12. Annexure A

12.1 Accounting Entries

This section contains details of the suggested accounting entries that can be set up, for the Mortgages module of Oracle FLEXCUBE. The details of the suggested accounting entries are given event-wise.

This chapter contains the following sections:

• Section 12.2, "Events "
• Section 12.3, "Accounting Roles"
• Section 12.4, "Event-wise Advices"

12.2 Events

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

	Event Code		Event Description
	ACCR		Accrual
	ADCH		ADHOC charge application
	ALIQ		Auto liquidation
	ARVN		Automatic Rate Revision
	BADJ		Back Dated Adjustment
	BNTC		Billing Notice Event
	BOOK		Booking Of Contract
	CAMD		Contract Amendment
	CLOS		Closure for off balance sheet comp
	CLOC		Closure of Commitment
	DLINK		Payment made against a mortgage linked to a revolving commitment con­tract
	DNTC		Delinquency Notice Event
	DSBR		Disbursement
	INIT		Contract Initiation
	ISTM		Interest Statement Event
	LCYP		LCY update processing
	LIQB		Liquidation Tanking
	LSTM		Mortgage Statement Event
	LINK		Linking a Commitment to a mortgage account
	MLIQ		Manual Liquidation
	NOVA		Novation
	PROV		Provisioning
	READ		Readjustment Processing
	REOP		Reopen of mortgage account
	REVC		Reversal Of Contract
	REVD		Reversal Of Disbursement
	REVN		Rate Revision
	REVP		Reversal Of Payment
	RNOG		Re-Negotiation
	ROLB		Roll Over Booking
	ROLL		Roll Over Of Contract
	REVL		Reversal of Linked Mortgage Account
	SROL		Special Roll over
	STSH		Installment Status Change
	TAXC		Specific Tax Calculation
	UDCN		UDE Cascade Change
	USGR		Un-Secured GL Transfer Reversal
	USGT		Unsecured GL Transfer
	VAMB		Value Dated Amendment Booking
	VAMI		Value Dated Amendment Initiation
	YACR		Yield to Maturity based Discount Accrual
	NCON		Notary Confirmation
	INLQ		Intermediary Liquidation
	IMST		Intermediary Statement
	NREJ		Notary Rejection
	SCHR		Schedule Regeneration in Linked Mortgage Contracts
	SDTX		Total Outstanding Balance of an Account
TRFR	Transfer
TADJ	Transfer Adjustment

12.3 Accounting Roles

In this section we have provided a list of sample accounting roles.

	Accounting Role		Description
	ASSETGL		The Customer GL to which the Mortgage Account move­ments are reported.
	PRINCIPAL_LIQD		Principal Liquidated
	PRINCIPAL_INCR		Principal Increased
	COMPONENT _INC		Component Income
	COMPONENT EXP		Component Expense
	COMPONENT RIA		Component Received in Advance
	COMPONENT PAY		Component Payable
	COMPONENT REC		Component Receivable
	COMPONENT PIA		Component Paid in Advance
	BRIDGE GL		Intersystem Bridge GL
	SETTLEMENT ACCOUNT		Customer Account Settled From / To
	FEES_REC		Fees Receivable
	CHARGES_REC		Adhoc Charges Receivable
	IN_INTER_STMT		Intermediary Statement

Accounting Roles for the YACR Event

	Sl No		Accounting Role		Acquisition Type		Role Type
	1.		EIMDISCRIA		Discount		Asset
	2.		EIMDISCINC		Discount		Asset
	3.		EIMPREMPIA		Premium		Asset
	4.		EIMPREMEXP		Premium		Asset
	5.		EIMINTADJREC		Par		Asset
	6.		EIMINTADJINC		Par		Asset

12.4 Event-wise Advices

In this section we will discuss the suggested events and advices that should be generated for that particular event in the life cycle of Consumer Lending.

BOOK

The system uses this event to enter details of a mortgage account. However, at this stage the account is not initialized thus there will not be a change in the balance but you can perform other activities (processing fee etc) for the mortgage account. The accounting entries passed will be either Contingent Entries for disbursement or component liquidations entries.

