This Annexure contains details of the suggested accounting entries that can be set up, for the Islamic Letters of Credit (Islamic LC) module of Oracle FLEXCUBE. The annexure lists details of the following suggested accounting entries, event-wise.
The following is an exhaustive list of events that can take place during the lifecycle of an Islamic 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 Islamic LCs |
BADV |
Booking Of An Islamic LC With Operation Advise |
Export Islamic LC Only |
BANC |
Booking Of An Islamic LC With Operation Advise And Confirm |
Export Islamic LC Only |
BCFM |
Booking Of An Islamic LC With Operation Confirm |
Export Islamic LC Only |
BISS |
Booking Of An Islamic LC Or Guarantee Issue (Open or Open & Confirm) |
Only For Import Islamic LC, Standby Islamic LC, Clean Islamic LC, Shipping Guarantee And Guarantee |
BPRE |
Booking Of An Islamic LC With Operation Pre-Advise |
Export Islamic LC Only |
CALC |
Periodic commission calculation |
All types |
CANC |
Cancellation of an Islamic LC |
All Types |
CLIQ |
Commission Liquidation |
All Types |
CLOS |
Closure Of An Islamic LC Or Guarantee |
All Types |
GCLM |
Guarantee Claim |
|
RASN |
Re-assign an Islamic LC contract |
All types |
RAVL |
Reversal of Availment |
All types |
REIN |
Reinstating An Islamic LC |
Revolving Islamic LCs |
ROPN |
Reopening Of An Islamic LC |
All Types |
REVR |
Reversal of contract |
All types |
ROPN |
Reopening of an Islamic LC |
All types |
REIS |
Reissue of Guarantee |
Guarantee only |
MLIQ |
Manual Liquidation of Islamic LC commission |
|
WAIV |
Waiver of components during manual liquidation |
|
Whenever a conversion of currency is involved, the conversion rate used is as follows:
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 |
Islamic LC Amendment Amount |
LC_OS_AMT |
Outstanding Islamic LC amount |
LC_REIN_AMT |
Outstanding Reinstatement Amount |
LIAB_AMND_AMT |
Liability Amendment Amount |
ADV_LIAB_AMND_AMT |
Liability Amendment Amount for advised Islamic LCs |
CNF_LIAB_AMND_AMT |
Liability Amendment Amount for confirmed Islamic LCs |
LIAB_AMT |
Liability Amount |
LIAB_AVAIL_AMT |
Availment Liability Amount |
ADV_LIAB_AVAIL_AMT |
Availment Liability Amount for advised Islamic LCs |
CNF_LIAB_AVAIL_AMT |
Availment Liability Amount for confirmed Islamic LCs |
LIAB_OS_AMT |
Outstanding liability amount |
ADV_LIAB_OS_AMT |
Outstanding liability amount for advised Islamic LCs |
CNF_LIAB_OS_AMT |
Outstanding liability amount for confirmed Islamic LCs |
LIAB_REIN_AMT |
Reinstatement Amount |
ADV_LIAB_REIN_AMT |
Reinstatement Amount for advised Islamic LCs |
CNF_LIAB_REIN_AMT |
Reinstatement Amount for confirmed Islamic LCs |
R |
Receivable Charge |
E |
Receivable Commission |
The following is an exhaustive list that contains details of the Accounting Roles that are applicable to the Islamic LCs you can process at your bank.
Accounting Role |
Description |
Role Type |
IL_OCU |
Outstanding Credit Unutilized |
Contingent Liability |
IL_OCU_OFFSET |
Unutilized Credit Offset |
Contingent Asset |
IL_CNF |
Confirmation of Islamic LC |
Real GL |
IL_CNF_OFF |
Confirmation of Islamic LC Offset |
Real GL |
IL_COLL_ACCT |
Islamic 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_PAY |
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 |
In this section, we will discuss the suggested accounting entries that should be generated for each event in the life cycle of an Islamic LC.
This section contains the following topics:
Role |
Amount Tag |
Debit / Credit |
IL_OCU |
LIAB_AMT |
Dr |
IL_OCU_OFFSET |
LIAB_AMT |
Cr |
Role |
Amount Tag |
Debit / Credit |
COLL_CUST_ACC |
COLL_AMT_OS |
Dr |
LC_COLL_ACC |
COLL_AMT_OSEQ |
Cr |
COL_DEPOSIT_ACC |
COLL_AVLAMTEQ |
Dr |
LCCOLL_INT_ACCT |
COLL_AVLAMT |
Cr |
Here, the transfer of the collateral from the customer onto the collateral deposit account/GL is assumed to be done before the booking of the Islamic LC.
