Understand Entities That Use COSTCASH Processing

Use of COSTCASH processing for an entity is optional; you can set up entities that do not use COSTCASH processing under certain conditions.

Set Up Entities That Use COSTCASH Processing

When an entity or master fund uses COSTCASH processing, you can set up the entity with the (hidden) Cost Cash Processing field (tag 5006) set to Yes and the Costcash Bulking Election (tag 2423) field set to No or Yes. You can also set the Cost Cash Processing field to Yes at the accounting basis level. For more information, see Set Up Entities for COSTCASH Processing.

Understand COSTCASH Processing in the STAR Engine

With COSTCASH processing, Eagle Accounting treats foreign currency balances held in an entity as a Cost position. When a foreign trade settles, the system posts COSTCASH. For foreign currencies, your units and cost are equal. The settlement generates a settled cash row in that security’s cash position as well as generates a cost row in the currency’s Cost position, which is your COSTCASH.

After you set up an entity for COSTCASH processing, the following occurs during trade processing:

1. When an event such as a trade, spot, or cash dividend occurs where the Entity base currency is not equal to the Asset currency, the system creates a traded row of cash in the Cash object on trade date.

2. The system settles the traded row of cash on settlement date. It creates a settled row of cash in the Cash object. Settlements can occur as a result of global contract cash, cash matching, auto settlements, or manual settlements.

3. The system generates a COSTCASH loopback and uses the loopback to calculate identified and average cost.

4. When closes (MTCLOSES) occur on that currency, the cost of foreign cash increases/decreases any currency gains/losses. This updates the Cost object of the foreign cash position.

Understand the System Impact of COSTCASH Processing

With COSTCASH processing used for an entity, Eagle Accounting stores foreign currency balances held in the entity in two places:

• Eagle STAR Cost Object. The system holds the cost balance for the Euro for entity ABC. In the Position Viewer tool, you can view the Cost object for the CASHEUR position. This is called COSTCASH.

• ESTAR Settled Cash Activity Table. The system holds the sum of cash balances of all individual securities nominated in that Euro currency. It stores this in the ESTAR_SETTLED_CASH_ACTIVITY table, which tracks transactions and does not have base cost values or realized gains and losses, and the ESTAR_SETLD_CASH_ACT table, the new settled cash table.

When you use COSTCASH processing with Eagle Accounting, the system uses the STAR engine to create COSTCASH Binary Large Objects (BLOBs) and loopbacks. When you use the STAR engine to calculate unrealized gain/loss, it updates the BLOBs for the unrealized gain/loss. The realized gain loss posting is a loopback posting from settlement.

STAR to PACE Direct derives and stores currency balances in the position tables of the Eagle data warehouse utilizing COSTCASH objects. The result data retrieves a settled cash balance from the ESTAR COSTCASH object for each foreign currency for a given entity. The settled cash balance enables the STAR engine to track both the costing of the currency as well as the realized gain loss recognized at settlement.

Settlement Example for COSTCASH Processing

This scenario shows a non-base settlement for an entity with the Costcash Processing field set to Yes.

The figure shows the Position Viewer tool following the settlement of a non-base BUY transaction. The transaction settled in euros. In this case, the STAR engine created a row in the object for the settlement currency. When you select the row for the issue named EURO and under Cost, click the Open Lots tab, you can view the settlement for the COSTCASH event.

Open