Understanding the Treasury Management Accounting Process

You use accounting templates to define the ChartFields to use for various kinds of accounting activities, called accounting events. By associating accounting templates with accounting events, you can automate most of the accounting process. In addition, you can also manually adjust accounting entries and create ad hoc entries.

The accounting template depicts the correct accounting and debit and credit configuration for a given treasury transaction and business event. For example, the purchase of a U.S. Treasury bond may involve the construction of two debit lines, Bonds Receivable and Unamortized Bond Discount, as well as one credit line, Cash. The accounting template for this type of transaction would include three predefined records to depict this particular debit or credit configuration.

The accounting template contains the following characteristics:

  • A unique template ID.

  • Options that determine how the correct ChartField combination is selected.

  • An attribute (calculation type) that describes how the accounting monetary amount is calculated or derived.

  • An attribute that designates whether the accounting build requires review.

An accounting event describes an event in the treasury business process that triggers the construction of a pending accounting build.

Oracle delivers the following treasury accounting event types with the system:

  • Deal transactions.

  • Facility, deal, wire, and letter of credit fees.

  • Bank transfers.

  • Bank statement processing transactions.

  • Hedges.

  • Electronic File Transfer (EFT) requests.

  • Internal account interest.

  • Investment pool transactions.

To automate accounting entries, you assign each accounting event type to a corresponding accounting template for all accounting events except bank transfers. Bank transfers do not have accounting templates because the accounting is derived from the bank and business unit of the bank. The template controls which ChartFields and monetary amounts to use in each accounting entry.

For treasury deals, you define the accounting event at the instrument level. You associate each instrument with various accounting events, depending on the instrument base type. In addition, you define each accounting event based on the accounting treatment (Held to Maturity, Available for Sale, Trading, or Other) and assign each accounting template to the appropriate accounting treatment. At deal entry, you select the appropriate accounting treatment. The system then automatically associates the appropriate accounting template, based on the accounting treatment of the instrument type.

The following diagram illustrates the process flow:

Process flow for treasury accounting from general accounting event to Journal Generator

 Process flow for treasury accounting

The PeopleSoft centralized processor generates the due-to and due-from entries for both interunit and intraunit balancing. PeopleSoft Treasury Management provides functionality to support interunit and intraunit processing using the centralized processor on the Accounting Template and Accounting Entries pages.

Interunit and Intraunit Balancing Methods

Interunit refers to balancing transactions that involve two general ledger business units. The bank accounts contain the ChartFields and the rules by which their values should be determined.

Intraunit refers to balancing transactions within the same general ledger business unit in which the transaction involves more than one value on the lower level balancing ChartField. For all transactions that Treasury Management generates, the system obtains the ChartFields from either the bank account or an accounting template. Inherited ChartFields obtain their values from the corresponding ChartField on the offsetting entry.

Treasury System Transaction Definitions

To facilitate interunit and intraunit processing, you segregate your interunit and intraunit payable and receivable accounts by the type of transaction. The interunit and intraunit system transactions are a predefined list of transactions, with one system transaction for each major type of Treasury transaction that generates interunit and intraunit entries. By defining transaction codes and associating them with system transactions, you control the level by which you segregate your Interunit and intraunit balances.

Important! Oracle delivers predefined system transactions, which you can view on the System Transaction Definition page. You should not change the information on this page because it affects the intraunit and interunit processing.

See Running the Centralized Interunit and Intraunit Processor.

This table associates a system-defined transaction with a PeopleSoft accounting source:

Accounting Source

System Transactions

Deals

TRDEAL

Hedges

TRHEDGE

Letter of Credit, Deal, Facility, or EFT Fees

TRFEE

Bank Statement Items

TRBSP

EFT Requests

TREFT

Bank Transfers

TRBAX

Interunit Interest

TRIUINT

Manual Entry

TRMANUAL

Investment Pools

TRINPOOL

Intraunit and Interunit Accounting Entries Generation Using the Centralized Processor

Here is an overview of the process:

  1. Specify an anchor entry in the accounting template as a model for any interunit and intraunit entries.

    The anchor entry cannot be a line where the ChartField is determined by Bank Account.

  2. Process treasury accounting using the Automated Accounting process (TR_ACCTG), which invokes the centralized processor. The centralized processor automatically creates any necessary offset entries that are tagged with the source identifier label System IU (viewable on the Additional Details tab of the Accounting Entries page) and inserts these data into the accounting tables.

  3. If you make any changes to an accounting entry line, you must click the Update Accounting button to invoke the centralized processor and regenerate accounting entries.