Calculation Of Contract Accrual

Principles

Accruals of costs and revenues accounting in the Financing Contract includes two accounting operations - "drawdown" (prescription) and "dissolution" (regular monthly income/expense).

Drawing (accruals prescription) can be accounted for by various documents, e.g. a purchase invoice for paid commissions or by posting an installment from a payment schedule.

The release of accruals is accounted for in the Financing Contract in revenues/expenses using the Contract Accrual calendars.

A prerequisite for generating accrual calendars is to set up the following tables:

Gen. Posting Groups and CI Type relations, specifically the flags:

• Calc. Inlet Accruals Local (Yes/No)

• Calc. Inp. Accruals IFRS (Yes/No)

• Accruals Calculation Method Setup

• OneCore settings, flag Fix flag Non-Regular Contract for accruals during activation.

Contract accruals have two levels (tables):

Open

• Accruals of Calculation Input

  • applies only to Calculation Inputs, and only to Calculation Input Variants = Fee, Subsidy and Commission (it is not possible to distinguish between Purchase Price and Change of Purchase Price)

  • A separate calendar is generated for each Calculation input that is marked for accruals

  • The calendar of Accruals of Calculation Inputs is only record-keeping, it is not possible to charge from it, it serves only as a basis for calculating the Accrual Line of the Contract

• Contract Accrual Lines

  • calendar Contract accruals are the basis from which the "release" of costs and revenues in the form of internal documents is accounted for

  • It is calculated as part of the calculation or recalculation of the contract

  • It is generated either directly from the individual components of the payment (principal, interest, insurance, services) or by accumulation of Accrual lines of calculation inputs according to accrual objects (Expense Subsidy, Income Subsidy, Expense Fee, Income Fee, Expense Commission, Income Commission).

Accrual Objects

On the Financing Contract, it is possible to generate accrual calendars for:

• Down Payment

• regular payment

  • Principal

  • interest

• Insurance with an insurance contract

• Detailed service

• Calculation input, variants only

  • subsidy

  • fee

  • commission 

Contract Modality and Irregularity

In the system, it is possible to set that accruals will be calculated based on the modality (periodicity) of the contract and/or the irregularity of the contract (see Accruals calculation method settings, Condition of accruals field).

Irregular contracts

The irregularity is assessed according to the flag Non-Regular Contract for Accruals = Yes and is assessed separately:

• for Financing Contract and Detailed Contract Service – flag from the Financing Contract header

• for Insurance Contracts – flag on Insurance Contract

Contract Modality (Periodicity)

Periodicity is assessed separately for each component of the contract:

• Financing Contract – according to the Payment Period field on the Calculation tab

• Contract Service – according to the Service Repayment Period field

• Insurance Contract – according to the Payment Period for Client field

Setting the Non-Regular Contract Flag for Accruals 

Irregular Financing Contract

The Non-Regular Contract for Accruals flag is set automatically on the contract header if the calculation lines contain settings other than Relative Part = 1 and Absolute Part = 0

The Irregular Contract for Accruals flag is hidden in the Financing Contract. It can be checked, for example, using the filter on the contract overview.

Non-Regular Insurance Contract

The Non-Regular Contract for Accruals flag on the Calculation tab is enabled automatically based on the settings of the Insurance Calculation Method for the client, for the First Month Free or First Period Free options.

Change the Irregular Contract flag for accruals

The flag is set to the contract during the calculation, it cannot be deleted after activation. If the flag was not set on the contract/insurance contract during activation, it can be set additionally, if the flag fixation in the Fix flag for the Czech Republic during activation (Yes/no) field is not enabled in OneCore Settings.

• If set to Yes, then the flag on the contract header will be fixed (Yes/No) when the contract is activated and will never be changed.

• If set to No, then the flag on the contract header can be switched on additionally after the contract is activated, if the originally regular contract becomes irregular. If accruals for non-regular contracts are set, the Contract Accrual calendar will be generated additionally, but only for accrual objects derived from the payment (principal, interest, contract Service, insurance, detailed Service), but only in the amount of the balance to be accrued that has not yet been posted.  

