Working with Migration of Account Details

For easier understanding, the illustration below is given based on a user taking over an AC account (2000003282) into an AR Arrangement through the standard user interface.

For easier understanding, the illustration below is given based on a user taking over the AC account Interest Accruals into AR.

• Given below is the balances of the account taken over earlier.
  • Accrued Debit Interest (51000): 205.48
  • Principal Balance (CREDIT): 1,500,000.00

    Based on the Takeover Activity in the previous step, the system generated a debit and credit movement on the Principal balance (CREDIT) to bring the balance into AR (ACCT.BALANCE.ACTIVITY).

  • Accrued Credit Interest (50000): 1,130.14

    

• To take-over the Accrued Interest, the user captures the following
  • New Balance Amount – Accrued Interest Amount
  • Adjust Property – Name of the Interest Property
  • Adj Bal Type – The AC Balance Type of the Interest Property to store the accruals namely ACC<PROPERTY>
• In the screenshot below,
  • The Debit Interest Accrual ‘205.48’ is captured as New Balance Amount corresponding to Adjust Property DRINTEREST Adjust Balance Type ACCDRINTEREST
  • The Credit Interest Accrual ‘1,130.14’ is captured as New Balance Amount corresponding Adjust Property CRINTEREST and Adjust Balance Type ACCCRINTEREST

    

• Given below is the balances of the account after the Interest accruals are taken over from AC to AR.
  • Credit Movement on ACCCRINTEREST against Debit Movement on 50000
  • Debit Movement on ACCDRINTEREST against Credit Movement on 51000

    

• From this point on, the AC account is fully operational as an AR arrangement.

It is recommended to include the historical balances as part of the interest calculation source to calculate the interest adjustment amount because of a back-value dated movement. That is, the interest calculation source is a virtual balance that contains both the historical balance and the current balance.

In the screenshots given below, the credit interest is calculated on the virtual balance that contains the historical account balance (HIS<ACCOUNT>) and current account balance (CUR<ACCOUNT>). Similarly, the virtual balance used as calculation source for the interests on the utilised limit and overdraft limit also contains both the historical balances along with the current balances.

Any backdated change beyond the system's take over date recalculates the interest and adjusts the historical bill for the corresponding period. During a back value dated change before the migration date, the interest adjustments due to the backdated changes are effected based on the Interest Adjustments due to back dated txns field in the accounting condition.

Consider the following example to know about how account migration and update is processed for the below mentioned arrangement.

• The migration effective date is 01 Jan, 2021 which is the oldest date until which the back valued transactions have to be accepted.
• The interest capitalisation dates till current date (15 Apr, 2021) are: 01 Feb, 01 Mar and 01 Apr
• The account balance movement dates before 15 Apr are as follows:
  • 05 Jan
  • 10 Feb
  • 15 Mar
  • 06 Apr

From 15 Apr, the account is migrated to the system by performing the ACCOUNTS-TAKEOVER-ARRANGEMENT activity, and the bills and balances are captured as of this date.

The user performs the Capture Historical Bill activity to capture the bills which were capitalised on 1 Feb, 2021, 1 Mar, 2021 and 1 Apr, 2021.

The below screenshot shows the ACCOUNTS-CAPTURE.HISTORIC.BILL-BALANCE.MAINTENANCE activity which the user has triggered on 15 Apr to capture the historic bill details mentioned above.

The account balances after the Capture Historical Bill Activity is shown below with the HISBALANCE balance type updated.

The user performs the Capture Historical Balance activity to capture the account balance movements till 15 Apr, 2021.

The below screenshot shows the ACCOUNTS-CAPTURE.HISTORIC.BAL-BALANCE.MAINTENANCE activity triggered by the user to capture the historic account balance movements as mentioned above.

The below screenshot shows that the net movement (captured in the Capture Historical Balance activity )for a given day is updated under the HISBALANCE balance.

The accounting movements during the period from 1 Jan, 21 to 15 Apr, 21 are as follows:

The balances (account balance, accrual balance, etc.,) from the legacy system as of 15 Apr are captured by triggering the Capture Balance Activity:

The system's account balance after the Capture Balance Activity is triggered is shown below.

After this, the user can perform a credit transaction of USD 10,000 to the migrated account with a back value date of 18 Mar, 2021. As a result of this, the system performs reverse-replay by updating the AA.RR.SERVICE.LIST application with the account arrangement ID.

