Eagle Accounting uses period close rules to assign the appropriate accounting date to transactions during processing. Period close rules allow you to exclude certain types of transactions from the Trade Date + 1 Business Day (T + 1) approach even when the entity follows the T + 1 approach for assigning the accounting date to transactions.

About Assigning Accounting Dates

Numerous processes in Eagle Accounting derive the accounting date that it assigns to transactions. The accounting date is the date on which the system accounts for, or posts activity to, the accounting ledger. The system determines the accounting date in processes including, but not limited to, trade processing, income processing, and unrealized gain/loss processing. When Eagle Accounting assigns an accounting date to a transaction, it derives the accounting date based on the effective date (trade date) of the transaction and based on the open accounting period that is in effect at the time it processes the transaction.

Period close rules provide consistency in the way the system derives the accounting date for different types of processing. For entities that generally follow the Trade Date + 1 Business Day approach to assigning the accounting date, you can use period close rules to exclude certain processing activities from that approach and enable the system to use the Trade Date to assign the accounting date.

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To use period close rules, you indicate at the entity level whether the entity generally uses an accounting date based on either:

Trade Date. Default. The system uses the effective/trade date when it assigns the accounting date for all types of processing activities for the entity.
Trade Date + 1 Business Day. Also called T+1. The system uses the T +1 approach for the entity to assign the accounting date for those processing activities included in the period close rules. However, it uses the Trade Date approach for the entity to assign the accounting date for those processing activities excluded from the period close rules.

The approach you select applies to processing for transactions across all accounting bases associated with that entity.A particular transaction has consistent accounting date treatment across all accounting bases within the same entity.

When the system processes an event, it determines whether the entity uses the Trade Date or T+1 approach. If the entity uses the T + 1 approach, the system ensures that the event is included in the period close rules and is eligible for T + 1 processing. Otherwise, it uses the Trade Date approach to assign the accounting date. The system can then assign the appropriate accounting date to the transaction. When an event uses replication for entities with multiple accounting bases, it follows the event from the controlling basis, if one exists, or from the primary basis.

About Events for Period Close Rules

After you determine the approach each entity uses for assigning accounting dates, you can use period close rules to identify which types of processing activity should follow that preference specified for those entities that follow the T + 1 approach when the system assigns accounting dates. You can include or exclude processing events such as BUY or SELL. Included processing events follow the T + 1 approach. Excluded processing events follow the default Trade Date approach.

Each period close rule identifies an Eagle Accounting processing event for a Message Type/Event Type combination. You can set up period close rules for events with message types of MTADJUST, MTOPEN, MTCLOSE, and MTLINK. Not every Event Type for those Message Types uses period close rules. For example, you do not set up period close rules for CONVERSION events. Period close rules do not apply to MTCASH events.

When you use period close rules, that is, when you use the T + 1 approach for certain entities and processing events, the system ensures that all other accounting processing that follows these transactions follows the same logic as the trade (for example, income, ledger, margin, cash activity, and so on). This maintains consistency from start to finish in terms of the accounting date on transactions and the subsequent activity that they generate.

WRITERS NOTE: what about MTCANCEL? not mentioned anywhere. Does this mean that a T + 1 BUY has all related txns follow T + 1?

About Trade Panels Fields Related to the Accounting Date

Many trade panels include several fields related to period close rules and assigning the accounting date.

The trade's Accounting Period Rule (tag 5566) hidden field identifies the Accounting Period Rule value you assigned to the entity associated with the trade. A value of 1 represents the Trade Date approach. A value of ????: indicates that the entity uses the T + 1 approach. The trade's Accounting Date (tag 36) field specifies the accounting date for the trade. The system uses the entity's accounting period rule to confirm whether the entity follows the Trade Date approach or the T + 1 approach. If the entity uses the T + 1 approach, it checks the period close rules to verify whether the trade's processing event (for example, BUY, SELL) follows the T + 1 approach. Otherwise, it applies the Trade Date approach to the trade when it assigns the accounting date.

The trade's Next Day Indicator (tag 18000) hidden field determines the period close logic for income accruals on T + 1 trades It shows a value when the entity uses the T + 1 approach and the period close rules also apply to the event for the trade, such that the trade uses the T + 1 approach. The system uses this value to determine whether to consider trades as next day trades in cases where the trade date and post date are the same but the accounting date is greater than the trade and post dates.

WRITERS NOTE: what value does the Trade show for an entity that uses T + 1? Does the trade value represent the entity's approach or does it follow the approach for the entity and period close rule combined?

do we need to document the other 3 new fields?

About T + 1 and Earnings

In Eagle Accounting, trades can result in activity, such as income accruals, that is linked to the originating event but relies on its own logic in terms of setting the accounting date, especially during rollback and replay.

Current day (trade date) trades trigger the rollback and replay of income activity that already occurred on the same effective (earn thru) date as the trade date. In cases where the entity uses the T + 1 approach to assign the accounting date, the system prevents the rollback and replay of earnings on trade date for T +1 trades. It also ensures that earnings rows that would normally be created with an effective date equal to trade date are created when you run earnings the following business day.

About T + 1 and Variation Margin

The system prevents accounting date-related issues with variation margin when the entity uses the T + 1 approach. Unlike the global earnings process which uses the transaction accounting period, the global variation margin process uses the latest open valuation period. The system allows you to keep your valuation periods open while your accounting periods have been closed (Trans Close versus Val Close). If you book margin-related transactions after Trans Close, the system prevents that trade from being included in the current day's margin, and also updates the correct effective date once valuation periods are closed, to keep all accounting in line. Variation margin processing also accommodates securities such as cleared swaps that potentially require both income and margin processing when those securities may not be earned through the same date.

Report on Period Close Rules

You can use the Trade Activity report to report on trades that use period close rules. The system includes tags 1800 and 18002 in the Trade Activity report results. It uses these values to determine how to generate subsequent activity related to the trade and the proper accounting date to assign to the activity.

Next Day Indicator (tag 18000) Displays a value equal to the trade date of the T + ! transaction based on period close logic. A value indicates that the entity uses the T + 1 approach and the period close rules additionally include the processing event for the trade, such that the trade uses the T + 1 approach for assigning the accounting date. The system uses this value to determine whether to consider trades as next day trades in cases where the trade date and post date are the same but the accounting date is greater than the trade and post dates.

Next Day Indicator Margin (tag 18002). Displays a value equal to the trade date of the T + ! transaction based on period close logic. Indicates that the entity uses the T + 1 approach and the period close rules additionally include the processing event for the trade, such that the trade uses the T + 1 approach for assigning the accounting date. Used for margin processing associated with T + 1 trades to determine when a next day (accounting date) trade is occurring.

About Period Close Rules