11.8 Ledger Migration Process

This section discusses the process for generating charges or credits, for funds provided or used, and their migration to the Management Ledger table when using the Ledger Level- Charge or Credit migration option in the TP Process.

This section provides a detailed description of how the information required for generating these charges or credits originates through Transfer Rate, Adjustment Rate, and Option Cost Processing from the instrument tables and how the results are inserted into the Management Ledger table.

• Overview of the Ledger Migration Process
  Ledger migration is the process of generating aggregated charges (expenses) and credits (revenues) for funds provided or used for a combination of dimensions and their migration to the Ledger table.
• Understand the Ledger Migration
  To understand the process of creating Average Transfer Rate, Adjustment Rates, Option Cost, and Charge/Credit rows in the Management Ledger table (financial elements 170/172, 174-177, 171/173, and 450/451, 414-417, 452/453, respectively), you need to make the following assumptions:
• Requirements for Successful Ledger Migration
  Successful Ledger Migration of Transfer Pricing Results requires correct configuration of the following parameters:
• Instrument Tables Accumulation
  The first operation in the ledger migration process is to accumulate all individual detail rows from the Instrument tables into a single row for each unique combination of Org Unit and Product dimensions in the Virtual Memory Table (VMT).
• Management Ledger Table Processing
  The first step in the Ledger Migration Process with respect to the Management Ledger table is to clear all the information stored in the table with financial elements 170 and 450 (172 and 452 if remaining term pricing is being used) for the particular combination of dimensions being used in the process.
• Transfer Pricing Accounts with Ledger-Only Data Source
  At this stage, all rows in the Management Ledger table that relate (directly or indirectly) to rows in the Instrument tables are accumulated into the VMT. However, the accumulation process still needs to deal with account types that are transfer priced using Ledger as the data source (as specified in the Transfer Pricing Rule). In this example, Product 10 is a Direct Transfer Price product with a Management Ledger balance of 200.00.
• Transfer Pricing Un-priced Accounts
  Accounts using the Un-priced Account method are a special case of direct transfer pricing in the Management Ledger table. The Un-priced Account transfer pricing methodology uses the WATR from other accounts to derive a WATR for the Unpriced account. This is accomplished by averaging the WATR for the component accounts, weighted by their relative LS Balances.
• Ledger Migration of Option Costs
  Ledger migration of option costs is similar to that of the transfer rate. However, there are no steps for calculating option costs directly on the Management Ledger Table. This is because the calculation of option cost is a cash-flow based method that requires the Instrument table data. Normally, option cost is represented in the Instrument table record as the difference between two columns, HISTORIC_ STATIC_SPREAD and HISTORIC_OAS (Option Adjusted Spread) and is expressed as a rate, in percent.
• Usage of Intermediate Tables in the Engine for Management Ledger
  Ledger migration with Management Ledger tables uses intermediate tables. Intermediate tables can be Global Temporary tables or Normal tables. The creation of an intermediate table depends on the Application Preferences' Debug setting. If the Debug setting is - Do not output any message, then Global Temporary table is created. For any other debug setting, a normal table is created. Global Temporary table, which is created, gets dropped at the end of execution. Usage of a global temporary table will increase the performance of execution since data does not last after execution. Normal tables are not dropped at the end. To drop the tables, execute the purge script at regular intervals. All intermediate table names will start with zML_GTT_<process sys id>_<slno>. The naming convention is the same for both the global temporary table and the normal table. The <process sys id> is the process definition ID and <slno> is a number of the intermediate tables.
• Migration Options- Functional Currency and Entered and Functional Currency
  FTP provides the option to the user to perform Ledger Migration in the Entered/Transaction currency (the one in the ISO_CURRENCY_CD column of the Instrument table – the currency in which the transaction takes place) or in the Functional currency. These are supported in the Management Ledger table. The selections for 'Functional Currency' and 'Entered and Functional Currency' are present in the Migration block of the Standard and Stochastic Processes. To provide control over how FTP multi-currency postings happen, you can select 'Functional' or 'Entered and Functional'.
• FSI_DB_INFO Dependency for Multi-Currency
  There is no mandatory connection or reference to multi_currency_enabled_flg or currency_type_enabled_flg from the FSI_DB_INFO table. Column Currency_Type is not present in the Management Ledger structure.