FI331 – Umoja Investment Accounting

Transcription

FI331 – Umoja Investment
Accounting
Umoja Investment Accounting – Version 13
Last
Modified:
16-August-13
Copyright
© United
Nations
1
Agenda
Course Introduction
Module 1: Transaction Execution – Investments
Module 2: Transaction Execution – Foreign Exchange
Module 3: Investment Accounting – Daily Process
Module 4: Investment Accounting – Period-End Process
Course Summary
Course Assessment
Course Survey
Copyright © United Nations
2
Introduction
Please share with us:
• Your name
• Your section/unit
• Years of experience in the field
• An interesting fact about you
3
Ground Rules
Please consider the following guidelines during the training session:
• Turn your cell phone to silent mode. Please step out of the class to take any
important phone call.
• Please do not access your e-mail or the Internet outside of breaks.
• Participate fully in the training session and respect each other’s contribution.
• Breaks are included at the discretion of the trainer.
X
No Phones
X
Do Not Access
E-mail
Participate
Ask Questions
Breaks
4
Course Overview
The purpose of the Umoja Investment Accounting course is to explain the Investment
Accounting processes and transactions in Umoja. The course will also cover relevant
transaction simulations for Investment Accounting.
Prerequisite Review
You should have completed the following prerequisite courses:
• Umoja Overview
• Umoja Master Data & Coding Block Overview
• Umoja Cash Management and Treasury Overview
• Umoja ECC Navigation
• Umoja BI Navigation
Course Duration: 6 hours
5
Course Objectives
After completing this course, you will be able to:
• Explain the roles and responsibilities involved in the Investment Accounting processes
• Review FOREX exposure and perform spot transactions
• Process foreign exchange investment decisions
• Update the Umoja Security Master
• Enter and approve investment transactions in Umoja and post derived flows
• Account for premiums and discounts
• Modify investment transactions
• Generate, review and post accounting entries for accrued income and amortization of
premiums/discounts
• Update the reference rates for Variable Rate Bonds (floating rate securities)
• Distribute the investment income and expense to the
investment pool participants
6
Agenda
Course Introduction
Course Summary
Course Assessment
Course Survey
7
Module 1 Objectives
After completing this module, you will be able to:
• Enter investment transactions in Umoja
• Approve investment transactions entered into Umoja
• Post derived flows
8
Key Terminology
Key Term
Business Partner
Online Trading
Platform/System
Payment Request
Description
It is a person or an organization that has a business interest with
UN. A BP can be a commercial vendor that supplies goods or
services to UN and also a UN agency or staff member. The
vendors registered in UNGM are replicated in Umoja (Umoja SRM
and ECC) as BP’s. BP’s can also be UN organizations, UN Staff
Members and other parties.
It is a software interface that allows a legally binding financial
transaction to be performed on terminals or through a desktop
software. System communication is performed via closed
networks or secure Internet connections.
It is a payment message created by the Umoja Treasury
component after confirmation and settlement of the trade.
Payment requests are cleared by Umoja, which results in a posting
in the General Ledger (G/L) bank accounts and, where applicable,
issuance of Payment Media (EFT, SWIFT and so on).
9
Key Terminology
Key Term
Description
It is a sequence of events set into a logical automated process
Straight-Throughwithout the need of re-entering master or transactional data
Processing
across the entire process.
Society for Worldwide It is an industry cooperative that provides a standard format for
Interbank Financial
transmitting payments and other financial messages to more than
Telecommunication
7,500 member banks, broker dealers and organizations around
(SWIFT)
the world.
Trade
It is a contract between the UN Treasury and an approved
counterparty to buy or sell a financial instrument.
10
Roles & Responsibilities
The following Umoja Enterprise roles are involved in the Investment Accounting process:
Back Office
Treasury User
Cashier
•
Confirms all investment trades
•
Issues daily investment reports and ensures distribution of net
income to participating funds and grants in overall International
Public Sector Accounting Standards (IPSAS) compliance
•
Maintains custodian relationship
•
Reviews/authorizes treasury related wire transactions
•
Provides supporting documentation related to investments for
financial reporting
•
Generates all payments (F110) in Umoja and manages cash control
by fund/grant
•
Raises the issues identified by the Cash Controller to Finance
Managers for resolution
•
Ensures that bank data is reflected in Umoja accurately and timely
to allow Front Office to manage daily liquidity
•
Verifies that all bank communication files are processed and
accepted by SWIFT/banks in a timely manner
11
Roles & Responsibilities
The following Umoja Enterprise roles are involved in the Investment Accounting process:
• Generates all payments (F111) in Umoja
Investment
Cashier
• Ensures that bank data is reflected in Umoja accurately and timely to
allow Front Office to manage daily liquidity
• Verifies that all bank communication files are processed and
accepted by SWIFT/banks in a timely manner
12
Introduction to UN Investment Pools
UN HQ Treasury is responsible for managing excess cash on the behalf of missions and OAH.