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 |
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_PAY |
COMMSN |
Cr |
In Advance (Month-End Accrual)
Role |
Amount Tag |
Debit / Credit |
COMM_PAY |
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 |
Here, Islamic LC_COMM component and Islamic LC_CHG component are defined in the Islamic LC product where the Collect Islamic LC Commission in Bills option is checked.
Accounting Role |
Description |
LC_CHG_RECV |
Islamic LC Charges Receivable |
LC_COMM_RECV |
Islamic LC Commission Receivable |
Dr/Cr |
Accounting role |
Amount tag propagated from Islamic LC |
Dr |
LC_COMM_RECV |
LC_COMM_LIQD |
Cr |
LC_COMM_INC |
LC_COMM_LIQD |
Dr |
LC_CHG_RECV |
LC_CHG_LIQD |
Cr |
LC_CHG_INC |
LC_CHG_LIQD |
In case of Islamic LC products you have to set up accounting to liquidate commission and charges onto the income GL from receivable GL.
If the accounting role for the DR leg of the accounting entries is setup as customer role, the same is recovered from the customer and gets tracked for transfer to Bills. If realization of income is not expected to happen on CLIQ, you need not setup any accounting entries in the CLIQ event and the income entries can be setup from Bills. The system allows Islamic LC products to be saved without any accounting entries defined in the CLIQ event if the options ‘Collect Islamic LC commission in Bills’ and ‘Collect Islamic LC charges in Bills’ for all the associated Charge and commission components are checked.
Accounting role |
Description |
LC_BC_COLL_BRIDGE |
Collateral bridge between Islamic LC and Bills |
This accounting role is used to transfer the collaterals from the Islamic LC onto the Bill. This role maps onto the GL/Account maintained as a part of the Islamic LC product preference.
Liability
Role |
Amount Tag |
Dr/ Cr |
IL_OCU |
AVAIL_SET_AMT |
Cr |
IL_OCU_OFFSET |
AVAIL_SET_AMTEQ |
Dr |
IL_OCU |
ADV_LIAB_AVAIL_AMT |
Cr |
IL_OCU_OFFSET |
ADV_LIAB_AVAIL_AMT |
Dr |
IL_CNF_OFF |
CNF_LIAB_AVAIL_AMT |
Dr |
IL_CNF |
CNF_LIAB_AVAIL_AMT |
Cr |
Collateral (If Any)
Role |
Amount Tag |
Debit / Credit |
COLL_CUST_ACC |
COLL_AMNDAMT |
Cr |
LC_COLL_ACCT |
COLL_AMNDAMTEQ |
Dr |
LCCOLL_INT_ACCT |
COLL_AVLAMT |
Dr |
LC_BC_COLL_BRIDGE |
COLL_AVLAMTEQ |
Cr |
Liability
Role |
Amount Tag |
Debit / Credit |
IL_OCU |
LIAB_OS_AMT |
Cr |
IL_OCU_OFFSET |
LIAB_OS_AMT |
Dr |
IL_OCU |
ADV_LIAB_OS_AMT |
Cr |
IL_OCU_OFFSET |
ADV_LIAB_OS_AMT |
Dr |
IL_CNF |
CNF_LIAB_OS_AMT |
Cr |
IL_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 |
LCCOLL_INT_ACCT |
COLLAMT_OS |
Dr |
COL_DEPOSIT_ACC |
COLLAMT_OSEQ |
Cr |
Role |
Amount Tag |
Debit / Credit |
IL_OCU |
LIAB_REIN_AMT |
Dr |
IL_OCU_OFFSET |
LIAB_REIN_AMT |
Cr |
IL_OCU |
ADV_LIAB_REIN_AMT |
Dr |
IL_OCU_OFFSET |
ADV_LIAB_REIN_AMT |
Cr |
IL_CNF |
CNF_ LIAB_REIN_AMT |
Dr |
IL_CNF_OFF |
CNF_ LIAB_REIN_AMT |
Cr |
Booking Islamic LC Advice
Role |
Amount Tag |
Debit / Credit |
IL_OCU |
ADV_LIAB_OS_AMT |
Dr |
IL_OCU_OFFSET |
ADV_LIAB_OS_AMT |
Cr |
Charges
As given in event BISS.
Commission
As given in event BISS.
Liability
Role |
Amount Tag |
Debit / Credit |
IL_OCU |
LIAB_AMT |
Dr |
IL_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
As given in event BISS.
Commission
As given in event BISS.
None
Role |
Amount Tag |
Debit / Credit |
IL_CNF |
CNF_LIAB_OS_AMT |
Dr |
IL_CNF_OFFSET |
CNF_LIAB_OS_AMT |
Cr |
Liability
Reverse all the previous entries for booking. Re-book entries based on BISS or BADV or BPRE or BANC.