Accruals Calculation

Accruals Calculation Rules 

Dissolution to Period

The source accrual amount can be dissolved into the following periods:

• Repayments

  • It is dissolved into months according to the periodicity of the instalment (e.g. the quarterly instalment will be dissolved within 3 months)

• Contracts

  • It is dissolved for the entire duration of the Financing Contract (the down payment will be dissolved, for example, within 36 months of the Contract)

The Accrual Period is determined by the Accrual Object and the regularity of the contract or insurance policy.

Accrual Start Month

It is dissolved into monthly periods, the Contract Accrual Line has a period "from-to" always from the 1st to the last day of the month.

The month of commencement of accruals is determined according to the method of calculating instalments, which is defined in the Financing Contract on the Calculation tab:

• Always Calendar Month

  • Yes = regular payment always starts on 1.

  • No = technical month, regular payment starts on the date of calculation start

• Calc. Start=Handover Date

• Payment Due Date

 *) If the Contract Accrual Calendar is generated after one or more payments are posted, the payment is posted to revenue and the accruals start only from the first unposted payment   

Accrual Currency

Accruals of calculation inputs are always calculated only in the contract currency.

Contract accruals are calculated in both the contract currency and the local currency. All columns are always filled.

Deploying Accrual Calendars

Accrual calendars are calculated as part of the Financing Contract calculation or recalculation. If any of the flags on the Financing Contract has a value of No. These are the symptoms:

• Annuity Updated

• Services – updated (flag is on Contract Service, field is hidden)

• Insurance – Updated

• Payments – Updated

Calculation of accruals of calculation inputs

In order to generate a Calculation Input Accrual Calendar, the following conditions must be met:

• The following flags must be enabled on the calculation input for the accounting system:

  • Calc. Inlet Accruals Local – when calculating for a local system

  • Calc. Inp. Accruals IFRS – when calculated for IFRS system

These symptoms are carried over when creating a calculation input from the Relation settings of General Posting Groups and CI Type

• Must be set Calculation method Accruals in the Accrual Method Setup table for the combination of General Business Posting Group, General Item Posting Group, Accrual Object and Accounting Area.

Note:

• Gen. Bus. Posting Groups and Gen. Prod. Posting Groups are taken from the Financing Contract header

• The accrual object is mapped to the data from the calculation input of the contract:

After starting the contract calculation, the system creates the Accruals calendar of the calculation input. The calendar is available from the Calculation Inputs list or from the Calculation Input tab by clicking on the Accruals button.

The calendar contains accrual lines of the given Calculation Input.

Meaning of Fields

• Contract No.

  • Financing Contract No. to which the calculation input is linked

• Financed Object No.

  • Financing Object No. to which the calculation input is linked

  • The field can also be empty if the Calculation input is not linked to the Financed Object, but only to the Financing Contract

• Calculation Input Line No.

  • Together with the Contract No. and the Financed Object No., it determines the specific Calculation Input of the Contract. The number is taken from the Calculation input

• Accounting Area

  • Accounting system for which accruals have been calculated

  • Different accrual methods can be set for each accounting system (local or IFRS)

• Accrual Object

  • Specifies for which objects according to the type and variant of the calculation input the accruals are calculated (Expense Flat Fee, Income Input Fee, Expense Subsidy, Income Subsidy, Expense Commission, Income Commission)   

• Row No.

  • Serial number of a row in the calendar

• Payment No.

  • Sequence number of the accrual line according to the payment numbering rules

• Calculation Input Code

  • The code of the calculation input type is taken from the given Calculation input

• Contract Payment No.