The investments are made according to the CPPI guidelines.
The objectives of the investment pools in decreasing priority are as follows:
1) Security
2) Liquidity
3) Return
To optimize investment returns and maintain liquidity, the UNHQ Treasury pools the
investments in two portfolios:
• USD Investment Pool
• EUR Investment Pool
In addition, the UNHQ Treasury also manages the
investments in CHF on behalf of the UNSMIS.
13
Review of IPSAS Compliance for Investment Accounting
The Umoja solution is designed to reinforce compliance of International Public Sector
Accounting Standards (IPSAS). Compliance in UN investment accounting is achieved
through the following parameters:
Fair Value through Surplus or Deficit
Adherence to Trade Date over Settlement Date
14
Contributing Factors to Investment Decisions
The determination of appropriate investments by Front Office is based on the following
factors:
Interest Rates
Duration
Terms
Risks
Counterparty
limits
UNHQ Treasury invests in the following types of financial instruments:
• Time Deposits
• Money Market Funds
• Fixed/Variable Income Bonds (US Treasuries, Bonds, Notes and Bills)
The settlement process followed depends on the type of financial instrument being
traded.
15
Processing Investments in Umoja
Investment Officers run the trades using Bloomberg Aim. Ultimately, trade details will be
interfaced from Bloomberg to Umoja. However, this interface is not being implemented for
Cluster 1. Until the interface is in place, the trades will have to be manually entered into
Umoja.
After a trade is recorded in Umoja, the Investment Back Office will go through the trade
settlement process, which includes confirming trade details with the counterparty, creating
SWIFT confirmation/payment instructions and posting the trade.
If the trade involves a new financial instrument, then the following steps need to be
completed before the trade can be recorded in Umoja:
1. If the instrument is from a new issuer, then the issuer has to be set up in BP as an
issuer by the Master Data team
2. After the BP is created, then the Security Master details have to be set up in Umoja by
the Investment Back Office
16
Processing Investments in Umoja
The first part of this module reviews the different types of investment-related transactions
that are processed.
Recording and Settling
Investment Pool Deposit
and Withdrawals
Recording, Confirming
and settling Money
Market Investments
Recording, Confirming
and Settling Fixed
Income Investments
Process steps conducted in Umoja are highlighted in blue.
The second part of this module walks through the execution of Umoja-based activities
conducted by Investment Operations and the Front Office.
17
Processing Investment Pool Deposit/Withdrawals
Investment Operations
Cashier’s Office
Confirm that the appropriate
Investment Account exists
Create deposit/withdrawal
blotter and submit to
Master Data Team
No
Create the necessary
fund/business area/cost
center
Yes
Transaction is uploaded
using JVs
Transaction is reviewed
for accuracy
No
Balance sufficiency is
confirmed
Yes
Release SWIFT
message
Post transactions and create
SWIFT messages
18
Processing Fixed Term Deposits
Cashier’s Office
Investment Front Office
Master Data Team
Place investments
Confirm counterparty
exists in Umoja
No
Add bank in BP
as a counterparty
Yes
Confirm investment
with counterparty
Release
SWIFT
message
Record investment in
Umoja
Approve and post
investment, create
SWIFT message
19
Processing Fixed Income Investments
Cashier’s Office
Investment Front Office
Master Data Team
Run trade in Bloomberg
Confirm broker/issuer exists
in Umoja
No
Add broker/issuer to
Umoja as BP
Yes
Enter Security Master
details in Umoja
No
Confirm if security exists in
Umoja
Yes
Release
SWIFT message
Record trade in
Umoja
Authorize trade
settlement, create
SWIFT message
Confirm trade with
counterparty
20
Investment Activities Conducted in Umoja
The remainder of this module takes a detailed look at the activities conducted in Umoja to
process different types of investments.
These activities include:
Updating the
Security Master
Entering
Investment
Transactions
Approving
Investment
Transactions
Posting Derived
Flows
Accounting for
Premiums and
Discounts
Modifying
Investment
Transactions
Reversing
Investment
Transactions
21
Update the Security Master
Security Master details must exist in Umoja before a fixed income transaction can be
recorded.
