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Set Up

Securities 

The ability to recognize dividend income on a cash settlement basis does not apply to Registered Investment Company (RIC) and Real Estate Investment Trust (REIT) securities, as a general rule, If you want to have the system exclude RICs and REITs when you recognize cash-based dividend income, you must identify the RIC and REIT securities you want to exclude. 

If you use Reference Data Center to set up securities, you can use the RIC Flag and REIT Flag options to identify securities as RICs and REITs. Otherwise, if you use Issue Viewer with Eagle Accounting, the following fields are available in the Equity/Mutual Fund panel under Equity/Mutual Fund Flags.

Set Up Security Processing Rules 

Security processing rules allow you to override market characteristic behavior such as income accrual and amortization. You can additionally use security processing rules to override a basis-level election to recognize income on a cash settlement basis for certain types of securities. 

If you want to exclude securities such as RICs and REITs from recognizing income on a cash settlement basis, you can create security processing rules for those securities that override the basis-level election so that the system recognizes cash for those securities on an ex-date basis rather than on a cash settlement basis. You can set up the Cash Based Div Recognition Flag field (tag 16160) and the FX Election for Cash Div Recognition field (tag 16161 in the panels where you define security processing rules so that the security processing rule has the Cash Based Div Recognition Flag set to No. 

The Create Security Processing Rule panel includes the following options. 

A security processing rule can control whether the system recognizes cash-based or settlement-

based dividend income in effect for that security. You can apply this rule at the security or entity level, as follows:

• Assigned at Security Level. If the security processing rule applies to a security across all entities and accounting bases in Eagle Accounting, you can directly assign the security processing rule to an individual security. For example, use the Security Processing Rule Name (tag 3197) field for the security record.

• Assigned to

• Basis Processing Rule Assigned at Entity Level. Otherwise, if you apply the security processing rule for the security only when processing specific entities or accounting bases, you can assign the security processing rule at the entity/accounting basis level. You do this by creating

• a basis processing rule that identifies one or more securities and includes the security processing rule, and then assigning the

• basis processing rule to a portfolio or accounting basis. For more information, see Manage Basis Processing Rules.

Process Corporate Actions 

During corporate action processing for an accounting basis where you set Cash Based Div Recognition Flag to No, the system recognizes all cash dividends and associated tax/reclaim in the accounting ledger on the accounting date that coincides with the ex-date of the cash dividends. The system generates traded cash events from the corporation action.

During corporate action processing for an accounting basis where you set Cash Based Div Recognition Flag to Yes, the system recognizes all cash dividends and associated tax/reclaim in the accounting ledger upon the settlement date of the associated cash. The system generates traded cash events from the corporate action that identify the election for ex-date or settlement date income recognition and the associated FX rate ex-date or settlement date election. These fields enable the system to exclude the records from the mapping for Ledger Subledger (LSL) Reconciliation Report reporting. This avoids unnecessary LSL mismatches because the system still writes the cash records to the object/database based on the ex-date.

If you created a security processing rule to override the basis-level setting for specific securities, the system determines when an override rule exists that allows it to recognize dividend income on ex-date even though the basis-level election is for the cash settlement date. 

Set Up Reports 

You can set up reports in Eagle Accounting's standard report package to ensure the reports correctly reflect the cash dividend recognition method you use. 

Dividend Income Report

The following option is available for report setup in the Dividend Income Report panel, 

Traded Cash Activity Report

The following option is available for report setup in the Traded Cash Activity Report panel.

Consolidated Earned Income Report

This report shows any cash dividend related income as of its entitlement date or settlement date based on how you choose to recognize such income. The report displays all cash dividend activity since its entitlement effective date in its appropriate open/settled status, if such cash dividend activity is recognized by STAR ledgers on entitlement. In cases where cash dividends are recognized on settlement, the report shows such dividends on their settlement date in settled status.

Ledger Subledger Reconciliation Report

The Ledger Subledger Reconciliation report displays any cash dividend income/reclaim income on settlement for dividends recognized on settlement date. This report also displays any cash dividend income/reclaim income and associated receivables on entitlement effective date for dividends recognized on entitlement date.

Unsettled Transactions Report

The following option is available for report setup in the Unsettled Transactions Report panel.

Set Up Control Center 

In Control Center, the EPDIT edit test leverages the Past Due Interest report (SPRECEIVABLEPAYABLEREPORT), and compares the report output results to a user defined day tolerance. If the interest receivable balance is past due (unsettled) and exceeds the tolerance setting, the system delivers a raised edit test result

to Control Center.

It generates an alert

for each day that the receivable balance remains unsettled.

About Processing for Estimated Dividends

Certain securities use an estimated dividends ratio that changes to an actual ratio after corporate actions processing. This can occur for some securities in Korea and other countries. For example, at ex-date you enter an estimated dividend rate and pay date. Sometime later you receive the actual dividend rate and pay date and must update the estimated dividends ratio with the actual dividends ratio. To do so, you can manually cancel and rebook the dividend.  

Eagle Accounting does not provide any special estimated dividends processing for such securities. You have the ability to set up a corporate action as a Pending transaction and then update it to a Released status at ex-date. But if you want to reflect the dividend as of ex-date while the dividend is still an estimate, the pending/released approach does not enable you to update the corporate action with the actual dividend ratio at a later time after corporate actions processing. You would still need to manually cancel and rebook the dividend.