built up a balance of USD 1,000.00 over a period and has a credit of USD 50.00 on the final day of thefinancial period. The accountant expects to see a closing balance of USD 1,050.00 for the old year and a new fresh balance of USD 0.00 for the NewYear; the balance having been transferred to an internal Asset and Liability account.

In the examples below, we show the progression of a single CONSOLIDATE.PRFT.LOSS record from a populated start point, though to the ‘virtualyear end day’ and then the new financial year. First, the record (based on PLCATEGORY 50-010) as it appears towards the year end:


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Record before year end

Entries for 50010 for the PL key - just before we get to year end

Now the record as it appears at the start of the close out process:


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Year end totals

Enquiry showing entries:

Entry totals for the year

Lastly, the record as it appears in the new financial year:


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New financial year PL

New Financial year entries posted

Note

The entries include the close out figure (128,418.06), which matches our expected results from the last financial year total for this record. And thenew entries that match our new financial year total so far.

The close out entry is easily identifiable from the references on the entry (not shown on the above listing).

Grouping

By default, the system produces one accounting entry per currency for each PL Category. As are many CONSOLIDATE.PRFT.LOSS records for eachof these, the option to group them by more specific values is permitted.

Let us use a simple example to illustrate this.

Our PL Category 51000 for USD has 7 records, which total USD 2,001,989.95. This amount is debited and posted to the AL Account specified in thePLCLOSE ACCOUNT.CLASS record.

Key Amount

PL.51000.1001.N.1.8002.GB.2510.GB.....US0010001 1,000,000.00

PL.51000.1001.N.1.8003.GB.2520.GB.....US0010001 500,000.00


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PL.51000.1001.N.5.3100.US.3120.US.....US0010001 333,333.33

PL.51000.1001.N.45.5400.JP.9000.JP.....US0010001 101,101.11

PL.51000.1001.N.65.3300.US.3900.US.....US0010001 55,555.40

PL.51000.1001.N.75.3300.US.5120.US.....US0010001 11,111.23

PL.51000.1001.N.75.3300.US.5120.US.....US0010001 888.88

Total 2,001,989.95

However, we wish to have the totals split into groups based on the residence of the clients, the first country code in the keys above. SettingAL.GROUPING in PL.CLOSE.PARAMETER to both PLCATEGORY & PLRESIDENCE instructs the system to produce grouped accounting entries.

On this basis, we have three sets as given below:

PLCATEGORY = 51000, CURRENCY = USD & PLRESIDENCE = GB

Key Amount

PL.51000.1001.N.1.8002.GB.2510.GB.....US0010001 1,000,000.00

PL.51000.1001.N.1.8003.GB.2520.GB.....US0010001 500,000.00

Total 1,500,000.00

PLCATEGORY = 51000, CURRENCY = USD & PLRESIDENCE = US

Key Amount

PL.51000.1001.N.5.3100.US.3120.US.....US0010001 333,333.33

PL.51000.1001.N.65.3300.US.3900.US.....US0010001 55,555.40

PL.51000.1001.N.75.3300.US.5120.US.....US0010001 11,111.23

PL.51000.1001.N.75.3300.US.5120.US.....US0010001 888.88

Total 400,888.84

PLCATEGORY = 51000, CURRENCY = USD & PLRESIDENCE = JP

Key Amount

PL.51000.1001.N.45.5400.JP.9000.JP.....US0010001 101,101.11

Total 101,101.11

This is a simple example for the User Guide. Further sub-division is possible based on the key structure. The more sub-divisions used mean more


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accounting entries but as the crf key structure has been created in a desired format, the entries are likely to be needed with the same breakdown.

Virtual Day

The processing of the PL close out effectively creates a second day for the year end. This ‘virtual day’ is used to segregate the accounting entries andrecord updates to enable the year end process audit to be as clear as possible.

Some of the system files have system dates with ‘CL’ appended to indicate that these are unique to the close out process.

EB.JOURNAL.SUMMARY showing year end actual and year end ‘virtual’ (CL)

The following shows the standard journal summary for the 31 Jan 2001:

31 JAN 2001 summary record

Next, we have one that has a suffix of CL on the date, indicating this is the ‘virtual’ date when the PL close processing entries are passed.

31 JAN 2001 (CL –virtual day) summary record

Lastly, we have the next record for the new financial year.

New financial year summary record

During the close out process, the system produces the end of year accounting entries, creates the requested reports/enquiries and if required, haltsthe cob process for audit purposes.


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At this stage, the CONSOLIDATE.PRFT.LOSS loss records are in an intermediate stage showing the effect of the entries posted for the ‘virtual day’,before they are cleared down for the new financial year. If the halt process is skipped, you will not see the intermediate records.

Let us look at one particular CONSOLIDATE.PRFT.LOSS record as an illustration as it goes through the year end processing. Firstly, the recordnear the year end.

Record for close of business 29 JAN 2001

And the effect when listed in RE.STAT.LINE.BAL

RE.STAT.LINE.BAL movement and ytd figures

Now the same record as it appears during the halted ‘virtual’ day:


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End of Year record

End of year line movement and total ytd

And finally, once the close out has completed the cleared record for the new financial year:

New financial year record showing entries for new year only


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New financial year line movements.

Published on: 10.02.2016


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End of Year Procedure R15 T24

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