14. Annexure A - Accounting Entries for LCs

14.1 Accounting Entries for LCs

This Annexure contains details of the suggested accounting entries that can be set up, for the LC module of Oracle FLEXCUBE. The annexure lists details of the suggested accounting entries, event-wise.

This section contains the following details:

14.1.1 LC Events

The following is an exhaustive list of events that can take place during the lifecycle of an LC. In the subsequent paragraphs we shall examine the accounting entries for each of the events listed below.

Event Code Event Description Remarks
ACCR Accrual (Of Commission) All Types
AMND Amendment All Types
AOCF Amendment from open to open and confirm Import only
AATC Amendment from Advice to Confirm Export Only
APAC Amend - Pre-advice to Adv & confirm Export Only
APAD Amendment from Pre-advice to advice Export Only
AVAL Availment Only For LC’s
BADV Booking Of An LC With Operation Advise Export LC Only
BANC Booking Of An LC With Operation Advise And Con­firm Export LC Only
BCFM Booking Of An LC With Operation Confirm Export LC Only
BISS Booking Of An LC Or Guarantee Issue (Open or Open & Confirm) Only For Import LC, Standby LC, Clean LC, Shipping Guar­antee And Guaran­tee
BPRE Booking Of An LC With Operation Pre-Advise All Types
CALC Periodic commission calculation All types
CANC Cancellation of an LC All Types
CLIQ Commission Liquidation All Types
CLOS Closure Of An LC Or Guarantee All Types
RAVL Reversal of Availment All types
REIM Reimbursement Claim of an LC Revolving LC
REIN Reinstating An LC Revolving LCs
ROPN Reopening Of An LC All Types
REVR Reversal of contract All types
ROPN Reopening of an LC All types
REIS Reissue of Guarantee Guarantee only
BKSG Booking of Shipping Guarantee Shipping Guarantee
CASG Cancellation of Shipping Guarantee Shipping Guarantee
APRE Amendment of LC with Pre-advice Import LC

Whenever a conversion of currency is involved, the conversion rate used is as follows:

14.1.2 Amount Tags

Amount Tag Description
AVAIL_SET_AMT Availment amount paid
AVAIL_SET_AMTEQ Availment amount received
COLL_AMNDAMT Collateral amend amount Dr.
COLL_AMNDAMT_EQ Collateral amend amount Cr.
COLLAMT_OS Outstanding Collateral amount
COLLAMT_OS_EQ Outstanding Collateral amount
LC_AMND_AMT LC Amendment Amount
LC_OS_AMT Outstanding LC amount
LC_REIN_AMT Outstanding Reinstatement Amount
LIAB_AMND_AMT Liability Amendment Amount
ADV_LIAB_AMND_AMT Liability Amendment Amount for advised LCs
CNF_LIAB_AMND_AMT Liability Amendment Amount for confirmed LCs
LIAB_AMT Liability Amount
LIAB_AVAIL_AMT Availment Liability Amount
ADV_LIAB_AVAIL_AMT Availment Liability Amount for advised LCs
CNF_LIAB_AVAIL_AMT Availment Liability Amount for confirmed LCs
LIAB_OS_AMT Outstanding liability amount
ADV_LIAB_OS_AMT Outstanding liability amount for advised LCs
CNF_LIAB_OS_AMT Outstanding liability amount for confirmed LCs
LIAB_REIN_AMT Reinstatement Amount
ADV_LIAB_REIN_AMT Reinstatement Amount for advised LCs
CNF_LIAB_REIN_AMT Reinstatement Amount for confirmed LCs
UCNF_LIAB_OS_AMT Unconfirmed Liability OS Amount
UCNF_LIAB_AMND_AMT Unconfirmed Liability Amendment Amount
UCNF_LIAB_AVAIL_AMT Unconfirmed Liability Availment Amount
UCNF_LIAB_REIN_AMT Unconfirmed Liability Reinstated Amount
REIM_UND_AMT Reimbursement Undertaking Amount
REIM_NON_UND_AMT Reimbursement Non-Undertaking Amount
AVAL_REIM_UND_AMT Availment - Reimbursement Undertaking Amount
AVAL_REIM_NON_UND_AMT Availment - Reimbursement Non-Undertaking Amount
AMND_REIM_UND_AMT Amend - Reimbursement Undertaking Amount
AMND_REIM_NON_UND_AMT Amend - Reimbursement Non-Undertaking Amount
REIM_OS_UND_AMT Reimbursement Outstanding Undertaken amount
REIM_OS_NON_UND_AMT Reimbursement Outstanding Non-undertaken amount
CNF_LIAB_INCR_AMT Confirmed Liability Increased Amount
UCNF_LIAB_INCR_AMT Unconfirmed Liability Increased Amount
CNF_LIAB_DECR_AMT Confirmed Liability Decreased Amount
UCNF_LIAB_DECR_AMT Unconfirmed Liability Decreased Amount
LC_REM_NU Reimbursement Non-Undertaking of LC
LC_REM_NU_OFF Reimbursement Non-Undertaking of LC Offset