Security Master would be automatically loaded from Bloomberg. However, until the
Bloomberg to Umoja interface is in place, the information would be maintained by the
Investment Operations team. The steps to add the Security Master details are as follows:
Launch the Security Master screen:
2
1•
Enter FWZZ in the Command field
2•
Click the Enter icon
1
The Display Class – Product Type screen appears.
22
3•
Click the Create icon
3
This launches a new Create Class window.
Enter the following information:
4•
Enter the Security ID number in the ID
number field
5•
Enter the product type in the Prod. type
field
6• Enter the short name of the security in the
Shrt field
7•
Enter the long name of the security in the
Long field
Unless an exact replica of an existing security is
to be created, select the Without reference
radio button.
8•
Click the Create icon
4
5
6
7
8
23
The Display Class – Product Type
screen re-appears with the
security’s information populated
across the following seven tabs:
• Search Terms
• Basic Data
• Conditions
• Exchanges
• Notice
• Regulatory Reporting
• User Data
The information modified in each
tab will now be reviewed.
24
Fill in the required fields located in the Basic Data tab:
•9
Issuer
10
•
Currency
11
•
Issue Start Date
12
•
End of Term Date
9
10
11
12
13
•
Click the Enter icon to validate the inputs before moving to the next tab
14
•
Click the Conditions tab
Note: The maturity date is determined by the Issue start and End of term
dates. The same date should be used for both of these fields.
25
The Conditions tab contains all the information related to coupon and final payment, such
as interest rates, calculation method, interest payment frequency and schedule.
15
•
Enter the following information:
• Percent
• Frequency
16
•
Click the Enter icon to populate the Calculation Date and Due Date
15
15
Note: Information should be modified in Int. (per-quoted) only. Final
repayment should not be modified.
26
17•
Double-click the int. (per quotes) row
to view the condition details
The Condition Details window appears.
18•
Select the appropriate Int.calc.method
(specifies the coupon calculation
method)
18
Note: The due date listed must match the first payment date of the security (Eff. From
date). If the dates do not match, modify the due date manually.
27
The Exchanges tab specifies the initial price (normally price at first purchase).
19•
Click the Insert Row icon to open the Assign Exchanges window
20•
Select OTC_US and click the Save icon
21•
Highlight the OTC_US row and click the Market Prices button
21
19
21
28
The Security Prices Change screen appears.
22•
Click the Display <-> Change icon
23•
Enter the price date and rate and click the Save icon
22
29
Entering an Investment Transaction into Umoja
The process followed to enter an investment transaction in Umoja differs depending on the
type of financial instrument being traded. To demonstrate the process followed, a fixedinterest bond is entered in Umoja in the succeeding slides.
The Treasury Front Office enters the trade information in Umoja via the following steps:
Access the Create Financial Transaction screen and perform the following steps:
1•
Enter FTR_create in the Command field
2•
2
1
30
The Create Financial Transaction screen appears. The information entered in the Header
section of this screen defines the product being traded.
Product Types
CPS – Commercial Papers and
Discounted Securities
FIB - Fixed Interest Bonds
VIB - Variable Interest Bonds
FTD - Fixed Term Deposits
The Transaction Types available:
Product Types
PUR - purchase (Bonds)
SAL - sale (Bonds)
INV - investments (FTD)
31
Enter the required transaction data in the following fields:
•3
Company Code (always 1000)
•4
Product Type
•5
Transaction Type
•6
Partner
•7
Transaction Currency
•8
Portfolio
3
4
5
6
The ID number automatically
populates.
•9
7
USD
8
USDPOOL
32
The Create Security Transaction: Structure screen appears containing detailed information
on the transaction being created across a series of tabs.
Let’s review each of the
tabs and walk through the
information entered in
each of them while
entering an investment
transaction in Umoja.
33
The Structure tab contains information that defines the terms of the transaction, including
transaction nominal and payment amounts, valuation class, payment/value/posting dates,
market price and accrued interest.
Enter the required
information in the following
fields in the Structure tab:
10•
Securities Acct
11•
Pos. Value Date
12•
Nominal Amount
13•
Check Incl. box
10
11
13
12
After populating the data,
click the Enter icon.
34
The Administration tab contains information that identifies the location from which the
trading funds will be pulled, required authorizations and investment type.
Enter the following information in the Administration tab:
•15 Portfolio
16•
Fund
17•
Grant (always GMNR)
15
16
After populating the data, click the
Enter icon.
17
35
The Other Flows tab contains information on interest, costs and charges that will be
factored into the transaction total. Examples include Accrued interest and processing
charges.