Role |
Amount Tag |
Debit / Credit |
IL_OCU |
ADV_LIAB_OS_AMT |
Dr |
IL_OCU_OFFSET |
ADV_LIAB_OS_AMT |
Cr |
IL_CNF |
CNF_LIAB_OS_AMT |
Dr |
IL_CNF_OFFSET |
CNF_LIAB_OS_AMT |
Cr |
Role |
Amount Tag |
Debit / Credit |
COL_DEPOSIT_ACC |
COLL_AMNDAMTEQ |
Dr |
LCCOLL_INT_ACCT |
COLL_AMNDAMT |
Cr |
In case of decrease of collateral amount upon amendment, the system attributes the amount tags with negative amounts.
None
None
Same as For BISS
Reverse out all the accounting entries booked for the contract till date.
See Commissions under event BISS.
No entries due to commission calculation.
See Commissions under event BISS.
Liability
Role |
Amount Tag |
Debit / Credit |
IL_OCU |
LIAB_OS_AMT |
Dr |
IL_OCU_OFFSET |
LIAB_OS_AMT |
Cr |
IL_OCU |
ADV_LIAB_OS_AMT |
Dr |
IL_OCU_OFFSET |
ADV_LIAB_OS_AMT |
Cr |
IL_CNF |
CNF_LIAB_OS_AMT |
Dr |
IL_CNF_OFFSET |
CNF_LIAB_OS_AMT |
Cr |
Collateral (If Any)
Role |
Amount Tag |
Debit / Credit |
COLL_CUST_ACC |
COLLAMT_OS |
Dr |
LC_COLL_ACCT |
COLLAMT_OS_EQ |
Cr |
Role |
Amount Tag |
Debit / Credit |
IL_OCU |
LIAB_OS_AMT |
Cr |
IL_OCU_OFFSET |
LIAB_OS_AMT |
Dr |
IL_OCU |
ADV_LIAB_OS_AMT |
Cr |
IL_OCU_OFFSET |
ADV_LIAB_OS_AMT |
Dr |
IL_CNF |
CNF_LIAB_OS_AMT |
Cr |
IL_CNF_OFFSET |
CNF_LIAB_OS_AMT |
Dr |
Role |
Amount Tag |
Debit / Credit |
LCCOLL_INT_ACCT |
COLLAMT_OS |
Dr |
COL_DEPOSIT_ACC |
COLLAMT_OSEQ |
Cr |
None
Role |
Amount Tag |
Debit / Credit |
IL_OCU |
LIAB_OS_AMT |
Cr |
IL_OCU_OFFSET |
LIAB_OS_AMT |
Dr |
IL_OCU |
ADV_LIAB_OS_AMT |
Cr |
IL_OCU_OFFSET |
ADV_LIAB_OS_AMT |
Dr |
IL_CNF |
CNF_LIAB_OS_AMT |
Dr |
IL_CNF_OFFSET |
CNF_LIAB_OS_AMT |
Cr |
None
Fetch entries for last availment event and reverse them.
Role |
Amount Tag propagated from Islamic LC |
Dr / Cr |
COMM_CUST_ACC |
LC_COMM_LIQD |
Dr |
LC_COMM_RECV |
LC_COMM_LIQD |
Cr |
CHG_CUST_ACC |
LC_CHG_LIQD |
Dr |
LC_CHG_RECV |
LC_CHG_LIQD |
Cr |
These Accounting entries are maintained when there is an Accounting entry maintained in CLIQ for transferring into Receivable. If the accounting entry is not maintained in CLIQ then the Cr Leg will be Income GL.
The amount tags for the WAI event are created upon creation of the charge and commission components. Consider Islamic LC_CHG and Islamic LC_COMM as charge and commission components defined in the system. The corresponding amount tags will be as follows:
Amount Tag |
Description |
LC_CHG_WAIV |
LC Charge being waived |
LC_COMM_WAIV |
LC Commission being waived |
Accounting Entries for the Waiver event
Dr/Cr |
Accounting role |
Amount tag propagated from Islamic LC |
Dr |
LC_COMM_RECV |
LC_COMM_WAIV |
Cr |
LC_COMM_INC |
LC_COMM_WAIV |
Dr |
LC_CHG_RECV |
LC_CHG_WAIV |
Cr |
LC_CHG_INC |
LC_CHG_WAIV |
These accounting entries are maintained if receivable accounting entries have been maintained on the CLIQ event of the Islamic LC. The amounts for waiver will be displayed as negative amounts. Partial waivers are not allowed.