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