19•
Confirm that the
Accrued interest
amount displayed in
the other flows table
is correct
19
36
The Payment details tab displays specific information on where payment funds are being
pulled from and whether or not a payment will be submitted with the trade settlement.
The House Bank Account from which the funds are being pulled is auto populated based on
the information entered earlier in the process.
Note: Today, payment is not submitted with each trade. The custodian handles
payments for individual trades and is then paid in a bulk sum at the end of the
day. If trades are paid individually, the Payment Req. must be checked.
37
The Cash flow tab lists all flows included in the transaction including the actual purchase
and additional flows listed in the Other flows tab.
•
20
Confirm that Umoja
generated flows
match the Bloomberg
ticket
38
21
•
Click the Save icon after all the tabs have been reviewed and completed. The Create
Position Indicator window appears
22
•
Click the Create Automatically button
The investment transaction is successfully entered into Umoja.
22
39
Approving an Investment Transaction in Umoja
After the investment transaction is created, it goes to the Investment Operations group
for confirmation and settlement.
The steps to approve and post the investment transaction in Umoja are as follows:
1•
Enter FTR_EDIT in the Command field
2•
The Edit Financial Transaction screen appears next.
2
1
40
Approving an Investment Transaction in Umoja
3•
Enter 1000 in the Company Code field
4•
Enter the correct transaction number in the Transaction field
5•
Click the Settle button. Verify the accuracy of transaction by reviewing each of the
tabs on the screen
6•
Click the Save
icon
3
4
5
41
Posting the Derived Flows in Umoja
Derived flows are created when the investment transaction is entered into Umoja, but
these flows cannot be posted until the transaction has been approved.
After the transaction has been approved, the derived flows are posted using the T-code
TBB1.
The steps to post the derived flows are as follows:
1•
Enter TBB1 in the Command field
2•
2
1
42
The Treasury: Post Flows screen appears.
3•
In the General selections section, enter
details in the following fields:
5
• Company Code
3
• Transaction
• Up to and including Due Date
4•
Select the Test Run check box
5•
Click the Execute icon
Note: A test run should be conducted first to
make sure that the correct postings are made.
4
43
The Posting Log: Posted Business Transactions screen appears displaying the accounting
flows for the transaction as they will appear in the General Ledger (G/L). After confirming
that the information listed is correct, the flows must be posted (remember, this posting
was run in test mode).
6•
Click the Back icon
7•
Clear the Test Mode checkbox
8•
44
Account for all Premiums and Discounts
Finally, all premiums and/or discounts applicable to the approved transaction must be
accounted for.
This transaction should also be run in test mode, first to review and then to confirm the
information generated.
The steps to post account premium/discount are as follows:
1•
Enter TPM18 in the Command field
2•
The Fix and Post Derived Business Transactions screen appears next.
2
1
45
3•
Select the Securities check box
4•
Enter details in the following fields:
• Company Code
5
• ID Number
3
• Securities Account
• TRL Date (must match posting
date)
5•
4
46
A table containing the positions with derived business transactions to be fixed appears on
the screen.
6•
Confirm that the information is correct
7•
Click the Fix button to post the flows
7
6
47
The premium/discount flows are posted.
48
Modify or Reverse a Transaction
Modifications/reversals of trade should be initiated by the person/group that recorded
the trade. It is possible to modify a trade even after security flows have been posted so
the need to reverse a trade should be very rare. After a transaction is modified or
reversed, the accompanying flows must be reversed before re-posting the flows again.
Investment Operations will be responsible for reversing the appropriate flows,
depending on what stage the transaction is in.
Example: If the trades do not match, Investment Operations will inform Front Office
who will take the required action by modifying or reversing the trade.
Modify a
Transaction
Reverse a
Transaction
Resolve Differences
with Counterparty
If Reversal is
Required,
Initiate
Reversal
Correct Trade in
Trading Platform
Confirm
Reversal
Modify Transaction
in Umoja
Reverse Trade
in Trading
Clear
all open items
Platform
Reconcile
Trading
Platform
Position with
Umoja
Note: If a transaction needs to be modified, but it has already been approved and its flows have
been posted, then the transaction must first be reversed before it can be modified.
49
Modify a Transaction
The process followed to modify an investment transaction varies, depending on where in
the entry process of the transactions is.
If…
…then
The investment transaction is in contract state
The transaction can be modified
The investment transaction has settled
Reverse the transaction to contract state
The investment transaction has settled and
the derived flows have been posted (TBB1 and
TPM18)
Reverse the transaction to contract state and
run TPM10 to reverse the postings which took
place in TBB1 and TPM18
Accruals (TPM44) and amortization (TPM1)
postings have been made
Delete the postings by running TPM45 and
TPM2 respectively, Reverse the transaction to
contract state and run TPM10 to reverse the
postings which took place in TBB1 and TPM18
Note: To delete the transaction from Umoja entirely, reverse the transaction from contract state.