	Advice Name		Description		Format Name
	CL_CONT_ADV		Contract Advice		CL_CONTR_STMT

On BOOK event of a commitment contract the following accounting entries are passed:

	Accounting Role		Amount Tag		Dr./Cr. Indicator
	CONTGL		PRINCIPAL_FWD		Debit
	CONTOFF		PRINCIPAL_FWD		Credit

INIT

The system uses this event to initiate a mortgage with a value date as the date of initiation. However, you can not disburse the mortgage under this event.

	Advice Name		Description		Format Name
	CL_INIT_ADV		Initiation Advice		CL_INIT_ADV
	CL_CAP		Capitalization Advice		CL_CAP_ADV
	CL_CONT_ADV		Contract Advice		CL_CONTR_STMT
	CLST_SUM­MARY		Mortgage Summary Statement Advice		CL_LOAN_SUMMARY
	COUPON		Coupon Advice		ADV_COUPON

DSBR

This event is marked by the disbursement of the mortgage amount. The disbursement may be done manually or can be triggered by a disbursement schedule. The mortgage account will have debit balances after total disbursement.

	Advice Name		Description		Format Name
	CR_ADV		Credit Advice		CL_CR_ADV
	CLST_DETAILS		Mortgage Detailed Statement Advice		CL_LOAN_DETAIL
	CLST_SUMMARY		Mortgage Summary Statement Advice		CL_LOAN_SUMMARY
	TAX_ADVICE		Tax Advice		CL_TAX_ADVICE

The entries passed are:

	Accounting Role		Amount Tag		Dr /Cr
	LOAN_AC		PRINCIPAL		Dr
	CR_SETTLEMENT_BRG		PRINCIPAL		Cr

Note

• The mortgage account of the customer reports to an internal GL of the bank, determined by the Role to Head mapping done at the product level.
• A settlement bridge account is used since there is a probability of the customer ac­count being present in another system which is capable of interfacing with Oracle FLEXCUBE. During the reconciliation process, the appropriate customer account in the relevant system is credited with the mortgage amount.

ACCR

The accrual of the various components will be triggered based on the accrual parameters you maintain at the product level.

The following accounting entries are passed for this event:

For Interest Accrual

	Accounting Role		Amount Tag		Dr /Cr
	INT_REC		INT_ACCR		Dr
	INT_INC		INT_ACCR		Cr

 

For Penalty Interest Accrual

	Accounting Role		Amount Tag		Dr /Cr
	PENAL_INT_REC		PENAL_INT_ACCR		Dr
	PENAL_INT_INC		PENAL_INT_ACCR		Cr

NCON

This event is triggered when the ‘Notary Pre Confirmed’ check box is checked at the account level or when the Notary Status is selected as ‘Confirmed’ in ‘Manual Notary Confirmation’ screen.

NREJ

This event is triggered when the ‘Notary Pre Confirmed’ check box is unchecked at the account level and Notary status is selected as ‘Reject’ in ‘Manual Notary Confirmation’ screen.

INLQ

This event is triggered as a batch process for the Intermediary Liquidation based on the product event advice maintenance. It provides basic information about the Intermediary and the corresponding commission settlement.

	Advice Name		Description		Format Name
	‘IN_INTER_CR		Intermediary Credit		INTER_CR_ADV

INCH

This event is triggered as a batch process for the Intermediary Liquidation based on the product event class maintenance. It provides basic information about the Intermediary and charge collected because of pre-payment and late payment by the customer.

	Advice Name		Description		Format Name
	IN_INTER_DR		Intermediary Debit		INTER_DR_ADV

IMST

This event is triggered as per the statement frequency maintained at the Intermediary Level. It provides basic information about the Intermediary and the corresponding commission/charge settlements.

	Advice Name		Description		Format Name
	IN_INTER_STMT		Intermediary Statement		IN_INTER_STMT

ALIQ and MLIQ

Depending on the mode of liquidation opted for, whether automatic or manual, the appropriate event is triggered. A batch process will be triggered at EOD for payments that are marked for auto liquidation.