On triggering the Retrospect Arrangement Activity (ACCOUNTS-RETROSPECT-ARRANGEMENT) either online or as a service (BNK/AA.RR.SERVICE) or during COB, the system processes the reverse-replay. Thus, the arrangement record in AA.RR.SERVICE.LIST is cleared and the adjustments in the interest accruals due to the back value dated credit are reflected in the AA.INTEREST.ACCRUALS table. The screenshot given below shows the interest accrual adjustment that happened due to the back value dated transaction.

Due to the reverse-replay, the system generates a new bill to capitalise the new amount and this is available in the Arrangement Overview page under the Bills tab.

In this scenario,

• The increase in accrued interest (in USD) from the period 18 Mar to 1 Apr: 250.02 + 17.32 = 267.34.

The already capitalised interest as on 1 Apr for USD 300 is reversed and a new bill is generated.

• The new bill amount (in USD): 300 +267.34 = 567.34

Out of this, the tax component (in USD) : 155.75

• The final bill amount (in USD): 567.34 – 155.75 = 411.59.

The system also modifies the arrangement account balance based on the increase in the capitalised interest on 1 Apr.

Consider an account is migrated to the system on Apr 20, 2022 by performing the ACCOUNTS-TAKEOVER-ARRANGEMENT activity. The migration effective date is Apr 1, 2022, which is the oldest date until which the back valued transactions have to be accepted.

During the Takeover activity, a limit for USD 10,000 is attached to the account arrangement.

The historical account and limit balances as on Apr 1, 2022 are captured using the ACCOUNTS-CAPTURE.HISTORIC.BAL-BALANCE.MAINTENANCE activity.

The screenshot below shows that the corresponding historical balances are updated with the captured amount.

The user triggers the ACCOUNTS-CAPTURE.HISTORIC.BILL-BALANCE.MAINTENANCE activity to capture the historical capitalised bills. The interest capitalisation dates till current date (Apr 20, 2022) are Apr 6, Apr 11 and Apr 16.

The HIS<ACCOUNT> and HIS<LIMIT>*<Balance Prefix> balances that are updated after the Capture Historical Bill Activity are shown below.

The user performs the ACCOUNTS-CAPTURE.HISTORIC.BAL-BALANCE.MAINTENANCE activity to capture the net account movements for a given day. The account balance movement dates before Apr 20 are as follows: Apr 3, Apr 5, Apr 9, Apr 14 and Apr 18.

The net movement for a given day which is captured in the Capture Historical Balance activity has updated the balance ladder for both historical account and limit balances.

The accounting for the period between Apr 1, 2022 and Apr 20, 2022 is as follows:

The balances (account balance, accrual balance, and so on) from the legacy system as of Apr 20 are captured by triggering the Capture Balance Activity.

After the Capture Balance Activity is triggered, the system's balances for account and limit properties are updated.

Later, the user performs a back value dated credit of USD 100,000 with value date as Apr 13, 2022. Since the Interest Adjustments due to back dated txns field is not set to Next.cap, the system performs reverse-replay by updating the AA.RR.SERVICE.LIST application with the account arrangement ID.

On running COB, the Retrospect Arrangement Activity (ACCOUNTS-RETROSPECT-ARRANGEMENT) is triggered, and the system performs the reverse-replay process. The record for the arrangement in AA.RR.SERVICE.LIST is removed and the following changes are processed in the system:

• The interest accruals for the credit interest, interest on utilised limit and interest on overdraft limit are adjusted for the period Apr 12 to Apr 16, based on the back-value dated credit.
  

• The system's balances for the current account, accrued credit interest, utilised limit, overdraft limit and current limit are updated as per the backdated change. Since the account is moved to a credit balance, the entire limit amount of USD 10,000 is available (that is, the CURLIMIT balance is -10,000). The accruals for the credit interest property are marked in the ACCCRINTEREST balance type.

  

• Due to the reverse-replay, the system generates a new bill with the recalculated amount for the period and this is made available in the Arrangement Overview page under the Bills tab.
  • The previous bills for UTLLIMITFEES and OVDLIMITFEES that are capitalised on the Apr 16 are reversed. The recalculated capitalise bills for CRINTEREST, UTLLIMITFEES and OVDLIMITFEES are generated for Apr 16.
  • Since the account balance moves to a credit on the Apr 13, the CRINTEREST is calculated from Apr 13 to Apr 16.
  • The UTLLIMITFEES and OVDLIMITFEES are calculated for only one day – Apr 12 during which the account was overdrawn.