50
Reverse a Transaction
Let’s now discuss how to reverse a transaction whose derived flows have not been
posted. Reversal of transactions should be initiated by the Front Office.
The steps to reverse a transaction are as follows:
1•
2•
2
1
51
3•
4•
5•
Click the Reverse button
3
4
5
52
The steps to reverse a transaction whose derived flows have been posted are as follows:
1•
Enter FTR_EDIT into the Command field
2•
2
1
53
3•
4•
5•
Click the Reverse button
6•
Select the appropriate reversal reason and save the transaction in the subsequent
window
3
4
5
54
If the derived flows have already been posted (TBB1 and TPM18) then they should be
reversed by the Investment Back Office.
The steps to access the Fix, Post or Reverse Transactions screen and reverse a transaction
are as follows:
1•
2•
2
1
55
The Fix, Post or Reverse Transactions
screen appears.
Note: If a transaction is reversed or
modified after the input date, that is, if
TPM1 and TPM44 have already run, then
those postings have to be reversed using
TPM2 and TPM45 respectively. The
reversals have to be run one day at a
time.
56
Reverse a Transaction – Valuation and Accruals
Accruals and amortization will need to be reversed separately for each day since the
settlement date of the transaction.
Example:
If today is June 15th and we want to reverse a transaction that was settled on June 12th,
accruals and amortization must be reversed separately for the 15th, 14th, 13th and 12th
respectively.
The steps to reverse a valuation are as follows:
1•
2•
2
1
57
Reverse Valuation
The Reverse Valuation screen appears. First, confirm whether the Key Date for Valuation
is correct.
3•
Select the appropriate Reason
for Reversal
4•
Select the Test Run checkbox
so that data can be verified
before actual execution
5•
5
4
58
Reverse Accrual/Deferral of Expenses and Revenues
The steps to reverse accrual/deferral of expenses and revenues are as follows:
1•
2•
2
1
59
Reverse Accrual/Deferral of Expenses and Revenues
3•
Confirm that the Accrual/Deferral
Key Date is accurate
4•
Select the appropriate Reason for
Reversal
5•
Select the Test Run checkbox so
that data can be verified before
actual execution
6•
6
3
5
4
60
The steps to modify a transaction in Umoja are as follows:
1•
2•
2
1
61
3•
4•
5•
Click the Change button
The Change [investment type]: Structure screen appears next.
62
6•
Modify the data that needs to be updated
7•
Click the Save
icon
6
63
Learning Checkpoint 1
An investment transaction can be modified in which of the following situation?
Select the correct option.
A.
B.
C.
D.
If the investment transaction is in contract state
If the investment transaction has settled
If the investment transaction has settled and the derived flows have been posted
If the accruals (TPM44) and amortization (TPM1) postings have been made
64
An investment transaction can be modified in which of the following situation?
A.
B.
C.
D.
If the investment transaction is in contract state
If the investment transaction has settled
If the investment transaction has settled and the derived flows have been posted
If the accruals (TPM44) and amortization (TPM1) postings have been made
Option A is the correct answer. An investment
transaction can be modified if the transaction is in
contract state.
65
Which of the following T-codes is used to approve an investment transaction in Umoja?
A.
B.
C.
D.
E.
TPM_CREATE
TPM_EDIT
FTR_CREATE
FTR_EDIT
TPM1
66
Which of the following T-codes is used to approve an investment transaction in Umoja?
A.
B.
C.
D.
E.
TPM_CREATE
TPM_EDIT
FTR_CREATE
FTR_EDIT
TPM1
Option D is the correct answer. The T-code
FTR_EDIT is used to access the relevant screen to
approve an already created investment
transaction in Umoja.
67
Module 1 Summary
The key points covered in this module are listed below:
• Front Office determination of appropriate investments is based on specific factors
such as interest rates, duration, terms, risks and counterparty limits
• Securities are setup in the Umoja Security Master prior to the execution of
investment transactions
• Investment transactions are entered in Umoja via the T-code FTR_CREATE and
approved, modified and reversed via the T-code FTR_EDIT
• Derived flows, premiums and discounts must be reversed individually for
transaction modifications and reversals
68
Agenda
Course Introduction
Course Summary
Course Assessment
Course Survey
69
Module 2 Objectives
• Review FOREX Exposure
• Perform Spot transactions
• Process Foreign Exchange (FX) investment decisions
70
Key Terminology
Key Term
Functional Currency
FX
FX Exposures
Spot Transactions
Forward contract
Description
It is an accounting concept relating to the currency in which the
majority of transactions are performed.