ALIQ

	Advice Name		Description		Format Name
	DR_ADV		Debit Advice		CL_DR_ADV
	DELINQYADV		Delinquency Advice		CL_DELQ_ADV

MLIQ

	Advice Name		Description		Format Name
	BILNOTC		Billing Advice		CL_BILL_ADVC
	DELINQYADV		Delinquency Advice		CL_DELQ_ADV
	PAYMENT_ADVICE		Payment Advice		CL_PMT_ADV

The accounting entries for these events will be as follows:

Principal Repayment

	Accounting Role		Amount Tag		Dr /Cr
	DR_SETTLEMENT_BRG		PRINCIPAL_LIQD		Dr
	LOAN_AC		PRINCIPAL_LIQD		Cr

 

Interest Repayment

	Accounting Role		Amount Tag		Dr /Cr
	DR_SETTLEMENT_BRG		INT_LIQD		Dr
	INT_REC		INT_LIQD		Cr
	INTERNAL_GL		MAIN_INT_WHLD		Dr
	MAIN_INTREC		MAIN_INT_WHLD		Cr

 

Penalty Interest Repayment

	Accounting Role		Amount Tag		Dr /Cr
	DR_SETTLEMENT_BRG		PENAL_INT_LIQD		Dr
	PENAL_INT_REC		PENAL_INT_LIQD		Cr

 

Following are the accounting entries passed for the manual repayment of mortgage by cash:

	Accounting Role		Amount Tag		Dr /Cr
	DR_SETTL_BRIDGE		PRINCIPAL_LIQD		DR
	LOAN_ACCOUNT		PRINCIPAL_LIQD		CR
	DR_SETTL_BRIDGE		MAIN_INT_LIQD		DR
	LOAN_ACCOUNT		MAIN_INT_LIQD		CR

LINK

This event is triggered when a commitment is linked to a consumer lending mortgage account. LINK event increases the utilization of the commitment amount and the contingent entries passed at the time of INIT is reversed upto the extent of linked amount.

	Accounting Role		Amount Tag		Dr./Cr. Indicator
	ASSETGL		COMMUTIL_INCR		Credit
	ASSETOFF		COMMUTIL_INCR		Debit

DLNK (Delink)

This event is triggered when payment is made against a mortgage, which is linked to a revolving commitment contract, Delink decreases the utilization of commitment amount.

	Accounting Role		Amount Tag		Dr./Cr. Indicator
	ASSETGL		COMMUTIL_DECR		Debit
	ASSETOFF		COMMUTIL_DECR		Credit

STCH

This event is triggered when a status change occurs. It could be a Forward Status Change (FSTC) where the mortgage moves from one adverse status to another or a Backward Status Change (BSTC) wherein, on repayment of overdue installments, a reversal of status takes place. The status derivation rule is used to resolve the status. The change may occur due to a status rule being activated. If the number of days by which a component becomes overdue, exceeds the allowed number of days (may be referred to as the grace period), the component can undergo a status change if a status rule is defined with such a criteria. A status change is triggered if any condition defined for the rule is satisfied.

The accounting entries, if maintained for the events (FSTC and BSTC) will be triggered. The accounting role provided will be the same for all the changes. However, the Role to Head mapping rules will resolve the entries to the appropriate accounts for each status.

Interest accrual for status ‘ACTIVE’

	Accounting Role		Amount Tag		Dr /Cr
	INT_REC (Mapped to a Real Asset)		INT_ACCR		Dr
	INT_INC (Mapped to a Real Income GL)		INT_ACCR		Cr

 

Interest accrual for status ‘PAST DUE’

	Accounting Role		Amount Tag		Dr /Cr
	INT_REC (Mapped to a Contingent Asset)		INT_ACCR		Dr
	INT_INC (Mapped to a Contingent Liability)		INT_ACCR		Cr

 

CAMD, VAMB and VAMI

These statuses are triggered as a result of making amendments to a mortgage.

CAMD (Account Amendment)

Any amendment to the parameters of the account will create a new version of the mortgage. These changes will not have any implications on the financial attributes of the mortgage.

	Advice Name		Description		Format Name
	CLAMDADV		Amendment Advice		CL_AMD_ADV

VAMB (Booking of a Value Dated Amendment)

This event is triggered when you book a value dated amendment.

You can book for an amendment of the following:

• Maturity date
• Principal Increase
• Rate change

The batch program will identify the changes booked and the same is triggered appropriately on the value date by the VAMI event.

	Advice Name		Description		Format Name
	CLAMDADV		Amendment Advice		CL_AMD_ADV

VAMI (Initiation of a Value Dated Amendment)

This event will pick up the future dated VAMBs and on the value date, initiate the same.