14.1.3 Accounting Roles

The following is an exhaustive list that contains details of the Accounting Roles that are applicable to the LCs you can process at your bank.

Accounting Role Description Role Type
LC_OCU Outstanding Credit Unutilized Contingent Liability
LC_OCU_OFFSET Unutilized Credit Offset Contingent Asset
LC_CNF Confirmation of LC Real GL
LC_CNF_OFF Confirmation of LC Offset Real GL
LC_COLL_ACCT LC Collateral account Liability
AVL_DEBIT_ACCT Availment Debit account Real / Type ‘X’
AVL_CREDIT_ACCT Availment Credit account Real / Type ‘X’
CHG_CUST_ACC Customer Accounts Real/Type “X”
COMM_CUST_ACC Customer Accounts Real/Type “X”
COLL_CUST_ACC Customer Accounts Real/Type “X”
TAX_CUST_ACC Customer Accounts Real/Type “X”
COMM_INC Commission Income Income
COMM_REC Commission earned not collected Asset
COMM_RIA Commission collected in advance Liability
CHG_INC Charge Income Income
CHG_REC Charge receivable Asset
CHG_EXP Charge expense Expense
CHG_PAY Charge payable Liability
TAX_PAY Tax payable Liability
TAX_EXP Tax expense Expense
LC_COLL_BRIDGE Collateral bridge between LC ship­ping guarantee and Bills Liability
LC_LOAN_BRIDGE Bridge GL between LC and CL Liability

14.2 Event-Accounting Entries

In this section we will discuss the suggested accounting entries that should be generated for each event in the life cycle of an LC.

This section contains the following details:

14.2.1 BISS: Booking of an import LC

Liability

Role Amount Tag Debit/Credit
LC_OCU LIAB_AMT Dr
LC_OCU_OFFSET LIAB_AMT Cr

 

Booking LC Contract

When the LC contract gets booked through MT740 processing (Authorization to reimburse), the accounting entries are passed as follows:

Role Amount Tag Debit/Credit
LC_OCU_OFFSET REIM_UND_AMT Dr
LC_OCU REIM_UND_AMT Cr

The following accounting entries are passed for the product to handle the entries for Non undertaking portion:

Role Amount Tag Debit/Credit
LC_REM_NU_OFF REIM_NON_UND_AMT Dr
LC_REM_NU REIM_NON_UND_AMT Cr

Collateral (If Any)

Role Amount Tag Debit/Credit
COLL_CUST_ACC COLL_AMT_OS Dr
LC_COLL_ACC COLL_AMT_OSEQ Cr

 

Charges

Booking (From Customer Account)

Role Amount Tag Debit/Credit
CHG_CUST_ACC CHARGES Dr
CHG_INC CHARGES Cr

 

Booking (From Receivable Account)

Role Amount Tag Debit/Credit
CHG_REC CHARGES Dr
CHG_INC CHARGES Cr

 

On Receipt (For booking Under Receivable Account)

Role Amount Tag Debit/Credit
CHG_CUST_ACC CHARGES Dr
CHG_REC CHARGES Cr

 

Commission

In Advance (Non - Accrual - On Booking)

Role Amount Tag Debit/Credit
COMM_CUST_ACC COMMSN Dr
COMM_INC COMMSN Cr

In Advance (Accrual - On Booking)

Role Amount Tag Debit/Credit
COMM_CUST_ACC COMMSN Dr
COMM_RIA COMMSN Cr

 

In Advance (Month-End Accrual)

 

Role Amount Tag Debit/Credit
COMM_RIA COMMSN Dr
COMM_INC COMMSN Cr

 

In Arrears (Non - Accrual - On Booking)

No Entries for Booking

In Arrears (Non - Accrual - On Receipt)

Role Amount Tag Debit/Credit
COMM_CUST_ACC COMMSN Dr
COMM_INC COMMSN Cr

In Arrears (Accrual - On Booking)

No Entries for Booking

In Arrears (Month - End Accrual)