These are transactions involving purchase and sale of other
currencies.
It is the risk of loss stemming from exposure to adverse foreign
exchange rate movements.
These are transactions to buy or sell a particular currency on the
spot date. In the FX market, spot transactions normally settle two
business days after the trade date.
It is a financial contract between two parties to buy or sell an
asset at a specified price at a future date after the spot date.
71
Key Terminology
Key Term
Option contract
Online Trading
Platform
Description
It is a financial contract that provides the buyer the right, but not
the obligation, to engage in a specific transaction, while the seller
incurs the obligation to fulfill the transaction if so requested by
the buyer.
It is a software interface, which allows legally binding financial
transaction to be performed on terminals or through desktop
software, on closed networks or over secure Internet
connections.
72
FX Transaction Execution Process: High-Level Process
The FX Transaction Execution process comprises of three key steps:
Review FX Exposure
and Requirement
Perform Required
FX Transactions
Confirm and Settle
Transactions
73
Review FX Exposure
Review FX Exposure
and Requirement
Perform Required
FX Transactions
Confirm and
Settle Transactions
The process begins with the review of FX requirements of missions and OAHs and any FX exposures to
determine which currencies need to be purchased or sold.
As Umoja will allow for aggregation of FX requirements, it will lead to better forecasting of FX
requirements and significant savings in transaction costs.
Note: The investment portfolio will be marked-to-market twice a year (June and December).
This will be done at the portfolio level (UNHQ Treasury), with allocations to portfolio
participants.
74
Perform Required FX Transactions
Review FX Exposure
and Requirement
Perform Required
FX Transactions
Confirm and
Settle Transactions
Once the FX transaction requirements have been determined, the Investment Officer may perform the
FX trade in the spot or forward market, depending on the requirement.
Both spot and forward FX transactions are performed in FXAll, the FX trading platform used by UNHQ
Treasury. Once the FX trade is performed, the trade details are re-entered in Umoja for settlement and
accounting purposes.
75
Confirm & Settle Transactions
Review FX Exposure
and Requirement
Perform Required
FX Transactions
Confirm and
Settle Transactions
After the transaction has been entered in Umoja by the trader, the Settlement Officer must perform the
following steps to complete the trade:
1. Process the transaction and calculate the required cash flows
2. Confirm the trade with counterparty. If there are discrepancy then send the trade back to the
investment officer
3. Review the standard settlement instruction for the counterparty and generate SWIFT message for
payment to the counterparty
4. Post the trade, which updates the liquidity forecast and related cash flow information
76
Which of the following types of transactions are performed in FXAll?
A.
B.
C.
D.
Spot transactions
Forward Transactions
All of the above
None of the above
77
Which of the following types of transactions are performed in FXAll?
A.
B.
C.
D.
Spot transactions
Forward Transactions
All of the above
None of the above
Option C is the correct answer. Both spot and
forward transactions are performed in FXAll.
78
Module 2 Summary
• The FX Transaction Execution process involves reviewing FX requirements and
exposure, executing spot and forward transactions and confirming and settling the
trade
• While FX trades are performed in FXAll, they are also recorded in Umoja for
accounting and settlement purposes. The settlement process brings the FX trade
to closure by making the required payment to the FX counterparty
• Investment officers may meet FX requirements by trading in the spot or forwards
market
79
Agenda
Course Introduction
Course Summary
Course Assessment
Course Survey
80
Module 3 Objectives
• Generate, review and post accounting entries for cash flows related to maturities,
redemptions, coupon and other interest income received
• Generate, review and post accounting entries for accrued income and amortization
of premiums/discounts
• Update reference rates for Variable Rate Bonds (floating rate securities)
• Distribute investment income and expense to the investment pool participants
81
Process Interest Accruals/Deferrals
For interest accruals and deferrals to be calculated, all incoming coupons must be
recognized and posted in Umoja.
Incoming coupons are recognized using a two-step process:
Recognize
Receipt of
Coupon
Post Incoming
Coupons
Steps performed in Umoja ECC
This process is reviewed in detail over the next four slides.