The accounting entries for an increase in principal will be as follows:

	Accounting Role		Amount Tag		Dr /Cr
	LOAN_AC		PRINCIPAL_INCREASED		Dr
	CR_SETTLEMENT_BRG		PRINCIPAL_INCREASED		Cr

Any change to Rate and Tenor (Maturity Date) will alter the original mortgage schedules.

ROLL

This event is triggered when a mortgage is renewed with new terms. Rollover will have either a combination of liquidation and rollover of Principal. It can also have liquidation of Interest and penalty Interest.

	Advice Name		Description		Format Name
	CLAMDADV		Amendment Advice		CL_AMD_ADV
	CL_ROLL_ADV		Rollover Advice		CL_ROLL_ADV
	PAYMENT_ADVICE		Payment Advice		CL_PMT_ADV

The entries passed for rollover of the Principal are as follows:

	Accounting Role		Amount Tag		Dr /Cr
	CR_SETTLEMENT_BRG		PRINCIPAL_ROLL		Cr
	LOAN_AC		PRINCIPAL_ROLL		Dr

For liquidation of Principal, the following entries are passed:

	Accounting Role		Amount Tag		Dr /Cr
	DR_SETTLEMENT_BRG		PRINCIPAL_LIQD		Dr
	LOAN_AC		PRINCIPAL_LIQD		Cr

For liquidation of Interest and Penalty Interest, the entries are:

	Accounting Role		Amount Tag		Dr /Cr
	DR_SETTLEMENT_BRG		LIQD_AMT		Dr
	INT_REC		INT_LIQD		Cr
	PENAL_INT_REC		PENAL_INT_LIQD		Cr
	INTERNAL_GL		MAIN_INT_WHLD		Dr
	MAIN_INTREC		MAIN_INT_WHLD		Cr

You may encounter the following cases:

Case 1: Rollover only Principal Outstanding; Pay Interest & Penalty Outstanding

In this case, both ‘PRINCIPAL_LIQD’ and ‘PRINCIPAL_ROLL’ will be zero and hence the ‘LOAN ACCOUNT’ balance is not affected.

The Outstanding Interest and Principal will be liquidated. Referring to the accounting entries above,

• INT_LIQD = Interest Outstanding
• PENAL_INT_LIQD = Penalty Interest Outstanding
• LIQD_AMT = INT_LIQD + PENAL_INT_LIQD (If Netting is ‘ON’ and both have the same Settlement Account).

Case 2: Rollover Principal + Interest Outstanding; Pay Penalty Outstanding

In this case,

• PRINCIPAL_LIQD = 0,
• PRINCIPAL_ROLL = INT_ROLL (which is the Interest Rolled over as Principal);
• PENAL_INT_LIQD = Penalty Interest Outstanding
• LIQD_AMT = PENAL_INT_LIQD (If Netting is on and both have the same Settlement Account).

Case 3: Rollover Principal + Interest + Penalty Outstanding

PRINCIPAL_ROLL = INT_ROLL + PENAL_INT_ROLL

LIQD_AMT = 0

Case 4 - a: Rollover Special Amount, Amount > Principal Outstanding

This is in effect a disbursement. Therefore,

PRINCIPAL_ROLL = SPECIAL_AMOUNT – PRINCIPAL_OUTSTANDING

Since the rolled over amount is greater than the outstanding principal, it will be positive and hence an increase in the mortgage amount is registered.

Case 4 – b: Rollover Special Amount, Amount < Principal Outstanding

This results in a decrease in Principal and hence

PRINCIPAL_ROLL = SPECIAL_AMOUNT – PRINCIPAL_OUTSTANDING will lead to a negative amount which will reduce the Dr Balance on the Mortgage Account.

SROL – Special Roll-over

This event is triggered when a roll-over is done and it involves a change in the currency, product and customer.

	Advice Name		Description		Format Name
	CLAMDADV		Amendment Advice		CL_AMD_ADV
	CL_ROLL_ADV		Roll-over Advice		CL_ROLL_ADV

RNOG – Re-negotiation

This event is triggered when a customer is not being able to honor the terms and conditions of the credit. In such a situation, the client re-negotiates the terms and conditions of the credit before maturity date.

