Overview of Profit or Loss Accounting

The Profit or Loss Accounting feature enables you to compute the Profit and Loss (or Gain or Loss) of Fair Value on two specific dates, that is From date and To date.

The Profit or Loss Accounting process is present in the Profit or Loss Accounting UI in the OFS HM application. These UI components are detailed in the following sections.

The Classification Code is sought from OFS LLFP Classification Run. If the LLFP Classification is not available, then the ClassificationCodes are expected as a download.

There are the following three types of ClassificationCodes are present:

• FVOCI - Fair Value through Other Comprehensive Income
• FVTPL - Fair Value through Profit for Loss
• AFS - Available for Sale

These three classification codes are picked up for accounting for fair value gains and losses.

You must select the From and To dates from the application UI. The date corresponds to the last accrual date while the To date corresponds to the FIC MIS date.

All instruments that were valued as of the To date are identified. For these instruments, the Fair Value as of the From date and the To date is fetched from the results of the Fair Valuation process. If there are multiple records for the same instrument on any given date (this can occur because of different Fair Value definitions and multiple executions), then the value with the least Fair Value level hierarchy is given preference. If multiple Fair Values are available at the same level, then the least Fair Value is fetched. This applies to both From and To dates.

In addition to the Profit or Loss computed for all instruments, for Hedging Instruments that are part of finalized or designated hedge definitions, the split between the effective and ineffective portion is computed. All finalized or designated hedge definitions as of the To (FIC MIS) date are considered for this calculation.