82
Recognize
Receipt of
Coupon
Post Incoming
Coupons
The steps to recognize the receipt of a coupon are as follows:
1•
Enter FWZE in the Command field
2•
Click the Enter
icon. The Manual Debit Position
Screen is displayed
3•
Populate the appropriate details in the following fields:
4•
•
Company Code
•
ID Number
•
Securities Account
•
Settlement Currency
2
1
3
Press the Enter key on the keyboard
83
Recognize
Receipt of
Coupon
Post Incoming
Coupons
The Manual Debit Positions are displayed.
4•
Review the data generated and modify as needed
5•
Click the Post business transaction button
5
84
Recognize
Receipt of
Coupon
Post Incoming
Coupons
Now that the coupon received has been
recognized in Umoja, it can be posted.
The steps to post incoming coupons are as
follows:
1•
Enter FWSO in the Command field
2•
Click the Enter
2
1
icon
The Securities: Automatic Debit Position
screen is displayed.
85
Recognize
Receipt of
Coupon
3•
4•
Populate the appropriate details in
the following fields:
4
•
Company Code
•
Product Type
•
ID Number*
•
Securities Account*
•
Up to and including due date*
•
Document Date*
Click the Execute
Post Incoming
Coupons
3
icon
3
Note: Fields marked with a * are automatically populated based on the information entered
when the coupon was recognized.
86
Investment Accounting: Daily Process
For accounting purposes, the following four activities need to be performed daily:
Account for
Interest Accrual
Account for
Amortization of
Premium and
Discounts
Update
Reference Rates
for Variable
Rate Bonds
Distribute
Investment
Income and
Expense
Activities 1 and 2 are run automatically as part of a nightly batch job. Activities 3 and 4
are conducted manually. These daily processes are run for all three portfolios, but can
be run for individual securities or portfolio if needed.
In this module, we review the process followed to recognize the receipt and posting of
a coupon. We then walk through the process followed to complete each of the four
daily activities in Umoja.
87
Account for Interest Accrual
Let’s start by discussing activity 1.
You can account for interest accrual by using the T-code
TPM44.
Account for
Interest Accrual
Note: The detailed steps are discussed in the subsequent slides.
88
Process Planned Interest, Dividend & Coupon Flows
The steps to account for interest accrual
are as follows:
1•
2•
Click the Enter
icon. The
Execute Accrual/Deferral of
Expenses and Revenues screen is
displayed
3•
Populate appropriate details in the
following fields:
• Company Code
• ID Number
• Securities Account
• Accrual/Deferral Key Date
(must match purchase date)
4•
Select the Test Run check box
5•
Click the Execute
icon
Note: A test run should be performed first to
confirm that the postings are correct.
89
Process Planned Interest, Dividend & Coupon Flows
The Execute Accrual/Deferral of Expenses and Revenues report is displayed. Review
the information for accuracy.
Next, execute the earlier steps again with the Test Run check box cleared.
90
Account for Amortization of Premium and Discounts
You can account for amortization of premium and discounts
by using the T-code TPM1.
Account for
Amortization of
Premium and
Discounts
91
Process Amortization of Premiums & Accounts
The T-code TPM1 is run daily to process amortization of premiums and accounts. It also
updates money market changes and FOREX changes.
The steps to account for amortization of premium and discounts are as follows:
1•
2•
Click the Enter
icon
2
1
92
The Execute Valuation screen is
displayed.
3•
Enter appropriate data in the
Key Date for Valuation field
4•
Click the Execute
4
icon
3
Note: A test run should be
conducted first to confirm that
the information is correct.
93
The Valuation Log showing the daily amortization is displayed.
94
Update Reference Rates for Variable Rate Bonds
Update
Reference Rates
for Variable
Rate Bonds
Update reference rates for Variable Rate Bonds (floating rate
securities). The rates must be updated on the rate fix date.
Until the Umoja Bloomberg interface is in place, this step will
be done manually via OB83.
95
Process Interest Rate fixing for Floating Rate Instruments
The steps to record reference rates for Variable Rate Bonds (VRBs) are as follows:
1•
Enter OB83 in the Command field
2•
Click the Enter
icon. The Change View Reference Interest Rate Values
Overview screen is displayed
2
1
96
The Change View Reference Interest Rate
Values Overview screen appears.
3
The rates should be entered on rate fixing
dates, which are normally two days
before the value date. If there is a market
data feed to Umoja, then the rates would
be updated automatically as needed.
3•
Click the New Entries button
97
The New Entries: Overview of
Added Entries screen appears.
4•
Populate appropriate
details in the following
fields:
4
• Reference
• Description
• Valid from (fixing date)
• Interest rate
5•
Click the Save
icon
98
Distribute Investment Income and Expense
Use the T-code ADB to distribute investment income and
expense to the investment pool participants.