Role Amount Tag Debit/Credit
COMM_REC ACCR_COMMSN Dr
COMM_INC ACCR_COMMSN Cr

In Arrears (On Receipt of Commission)

Role Amount Tag Debit/Credit
COMM_CUST_ACC COMMSN Dr
COMM_REC COMMSN Cr

The following accounting entries are maintained for a shipping guarantee product:

Accounting Role Amount Tag Dr/Cr
LC_COLL_BRIDGE COLL_AMT Dr
LCCOLL_INT_ACCT COLL_AMT Cr
LC_OCU_OFFSET LIAB_OS_AMT Dr
LC_OCU LIAB_OS_AMT Cr
LCCOLL_INT_ACCT COLLAT_DECR Dr
Customer COLLAT_DECR Cr
Customer COLL_AMT_INCR Dr
LCCOLL_INT_ACCT COLL_AMT_INCR Cr

14.2.2 AVAL: Availment Under LC

Liability

Role Amount Tag Dr/Cr
LC_OCU AVAIL_SET_AMT Cr
LC_OCU_OFFSET AVAIL_SET_AMTEQ Dr
LC_OCU ADV_LIAB_AVAIL_AMT Cr
LC_OCU_OFFSET ADV_LIAB_AVAIL_AMT Dr
LC_CNF_OFF CNF_LIAB_AVAIL_AMT Dr
LC_CNF CNF_LIAB_AVAIL_AMT Cr

 

Collateral (If Any)

Role Amount Tag Dr/Cr
COLL_CUST_ACC COLL_AMNDAMT Cr
LCCOLL_INT_ACCT COLL_AVALAMT Dr
LC_OCU_OFFSET AVAIL_SET_AMT Dr
LC_OCU AVAIL_SET_AMT Cr
LCCOLL_INT_ACCT COLL_AMT_DECR Dr
LC_COLL_BRIDGE COLL_AMT_DECR Cr

 

14.2.3 CLOS: Closure of an LC / Guarantee

Liability

Role Amount Tag Dr/Cr
LC_OCU LIAB_OS_AMT Cr
LC_OCU_OFFSET LIAB_OS_AMT Dr
LC_OCU ADV_LIAB_OS_AMT Cr
LC_OCU_OFFSET ADV_LIAB_OS_AMT Dr
LC_CNF CNF_LIAB_OS_AMT Cr
LC_CNF_OFFSET CNF_LIAB_OS_AMT Dr

 

Collateral (If Any)

Role Amount Tag Debit/Credit
COLL_CUST_ACC COLLAMT_OS Cr
LC_COLL_ACCT COLLAMT_OSEQ Dr

 

When the Export LC is closed, the amount will be reduced proportionately from Confirmed portion and Unconfirmed portion.

Dr/ Cr Account role code Amount tag LCY Amount Description
Dr LC_OCU_OFFSET (Unuti­lized Credit Offset) UCNF_LIAB_OS_AMT Unconfirmed LC Amount
Cr LC_OCU (Outstanding Credit Unutilized) UCNF_LIAB_OS_AMT Unconfirmed LC Amount
Dr LC_CNF_OFF (Confirmation of LC Offset) CNF_LIAB_OS_AMT Confirmed LC Amount
Cr LC_CNF (Confirmation of LC) CNF_LIAB_OS_AMT Confirmed LC Amount

14.2.4 REIN: Reinstatement of an LC / Guarantee

Role Amount Tag Debit/Credit
LC_OCU LIAB_REIN_AMT Dr
LC_OCU_OFFSET LIAB_REIN_AMT Cr
LC_OCU ADV_LIAB_REIN_AMT Dr
LC_OCU_OFFSET ADV_LIAB_REIN_AMT Cr
LC_CNF CNF_ LIAB_REIN_AMT Dr
LC_CNF_OFF CNF_ LIAB_REIN_AMT Cr

The accounting entries for reinstatement for Revolving LC (in case of reinstatement of more than the confirmed amount) are as follows:

Account role code Amount tag Dr/ Cr
LC_OCU (Outstanding Credit Unutilized) UCNF_LIAB_REIN_AMT Dr
LC_OCU_OFFSET (Unuti­lized Credit Offset) UCNF_LIAB_REIN_AMT Cr
LC_CNF (Confirmation of LC) CNF_LIAB_REIN_AMT Dr
LC_CNF_OFF (Confirmation of LC Offset) CNF_LIAB_REIN_AMT Cr

The amount of the Confirmed Portion will be reinstated first. In this case, the entire confirmed amount is reinstated