• to which payment this accrual line belongs in terms of date - the beginning of the accrual line period and the payment period are compared, while the accrual period can be shifted by a month (according to the ShiftAccrualStartPeriod function)  

• Date From

  • Start of the period for which accruals are calculated

• Date To

  • End of period for which accruals are calculated

• Posted

  • flag that is copied from the corresponding line of Contract Accrual Lines

• Locked

  • Flag that the corresponding Contract Accrual Line has been locked

• Amount

  • The calculated accrual amount of the input amount for a given period;

  • The amount is in the currency of the Financing Contract

  • The amount has the same sign of the source amount to dissolve from the Calculation Input (Base Amount, Financed Value, Calculation Amount)

• Accrual Balance

  • the difference between the total amount to be dissolved from the Calculation Input and the amounts accrued so far, including the current line

The calculation input is always distinguished from the date of entry into the calculation, or from the first payment that contains this date.

KV with Object Handover Date – it starts to be differentiated from the 1st month of the 1st installment.

CI entered during the contract - if the original algorithm is used, that the date of entering the calculation = the last day of the last posted payment, the decisive date is shifted to the 1st day of the next payment.

Accruals are always calculated without taking into account the status of payment accounting, i.e. always from the date of commencement of accruals to the end of the contract according to the course determined by the CR method.

Contract Accrual Calculation

Contract accruals are calculated

• either as an accumulation of Accrual lines of calculation inputs for objects derived from calculation inputs

• or by direct calculation of accruals for items derived from an installment.

The calendar is available from the Financing Contract > Related > Finance > Contract Accrual Lines

Meaning of fields:

• Contract No.

  • for which contract the accruals are calculated

• Accounting Area

  • for which accounting system (local or IFRS) the accruals are calculated

• Accrual Object

  • for which objects the accruals are calculated

• Accrual Type Key

  • The insurance contract number (for insurance accruals) or the contract service number (for detailed service accruals) is filled in, for other subjects it is blank

• Row No.

  • Sequential Line No.

• Payment No.

  • Sequence number of the accrual line according to the payment numbering rules

• Contract Payment No.

  • to which payment from the payment calendar this line belongs in terms of date (the beginning of the period of the accrual line and the payment period is compared, while the period can be shifted by a month (according to the ShiftAccrualStartPeriod function))

• Date From

  • Start of the period for which accruals are calculated

• Date To

  • End of period for which accruals are calculated

• Posting Date

  • Posting date for accounting document; when the accrual line is generated, it is set the same as Date to. If it changes during posting (shift to open accounting period), it will be changed to the date actually used

• Posted

  • Flag that the line has been posted

  • If it is a accrual of the calculation input, the flag is also written into the relevant line of the Accruals of the calculation input.

• Locked

  • Flag that the corresponding Contract Accrual Line has been locked

  • The flag on accruals is set when the related payment is posted, and conversely, if the accruals are posted before the payment, the flag is set on the payment

  • You can't make changes to locked accrual lines. Any changes (e.g. increasing the subsidy by creating a new calculation input) will be reflected only on the first unlocked accrual line. 

• Canceled

  • Flag that the accrual line has been reversed after the previous posting

• Document No.

  • Document number substituted when posting from a number series

• Currency

  • Currency code from the header of the contract in which the accrual amounts are maintained

• Currency Factor

  • Currency factor used to calculate local currency amounts on the line (currency factor = 1 : exchange rate)

• Amount

  • the amount in the currency of the contract corresponding to the release of the input amount into the given period (month); The amount matches the face value, without adjustments that are affected by the posting status of the lines

• Amount (LCY)

  • Accrual Amount Converted to Local Currency

• Posting Amount

  • the amount in the contract currency corresponding to the adjusted resolution of the input amount for the given period affected by the posting status of the lines – may contain the difference from previously posted lines so that the total sum of the Czech Republic corresponds to the input value

• Posting Amount (LCY)

  • accrual amount in local currency; The line with any exchange rate difference contains only the Amount to Be Posted (LCY), the other amounts are zero

• Extraordinary Termination of Accruals

  • Flag that the line was processed during an extraordinary contract termination (either just marked or posted)

• Payment Currency Factor

  • Not part of the standard solution

    • informative information, the currency factor from the instalment used to calculate any exchange rate difference