Distribute
Investment
Income and
Expense
99
Process Net Revenue Allocation to Investment Fund Participants
FMADB_post is used to distribute income and expenses to the investment pool
participants. The distribution can be run daily. However, initially it will be run once a
month but run thirty times to capture daily balances.
As with all Umoja processes, ADB can be run in test mode prior to posting the
distribution. If any revenue or expense posting document is reversed then ADB_POST
should be re-run for that date to account for the change.
Instead of accruing interest daily and capitalizing every six months, interest will be
distributed on a daily basis based on the daily balance.
Let’s walk through this process in Umoja.
100
The steps to distribute income and expenses
to the investment pool participants are as
follows:
1•
Enter FMADB_POST in the Command
field
2•
Click the Enter
icon. The Enter ADB
ID pop-up box is displayed
3•
Enter appropriate information in the
ADB Rule field and press the Enter key
on the keyboard
2
1
3
101
The Weighted Balance Distribution
screen is displayed. The ADB Rule is
populated based on the selection in the
ADB pop-up box.
4•
Enter appropriate data in the From
and To fields to define the
Calculation Period. Note that
calculation periods should be run
one day at a time, not over
extended duration
5•
Select the Call account derivation
check box
6•
Select the Test Run checkbox
7•
Click the Execute
7
4
5
6
icon
Investment updates to G/L occur automatically as other T-codes are run.
102
Investment Portfolio Reconciliations
The asset reconciliation process will be automated in Umoja. MT-535 from the
custodian would be uploaded into Umoja to compare the asset position in Umoja to that
recognized by the custodian. After the comparison is run, a status e-mail will be sent to
the Back Office staff nightly. If there are any failures, action must be taken immediately.
Similarly, when Bloomberg to Umoja interface is in place, positions in the two systems
will also be reconciled.
103
Module 3 Summary
• Generate, review and post accounting entries for cash flows related to maturities,
redemptions, coupon and other interest income received
• Generate, review and post accounting entries for accrued income and amortization
of premiums/discounts
• Distribute investment income and expense to the investment pool participants
104
Agenda
Course Introduction
Course Summary
Course Assessment
Course Survey
105
Module 4 Objectives
After completing this course, you will be able to:
• Run the Investment Accounting Period-End process
106
Investment Accounting: Period-End Process
The Investment Accounting Period-End process comprises two key activities:
2. Confirm that all daily
processes have been
successfully run
1. Load market prices into
Umoja
Let’s review the process followed to load market prices into Umoja.
107
Investment Accounting: Period-End Process
The steps to upload market prices are as follows:
1•
Enter TBEX in the Command field
•4 Click the new box
2•
Click the Enter
•5 Copy and paste the rates as below
3•
Click the Spreadsheet tab
icon
108
Module 4 Summary
• The Investment Accounting Period-End process comprises two key activities:
loading market prices into Umoja and confirming that all daily processes have been
successfully run
109
Agenda
Course Introduction
Course Summary
Course Assessment
Course Survey
110
Course Summary
Now that you have completed the course, you can:
• Explain the roles and responsibilities involved in the Investment Accounting processes
• Review FOREX exposure and perform spot transactions
• Process foreign exchange investment decisions
• Enter and approve investment transactions into Umoja and post derived flows
• Generate, review and post accounting entries for accrued income and amortization of
premiums/discounts
• Distribute investment income and expense to the investment
pool participants
111
Agenda
Course Introduction
Course Summary
Course Assessment
Course Survey
112
Course Assessment
Now that you have completed all the modules in this course, you can test your
knowledge by completing the Course Assessment.
To receive credit for completing this course, you must pass this assessment with a
minimum score of 90%.
To complete the assessment you must return to the Learning Management System:
1. Log into Inspira
2. Navigate to Main Menu -> Self-Service -> Learning -> My Learning
3. Search for the name of the course under the My Learning Activities section
4. Click the Start link of the course assessment
5. Click the Submit button once you have completed the assessment
113
Agenda
Course Introduction
Course Summary
Course Assessment
Course Survey
114
Course Survey
Your feedback is important to the continuous improvement of our training program.
Please complete the evaluation for this course using the following steps:
1. Log into Inspira
2. Navigate to Main Menu -> Self-Service -> Learning -> My Learning
3. Search for the name of the course under the My Learning Activities section
4. Click the Start link of the course survey
5. Click the Submit button once you have completed the course survey
115
Congratulations! You have successfully completed the
Umoja Investment Accounting course.
116

FI331 – Umoja Investment Accounting

Transcription

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