Accounting entries for increase in the confirmation as part of amendment are as follows:

Account role code Amount tag Dr/ Cr
LC_OCU_OFFSET (Unuti­lized Credit Offset) CNF_LIAB_INCR_AMT Dr
LC_OCU (Outstanding Credit Unutilized) CNF_LIAB_INCR_AMT Cr
LC_CNF (Confirmation of LC) CNF_LIAB_INCR_AMT Dr
LC_CNF_OFF (Confirmation of LC Offset) CNF_LIAB_INCR_AMT Cr

Accounting entries for decrease in the confirmation as part of amendment are as follows:

Account role code Amount tag Dr/ Cr
LC_CNF_OFF (Confirmation of LC Offset) CNF_LIAB_DECR_AMT Dr
LC_CNF (Confirmation of LC Offset) CNF_LIAB_DECR_AMT Cr
LC_OCU (Outstanding Credit Unutilized) CNF_LIAB_DECR_AMT Dr
LC_OCU_OFF (Outstanding Credit Unutilized Offset) CNF_LIAB_DECR_AMT Cr

If the amendment is done for change of confirmation amount, if any charges associated with this event with Basis Amount as Confirmation amount will be collected along with other charges associated with this event.

14.2.5 BADV: Advising an LC

Booking LC Advice

Role Amount Tag Debit/Credit
LC_OCU ADV_LIAB_OS_AMT Dr
LC_OCU_OFFSET ADV_LIAB_OS_AMT Cr

 

Charges/ Commission

As given in event BISS

14.2.6 BCFM: Confirming an LC

Liability

Role Amount Tag Debit/Credit
LC_OCU LIAB_AMT Dr
LC_OCU_OFFSET LIAB_AMT Cr

 

Collateral (If Any)

Role Amount Tag Debit/Credit
COLL_CUST_ACC COLL_AMT_OS Cr
LC_COLL_ACCT COLL_AMT_OSEQ Dr

Charges/ Commission

As given in event BISS

14.2.7 BPRE: Pre-advising an LC

The accounting entries passed for BPRE are similar to those passed for BISS event.

14.2.8 BANC: Advising and Confirming An LC

Role Amount Tag Dr/Cr
LC_CNF CNF_LIAB_OS_AMT Dr
LC_CNF_OFFSET CNF_LIAB_OS_AMT Cr

14.2.9 AMND: Amendment

Liability

Reverse all the previous entries for booking. Re-book entries based on BISS or BADV or BPRE or BANC.

Role Amount Tag Dr/Cr
LC_OCU ADV_LIAB_OS_AMT Dr
LC_OCU_OFFSET ADV_LIAB_OS_AMT Cr
LC_CNF CNF_LIAB_OS_AMT Dr
LC_CNF_OFFSET CNF_LIAB_OS_AMT Cr

Undertaking Amount

When Undertaking Amount is reduced as part of amendment, the accounting entries passed during “AMND” event are as follows:

Role Amount tag Dr/Cr
LC_OCU REIM_NON_UND_AMT Dr
LC_OCU_OFFSET REIM_NON_UND_AMT Cr
LC_REM_NU_OFF REIM_NON_UND_AMT Dr
LC_REM_NU REIM_NON_UND_AMT Cr

When Undertaking Amount is increased as part of amendment, the accounting entries passed during “AMND” event are as follows:

Role Amount tag Dr/Cr
LC_OCU_OFFSET REIM_UND_AMT Dr
LC_OCU REIM_UND_AMT Cr

14.2.10 AOCF: Amendment from Open to Open and Confirm

None

14.2.11 APAD: Amendment from Pre-advice to Advice

None

14.2.12 APAC: Amendment from Pre-advice to Advice and Confirm

Same as For BISS

14.2.13 REVR: Reversal

Reverse out all the accounting entries booked for the contract till date.

14.2.14 ACCR: Accrual of Commission

See Commissions under event BISS.

14.2.15 CALC: Periodic Commission Calculation Date

No entries due to commission calculation.

14.2.16 CLIQ: Liquidation of Commission

LC Status Change

Role Amount Tag Dr/Cr
<component>INC <Component>_MOVINC Dr
<component>NORMINC <Component>_MOVINC Cr

 

See Commissions under event BISS.