	Advice Name		Description		Format Name
	CLAMDADV		Amendment Advice		CL_AMD_ADV
	PAYMENT_ADVICE		Payment Advice		CL_PMT_ADV

NOVA – Novation

This event is triggered when a primary customer is changed.

	Advice Name		Description		Format Name
	CLAMDADV		Amendment Advice		CL_AMD_ADV

REVC – Mortgage Reversal

This event is triggered when a mortgage is withdrawn. This will pass the DSBR entries with a reversal of signs (-ve) for the amounts, as follows:

	Accounting Role		Amount Tag		Dr /Cr
	LOAN_AC		- PRINCIPAL		Dr
	CR_SETTLEMENT_BRG		- PRINCIPAL		Cr

REVP - Payment Reversal

The latest payment made, both auto and manual, will be reversed during this event. This will pass the ALIQ or MLIQ event selected with a reversal of signs for the amounts.

Reversal of Principal Repayment

	Accounting Role		Amount Tag		Dr /Cr
	DR_SETTLEMENT_BRG		- PRINCIPAL_LIQD		Dr
	LOAN_AC		- PRINCIPAL_LIQD		Cr

 

Reversal of Interest Repayment

	Accounting Role		Amount Tag		Dr /Cr
	DR_SETTLEMENT_BRG		- INT_LIQD		Dr
	INT_REC		- INT_LIQD		Cr

 

Reversal of Penalty Interest Repayment

	Accounting Role		Amount Tag		Dr /Cr
	DR_SETTLEMENT_BRG		- PENAL_INT_LIQD		Dr
	PENAL_INT_REC		- PENAL_INT_LIQD		Cr

 

REVN – Periodic Rate Revision

This will change the Floating Interest Rates based on the periodicity that you maintain.

	Advice Name		Description		Format Name
	CL_INT_STMT		Interest Statement Advice		CL_INT_STMT
	RATECH_ADV		Rate Change Advice		CL_RTCH_ADV

ARVN – Automatic Rate Revision

This will change the Floating Rate as and when the rate changes.

	Advice Name		Description		Format Name
	CL_INT_STMT		Interest Statement Advice		CL_INT_STMT
	RATECH_ADV		Rate Change Advice		CL_RTCH_ADV

UDCH – User Defined Element Value Changes

This event will be triggered whenever there is a change in the UDE values. This will be required to have Rate revision advices sent to the customers.

YACR – Yield to Maturity Discount Accrual

This event will be triggered for the computation of IRR. The following accounting entries will be passed:

	Accounting Role		Amount Tag		Dr /Cr
	EIMDISCRIA		EIM_ACCR		Dr
	EIMDISCINC		EIM_ACCR		Cr
	EIMPREMEXP		EIM_ACCR		Dr
	EIMPREMPIA		EIM_ACCR		Cr

If refunding needs to be done as part of with complete pre-payment, the following entries should be passed in addition to the ones specified above:

	Accounting Role		Amount Tag		Dr /Cr
	<Charge Comp>_RIA		EIM_ADJ		Dr
	CR_SETTL_BRIDGE		EIM_ADJ		Cr
	DR_SETTL_BRIDGE		EIM_ADJ		Dr
	<Charge Comp>_PIA		EIM_ADJ		Cr

CLIQ – Charge Liquidation

This event triggers the liquidation of charges applicable to the mortgage accounts. You need to set up the following entries for this event:

	Accounting Role		Amount Tag		Dr /Cr
	DR_SETTL_BRIDGE		<Charge Comp>_LIQD		Dr
	<Charge Comp>_RIA		<Charge Comp>_LIQD		Cr
	CR_SETTL_BRIDGE		<Charge Comp>_LIQD		Dr
	<Charge Comp>_PIA		<Charge Comp>_LIQD		Cr

CLOC Event

	Accounting Role		Amount Tag		Dr./Cr. Indicator
	CONTGL		COMM_UNUTIL		Credit
	CONTOFF		COMM_UNUTIL		Debit

Accounting Entries for RML – Reverse Mortgage Loan

DSBR Event

	Accounting Role		Amount Tag		Dr/Cr
	LOAN_ACCOUNT		PRINCIPAL		Dr
	CR_SETTL_BRIDGE		PRINCIPAL		Cr

