In the Year End Reclass Adjustment panel, you can reclassify ledger entries that have an effective date and month end date greater than the year-end date, but have an accounting date in the prior fiscal year. The system reposts that activity so that the starting balance in the new year does not start out at zero. The balance is now inclusive of that activity. This panel allows you to essentially reverse out the effects of the year-end closeout process for that specific activity.
About Earn Thru Rule Setup and Year End Reclass Adjustments
The following scenario describes situations when you may find it helpful to use the Year End Reclass Adjustment option.
Earn thru rules allow you to specify how the system processes accrue income and expenses when a series of non business days fall on a month end, quarter end, semi annual, or year end date. For funds that use Process with Previous Business Day logic within the earn thru rule, the general ledger postings reflect the total income and expenses accrued for Friday, Saturday, and Sunday on the Friday’s accounting date.
Additionally, if the beginning of a month happens to fall on a non-business day, there is split logic within the earn thru rule that allows you to elect on how to account for both the daily and monthly accounting dates for that effective date. Funds that elect to split the month end accounting date have a daily accounting date of Friday and a month end accounting date equal to the most recent business day of the following month. For year ends, this means that activity is closed out as part of the Year End Closeout process because the daily accounting date falls in the previous year, even though the month end accounting date does not. For example, for year ends occurring in December 2017, the system adjusts the year-end date to December 29th, which is a Friday. All activity occurring with an earn thru date through January 1st has a daily accounting date of December 29th. The activity occurring with an earn thru date of January 1st has a month end accounting date of January 2nd, which is the first business day of the following month.
The Year End Reclass Adjustment process provides an automated process that eliminates the need for manual intervention in these circumstances.
Adjust Year End Reclass Entries
When you submit the Year End Reclass Adjustment panel, the system identifies income/expense accruals generated by earn thru split logic for non-business days posted on the previous accounting day where the accounting date is less than the monthly accounting date and the accounting date is equal to the fiscal year end date of the funds that are elected as accruing Friday forward and using monthly split earn thru logic. The system reposts that activity so that the starting balance in the new year does not start out at zero. The balance is now inclusive of that activity.
To adjust year end reclass entries:
- In Accounting Center, in the left navigation pane, click Transactions > Ledger > Year End Processing > Year End Reclass Adjustment.
You see the Year End Reclass Adjustment panel. - Complete the options in the Year End Reclass Adjustment panel.
You can repost entries for one or for all accounting bases for a specified entity. You can select only funds that process Friday forward accruals and use split earn thru rules with a monthly split option. - Click Submit.
Year End Reclass Adjustment Panel Options
The following are the options in the Year End Reclass Adjustment panel.
| Option | Tag | Description |
|---|---|---|
| Entity Information | ||
| Portfolio ID | 1163 | Specifies the unique identifier of the entity. |
| Portfolio Name | 1164 | Specifies the name of the entity. |
| Select Query Option | 2283 | Indicates whether to repost year end closeout entries for one or all accounting bases for the specified entity. Options include:
|
| Portfolio Currency | 86 | Displays the portfolio currency for the selected entity. This field appears if you set the Select Query Option to One Entity/One Basis. |
| Accounting Basis | 21 | Specifies the accounting basis to process for the selected entity. This field appears if you set the Select Query Option field to One Entity/One Basis. |
| Regulatory Category | 12387 | Displays the regulatory category associated with International Financial Reporting Standards (IFRS) for the selected entity/accounting basis grouping. NOTE: The system cannot perform a year end reclass adjustment for funds set up with a regulatory category. |
| Account Currency | 86 | Displays the base currency for the entity/accounting basis. This field appears if you set Select Query Option to One Entity/One Basis. |
| Non Bus Day Processing | 3907 | Displays how the system processes accrued interest on bonds or other fixed income securities on non-business days for the selected entity. Options include:
NOTE: The system can process a year end reclass adjustment only for funds that process Friday forward accruals, where you see a value of P. |
| Earn Thru Rule Name | 8954 | Displays the earn thru rule name for the selected entity. The earn thru rule specifies how the system processes accrued interest when a series of non-business days fall on a month end, quarter end, semiannual, or year end date. For more information, see Manage Earn Thru Rules. |
| Earn Thru Rule ID | 8955 | Displays the instance number of the Earn thru Rule Name field value for the selected entity. |
| Split Indicator | 8958 | Displays how to split non business day processing when a series of non business days falls on a month end date, quarter end date, semi-annual date, or at the end of a year for the selected entity. Options include:
NOTE: The system can process a year end reclass adjustment only for funds that use the Split Indicator for monthly accounting dates, where you see a value of M or B. |
| Date Information | ||
Ledger Period Year End Date | 921 | Displays the year end date for which you most recently posted closeout entries for the entity. You can perform a year end reclass adjustment only after you posted year end closeout entries for an entity. |
| Trade Date | 35 | Displays the effective date of ledger entries to use for the reclass. |
| Accounting Date | 36 | Displays the accounting date of ledger entries for the entity to use for the reclass. |
| Mnthly Acct Per Date | 4733 | Displays the month end accounting date for the entity. For example, this date occurs in January. |
| Ye Reclass Flag | 18054 | Indicates whether the system ran a year end reclass adjustment for the corresponding accounting period for the entity as follows:
|
| YE Reclass Ledger Range Info | ||
| From Ledger Acct | 10931 | Displays the beginning ledger account number for the ledger entries that the system adjusts in the new year to restate balances as part of the reclass. The default value is 4001000100. |
| To Ledger Acct | 10932 | Displays the ending ledger account number for the ledger entries that the system adjusts in the new year to restate balances as part of the reclass. The default value is 5999999999. |
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