• Extra line rate. Difference

  • Not part of the standard solution

    • Identification of the line on which the exchange rate difference in relation to the given payment is calculated

• Accruals Calculation Method

  • copied from Accruals Calculation Method Settings when creating a new calendar; If at least one accrual line is posted, the parameters from that line are taken so that the accruals on the contract are consistent 

• Condition of accruals

  • copied from Accruals Calculation Method Settings when creating a new calendar; If there is at least one accrual line posted, parameters are taken from that line so that the accruals on the contract are consistent

• Difference Posting Method

  • copied from Accruals Calculation Method Settings when creating a new calendar; If at least one accrual line is posted, parameters are taken from that line so that the accruals on the contract are consistent

• Gen. Bus. Posting Group

  • Hidden field, the system will use it as a key to determine the accrual method and for posting

• Gen. Prod. Posting Group

  • Hidden field, the system will use it as a key to determine the accrual method and for posting

To cumulate accrual lines of calculation inputs:

For accruals of calculation inputs, the lines of the Contract Accrual Calendar are created by cumulating the lines of the Accrual Calendar of calculation inputs. Rows are accumulated on the date principle in such a way that:

• The Amount field is cumulated regardless of the posting status of the CZ contract line

• The Amount (LCY) field is calculated by dividing the Amount field by the Currency Factor (from the Financing Contract header)

• The Posting Amount field is the same as the Amount field, it changes only on unposted lines; according to the method settings in the Difference Posting Method field, the sum of the difference amounts on the posted lines between the value in the Posting Amount and Amount fields is added to the 1st unposted or last line in the Czech Republic; otherwise, the field is the same as the Amount field

• The Posting Amount (LCY) field is calculated as the ratio of the Posting Amount: Currency Factor field (from the Financing Contract header)

In the case of accruals of calculation inputs, exchange rate differences are not calculated!

Calculation of Contract Payment Accruals

Payment Accruals (Principal, Interest, Insurance, and Detailed Services) create only Contract Accrual lines.

The amount to be dissolved is calculated from the source fields according to the accrual object, the accrual calculation method, and the period into which the source amount is dissolved.

Calculation of the amount to be dissolved:

• Advance payment

  • Sum of Principal fields from all lines in the contract payment calendar that are marked Down Payment Line = Yes

• Principal

  • Sum of Principal fields from all regular lines of the contract payment calendar (Down Payment Line = No, Sales Price Line = No, Extra Payment = No) for the dissolution period (regular contracts = sum per payment, non-regular contracts = sum per contract)

• Interest

  • Sum of fields Interest from all regular lines of the contract payment calendar (Down Payment Line = No, Line with Sales Price = No, Extra Payment = No) for the dissolution period (regular contracts = sum per payment, irregular contracts = sum per contract)

• Insurance

  • Sum of fields Amount from all lines of the Client's Insurance Calendar for the dissolution period (regular contracts = sum per installment, irregular contracts = sum per contract)

  • It is calculated separately for individual insurance contracts

• Contract Service

  • Sum of fields Amount from all lines of the detailed service calendar for the dissolution period (regular contracts = sum per payment, non-regular contracts = sum per contract)

  • It is calculated separately for individual detailed services of the contract

The system calculates the amount to be dissolved and divides the amount into the appropriate number of monthly installments of the period (installments/contracts). For splitting, it uses the set method of calculating accruals:

• Linear

  • Equally as dividing the Amount to be dissolved and the number of months of the dissolution period

• By Interest

  • Proportionally according to the ratio of interest of the given instalment and total interest 

The Amount field is calculated (overwritten) regardless of the posting status of the CZ contract line

The Amount (LCY) field is calculated as the Amount/Factor field from the contract header, calculated based on the Contract Exchange Rate field, converted to a factor according to the contract currency settings (e.g. HUF is the exchange rate for HUF 100, etc.).