ACCR Event

	Accounting Role		Amount Tag		Dr/Cr
	MAIN_INTREC		MAIN_INT_ACCR		Dr
	MAIN_INTINC		MAIN_INT_ACCR		Cr

 

MLIQ/ALIQ Event

	Accounting Role		Amount Tag		Dr/Cr
	DR_SETTL_BRIDGE		PRINCIPAL_LIQD		Dr
	LOAN_ACCOUNT		PRINCIPAL_LIQD		Cr
	DR_SETTL_BRIDGE		PRINCIPAL_EXCESS		Dr
	PRINCIPALPAY		PRINCIPAL_EXCESS		Cr
	PRINCIPALEXP		PRINCIPAL_WAVD		Dr
	LOAN_ACCOUNT		PRINCIPAL_WAVD		Cr
	DR_SETTL_BRIDGE		MAIN_INT_LIQD		Dr
	MAIN_INTREC		MAIN_INT_LIQD		Cr
	MAIN_INTEXP		MAIN_INT_WAVD		DR
	MAIN_INTREC		MAIN_INT_WAVD		CR

TRFR Event

This event triggers the transfer of mortgages. You need to set up the following entries for the event:

Transferring Account Entries

	Account Role		Amount Tag		Dr/Cr
	LOAN_ASSET_GL		PRINCIPAL_OUTSTAND_TRFR_OBRN		Credit
	INT_RECV_GL		MAIN_INT_OUTSTAND_TRFR_OBRN		Credit
	LOAN_ASSET_GL		PRINCIPAL_OUTSTAND_TRFR_NBRN		Debit
	INT_RECV_GL		MAIN_INT_OUTSTAND_TRFR_NBRN		Debit

In case of any interest component say <COMP_NAME>, penalty or charge component for the product with accrual then the following account entries are maintained:

	Account Role		Amount Tag		Dr/Cr
	OTH_INT_INCOME_GL		<COMP_NAME>_INCOME_TRFR_OBRN		Debit
	OTH_INT_REC_GL		<COMP_NAME>_OUTSTAND_TRFR_OBRN		Credit
	OTH_INT_INCOME_GL		<COMP_NAME>_INCOME_TRFR_NBRN		Credit
	OTH_INT_REC_GL		<COMP_NAME>_OUTSTAND_TRFR_NBRN		Debit

Transfer of Discounted Loans

If the mortgage account transferred is a discounted mortgage then the accounting entries for the transfer event is maintained for the main interest.

	Account Role		Amount Tag		Dr/Cr
	LOAN_ASSET_GL		PRINCIPAL_OUTSTAND_TRFR_OBRN		Credit
	LOAN_ASSET_GL		PRINCIPAL_OUTSTAND_TRFR_NBRN		Debit
	INT_REC_ADV_GL		MAIN_INT_RIA_TRFR_OBRN		Debit
	INT_REC_ADV_GL		MAIN_INT_RIA_TRFR_NBRN		Credit

Transfer of Commitments

When a commitment is transferred then the accounting entries for the transfer event is maintained as following:

	Account Role		Amount Tag		Dr/Cr
	ASSET_GL		PRINCIPAL_FWD_TRFR_OBRN		Credit
	ASSETOFF		PRINCIPAL_FWD_TRFR_OBRN		Debit
	ASSET_GL		PRINCIPAL_FWD_TRFR_NBRN		Debit
	ASSETOFF		PRINCIPAL_FWD_TRFR_NBRN		Credit

A transfer advice attached with event TRFR displays the account number, old and new branches, transfer date, the mortgage outstanding as on transfer date and the schedule details. The advice specifies whether the transfer is done as part of branch merger, product transfer or customer initiated transfer.

	Advice Name		Description		Format Name
	MO_TRFR_ADV		Transfer Advice		MO_TRFR_ADV

TADJ Event

The event adjusts the income in the old branch in case of reversal of pre-transfer events and for back-dated events beyond the transfer date. You need to set up the following entries for the event:

	Account Role		Amount Tag		Dr/Cr
	MAIN_INT_INC		MAIN_INT_ADJINC_TADJ_OBRN		Debit
	MAIN_INT_INC		MAIN_INT_ADJINC_TADJ_NBRN		Credit