14.2.17 ROPN: Reopening of an LC

Liability

Role Amount Tag Dr/Cr
LC_OCU LIAB_OS_AMT Dr
LC_OCU_OFFSET LIAB_OS_AMT Cr
LC_OCU ADV_LIAB_OS_AMT Dr
LC_OCU_OFFSET ADV_LIAB_OS_AMT Cr
LC_CNF CNF_LIAB_OS_AMT Dr
LC_CNF_OFFSET CNF_LIAB_OS_AMT Cr

 

Collateral (If Any)

Role Amount Tag Dr/Cr
COLL_CUST_ACC COLLAMT_OS Dr
LC_COLL_ACCT COLLAMT_OS_EQ Cr

 

14.2.18 CANC: Cancellation of an LC

Role Amount Tag Dr/Cr
LC_OCU LIAB_OS_AMT Cr
LC_OCU_OFFSET LIAB_OS_AMT Dr
LC_OCU ADV_LIAB_OS_AMT Cr
LC_OCU_OFFSET ADV_LIAB_OS_AMT Dr
LC_CNF CNF_LIAB_OS_AMT Cr
LC_CNF_OFFSET CNF_LIAB_OS_AMT Dr

The following accounting entries are maintained in Shipping Guarantee product:

Accounting Role Amount Tag Dr/Cr
LC_OCU_OFFSET LIAB_OS_AMT Dr
LC_OCU LIAB_OS_AMT Cr
LCCOLL_INT_ACCT COLL_AMT_DECR Dr
LC_COLL_BRIDGE COLL_AMT_DECR Cr

14.2.19 TRGN: Generation of Tracers

None

14.2.20 AATC: Amendment from Advice to Confirm

Role Amount Tag Dr/Cr
LC_OCU LIAB_OS_AMT Cr
LC_OCU_OFFSET LIAB_OS_AMT Dr
LC_OCU ADV_LIAB_OS_AMT Cr
LC_OCU_OFFSET ADV_LIAB_OS_AMT Dr
LC_CNF CNF_LIAB_OS_AMT Dr
LC_CNF_OFFSET CNF_LIAB_OS_AMT Cr

14.2.21 RASN: Reassign an LC

None

14.2.22 Transfer of an LC

When an Export LC is transferred, the amount in the old LC (From LC) would be reduced proportionately from Confirmed portion and Unconfirmed portion as part of AVAL event.

Dr/ Cr Account role code Amount tag LCY Amount Description
Dr LC_OCU_OFFSET (Unuti­lized Credit Offset) UCNF_LIA­B_AVAIL_AMT Unconfirmed LC Amount
Cr LC_OCU (Outstanding Credit Unutilized) UCNF_LIA­B_AVAIL_AMT Unconfirmed LC Amount
Dr LC_CNF_OFF (Confirmation of LC Offset) CNF_LIAB_AVAIL_AMT Confirmed LC Amount
Cr LC_CNF (Confirmation of LC) CNF_LIAB_AVAIL_AMT Confirmed LC Amount

The new Export LC contract will have the same split of Confirmed LC amout and Unconfirmed LC amount as it was there in the old LC.

Dr/ Cr Account role code Amount tag LCY Amount Description
Dr LC_OCU (Outstanding Credit Unutilized) UCNF_LIAB_OS_AMT Unconfirmed LC Amount
Cr LC_OCU_OFFSET (Unuti­lized Credit Offset) UCNF_LIAB_OS_AMT Unconfirmed LC Amount
Dr LC_CNF (Confirmation of LC) CNF_LIAB_OS_AMT Partial Confirma­tion Amount
Cr LC_CNF_OFF (Confirmation of LC Offset) CNF_LIAB_OS_AMT Partial Confirma­tion Amount

14.2.23 RAVL: Reversal of Availment

Fetch entries for an availment event and reverse them.

14.2.24 BKSG: Booking of Shipping Guarantee

Role Amount Tag Dr/Cr
LC_OCU AVAIL_SET_AMT Dr
LC_OCU_OFFSET AVAIL_SET_AMT Cr
LCCOLL_INT_ACCT COLL_AMT_DECR Dr
LC_COLL_BRIDGE COLL_AMT_DECR Cr

14.2.25 CASG: Cancellation of Shipping Guarantee

The following accounting entries are maintained for cancellation of Shipping Guarantee:

Accounting Role Amount Tag Dr/Cr
LC_OCU AVAIL_SET_AMT Dr
LC_OCU_OFFSET AVAIL_SET_AMT Cr
LC_COLL_BRIDGE COLL_AMT_INCR Dr
LCCOLL_INT_ACCT COLL_AMT_INCR Cr

14.2.26 APRE: Amendment of LC with Pre-advice

The accounting entries passed for BPRE are similar to those passed for AMND event.