Posting Amount field – changes only on unposted lines; according to the method settings in the Difference Posting Method field, the sum of the difference amounts on the posted lines between the value in the Posting Amount and Amount fields is added to the 1st unposted or last line in the Czech Republic; otherwise, the field is the same as the Amount field

Posting Amount (LCY) field – calculated as the content of the Posting Amount/Factor field from the contract header, calculated based on the Contract Exchange Rate field, converted to a factor according to the contract currency setting

Foreign currencies and exchange rate differences

Contract Accruals in Foreign Currency

If the contract is registered in a foreign currency, the Contract Accrual Calendar always includes information about the amount in the currency and the amount in the local currency.

Calculation inputs (grants, fees, commissions) and down payments are converted to local currency at a fixed exchange rate.

The principal, interest, insurance, and services of the contract are converted into local currency using the exchange rate from the header of the Financing Contract

Exchange Rate Differences of Contract Accrual Lines in Foreign Currency

Calculation and accounting of exchange rate differences in contract accruals is not part of the standard solution. It can be added as a customer modification.

• The accrual exchange rate difference will be calculated for Accrual Objects = Principal, Interest, Insurance, Contract Service

• The accrual exchange rate difference will not be calculated for down payment and calculation inputs (grants, fees, commissions).

• The accrual exchange rate difference will always be calculated before accruals are posted, but only if the actual exchange rate of the payment is known (i.e. the related payment has been posted).

• The accrual exchange rate difference will always be generated as a separate line marked with the Extra Line Exchange Rate flag. difference = Yes.

• The exchange rate difference line will be generated for the regular accrual line, which falls on the Posting date of the payment from which the exchange rate is applied

• There will be 2 methods of calculating KR, the choice of method will be determined by the settings (Accruals Calculation Method Settings)

• Standard method – the exchange rate difference is calculated as the difference between the originally calculated amount in the local currency using the exchange rate from the contract header and the newly calculated amount in the local currency using the exchange rate from the posted document – instalments.

• Balance Adjustment Method – Exchange Rate Difference is calculated by revaluing the accrual balance to be posted (unposted lines) using the current exchange rate and the difference between the accrual amounts posted so far in the local currency and this amount is calculated as KR.  In addition, the amount of amounts booked so far from the documents for the Czech Republic (the sum of the principal, interest, etc.) and the total sum are added up; the difference (total – posted) is revalued to the current exchange rate of the last posted payment and compared with the total Amount to Be Booked (LCY) from all previous lines in the Czech Republic, including exchange rate differences). The difference is added to the Amount (LCY) and Posting Amount (LCY) fields, and the Extra Line Exchange Rate flag is set at the same time. difference = Yes.

• On the last line of the Czech Republic, the difference between the sum of the previous Amounts and Amounts to be booked is resolved compared to the sum of the amounts from the definition amount for the Czech Republic so that the total sum from the Czech Republic corresponds to the definition amount.

Accruals for Extra Payment

• An extra payment is entered on the Lines of the Contract Calculator using the Insert Extra Payment function. A description of the functionality is in the https://iao.atlassian.net/wiki/x/zoDIAQ

• only the principal without interest is calculated

• it is posted as a regular line, i.e. also to the accounts of the Czech Republic

• The calendar of the Czech Republic does not calculate the extraordinary payment, but as part of the "rounding" process, it appoints the difference to the end  

Accruals when changing a regular/irregular contract

At the moment of contract activation, the contract status in terms of regularity, the Non-Regular Conth field, is fixed for the CR calculation method. For Accruals.

From the point of view of regularity, the change of the contract has no impact on the recalculation of the Czech Republic.

Accruals when changing the amount to be accrued during the course of the contract

E.g.

• Principal Increase

• Interest Rate Change

• additional subsidy, fee, commission.

Already posted lines or blocked CZ lines are not used when calculating a new Czech Republic. They remain unchanged.

The calculation for the new amounts of the Czech Republic is then calculated according to the set method of posting the difference in the Czech Republic calculation method settings.